Sen. Bernie Sanders (I-Vt.) is preparing to introduce legislation that would break up the notorious “too big to fail” banks, The Hill reported Wednesday.
“We have a situation now where Wall Street banks are not only too big to fail, they are too big to jail,” Sanders said. “That is unacceptable and that has got to change because America is based on a system of law and justice.”
Sanders added, “If an institution is too big to fail, it is too big to exist."
Sanders' announcement comes after the Justice Department admitted earlier this month that it has been hesitant to prosecute some banks out of fear that an indictment would damage the nation’s economy.
"I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy," Attorney General Eric Holder told the Senate Judiciary Committee.
On Thursday, Sanders turned to The Huffington Post's blog to express his shock and disappointment in Holder's remarks.
"I was stunned when our country's top law enforcement official recently suggested it might be difficult to prosecute financial institutions that commit crimes because it may destabilize the financial system of our country and the world," Sanders wrote. "The attorney general's troubling acknowledgement has revived interest in an idea that is drawing more and more support. It is time to break up too big to fail financial institutions."
Sanders' upcoming legislation would provide Treasury Secretary Jacob Lew 90 days to put together a list of financial institutions -- including commercial banks, investment banks, insurance companies and hedge funds -- that the secretary considers too big to fail, which Sanders defined as “any entity that has grown so large that its failure would have a catastrophic effect on the stability of either the financial system or the United States economy without substantial government assistance.”
Once that list is compiled, the Treasury Department would have one year from the time the legislation becomes law to break up the financial institutions identified by Lew.
“No single financial institution should be so large that its failure would cause catastrophic risk to millions of American jobs or to our nation’s economic wellbeing,” Sanders said Wednesday. “We need to break up these institutions because ... of the tremendous damage they have done to our economy.”
Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) have also teamed up to take on big banks, announcing last month that they are working together to produce bipartisan legislation to tackle the nation’s too-big-to-fail banks.
In 2008, Sanders voted against the $700 billion bank bailout, arguing that the bailout did "not address the issue that has taken us to where we are today, the concept of too big to fail."