Target: Jack Lew, United States Secretary of Treasury
Goal: Demand that banks declared “too big to fail” be prevented from growing even bigger, and ensure that their defaults result in bankruptcy rather than taxpayer-funded bailouts
Many hoped that the financial crash of 2008, and the unpopular taxpayer bailout of the banks responsible, would lead to more sensible regulation of the financial sector. While there have been some half-hearted attempts at regulation, little has been done to prevent future calamity. Many shareholders are convinced additional bailout money would be made available, therefore banks have done little to ensure their sustainability. Declared “too big to fail,” America’s most powerful banks are even bigger now than they were before the start of the recession.
According to CNN, between 2008-09 the Treasury Department provided more than $200 billion in investments to dozens of banks struggling to stay afloat. Banks were later required to come up with plans to ensure they could follow through with bankruptcy without sinking the larger economy, should they fail in the future. Yet the “living wills” created by many major banks would do little to prevent serious harm to the economy in the event of another meltdown, according to financial regulators. Common Dreams reports that taxpayers would most likely be forced to save these colossal banks from having to file bankruptcy, yet again.
The heart of the issue seems to be that the collapse of major banks would send America’s economy into a tailspin. Why, then, have these institutions been allowed to merge and grow even more gluttonous? Senator Elizabeth Warren, well-known for her consumer advocacy work, spoke about the issue at an event organized by Americans for Financial Reform and the Roosevelt Institute. “Today, the four biggest banks are 30% larger than they were five years ago,” she said. “And the five largest banks now hold more than half of the total banking assets in the country. One study earlier this year showed that the Too Big to Fail status is giving the 10 biggest U.S. banks an annual taxpayer subsidy of $83 billion.”
Something must be done to prevent banks’ private failures from increasing the suffering of average Americans. Demand improved regulation of U.S. banks to prevent further mergers and to ensure that their failure to remain solvent would lead to bankruptcy and dismantling rather than another bailout.
Dear Secretary Lew,
While the Dodd-Frank Wall Street Reform and Consumer Protection Act was intended to prevent another economic crisis should major banks face collapse, little has gone as planned. According to Common Dreams, the Governors of the Federal Reserve System and the Board of Directors of the Federal Deposit Insurance Corporation found that the mandated “living wills” prepared by eleven major banks are inadequate to protect consumers and the broader economy. In fact, the nation’s largest banks are now nearly a third bigger than they were before the recession began.
I urge you to treat this issue as your top priority. Taxpayers will not stomach the further bailout of these irresponsible banks. Help truly protect the American economy: create and enforce regulations that prevent these banks from continuing to merge and expand, and to ensure that they would be forced to dismantle and file bankruptcy should they fail.
[Your Name Here]
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