George Will and I don’t agree on much. We’ve shared many a spirited debate over the years on ABC’s “This Week.” But on one of the key issues of our time — how to save our economy and our democracy from the reign of the big banks — it’s time for the Obama administration to listen to George Will.
In his Sunday column, “A badly needed breakup,” Will makes the conservative case for a common-sense principle: financial institutions that are Too Big to Fail are also Too Big to Exist. Will’s full-throated call to arms is welcome, and his conclusion echoes that of countless occupiers, tea partiers, and Americans of all stripes. Here’s hoping, for the sake of the republic, that Will can bring more of his fellow conservatives along with him.
As Will notes, over two-thirds of the banking industry’s assets are now in a dozen banks with between $250 billion and $2.3 trillion to their names. Just five institutions have fully half of the industry’s assets. “There is no convincing consensus about a correlation between a bank’s size and supposed efficiencies of scale,” writes Will, “and any efficiencies must be weighed against management inefficiencies associated with complexity and opacity.”
Of course, I don’t agree with all of Will’s argument, which includes a condemnation of the auto rescue and a shot at what he calls an “improvident safety net.” But he’s exactly right to say that “By breaking up the biggest banks, conservatives will not be putting asunder what the free market has joined together.” As Will notes, there’s nothing natural about the outsized advantages currently benefiting our big banks. They’re fruits of a crony capitalism that should concern Americans across the political spectrum. The sooner we vanquish the myth that the “free market” “chose” mega-bank domination, the sooner we can build the multi-partisan coalition necessary to take them on.
Will’s column comes at an important moment. As he notes, progressive Democratic Sen. Sherrod Brown (who’s approvingly quoted in Will’s column) and his GOP colleague David Vitter introduced — and the Senate unanimously passed — language requiring a Government Accountability Office investigation regarding whether big banks derive an “economic benefit” over competitors. Meanwhile, the end of Tim Geithner’s tenure at Treasury should prompt a reappraisal of the kid gloves with which the administration has handled the big banks.
Writing in the Financial Times last week, former TARP inspector-general Neil Barofsky sounded an alarm: “The US faces a two-tiered system of justice that, if left unchecked by the incoming Treasury and regulatory teams, all but assures more excessive risk-taking, more crime and more crises.” In Barofsky’s assessment, the Obama/Geithner Treasury Department “made the preservation of the largest banks, no matter the consequences, a top priority of the US government.” Meanwhile, despite rampant and well-established criminality, bankers have eluded criminal accountability. As some of us have observed, Too Big to Fail became Too Big to Jail. That’s not a legacy we can afford to continue.
Fortunately, there are alternatives. As The Nation’s William Greider has noted, a raft of great proposals to curb the power of the big banks were proposed but ultimately defeated on the way to passage of Dodd-Frank. These proposals divided Senate Democrats. If grassroots progressives, policy experts and conscientious conservatives got behind them, we’d be well on our way to getting a critical mass in Congress.
And not all reforms have to start in Washington. As Barbara Dudley explained in The Nation’s special “Reimagining Capitalism” issue, the state-owned Bank of North Dakota offers an inspired example of progressive federalism, one which deserves imitation in statehouses across the country.
I don’t expect George Will to join the call for state-owned banks. But I’m glad he’s calling for Washington to stop coddling the big banks, and start shrinking them. I hope Will only gets louder on the issue. And for once, I hope the president is listening to him.