Small business forum adds Main Street voice to growing momentum for megabank limits
Today, small businesses owners from across the country added a Main Street voice to growing momentum for post-Dodd-Frank measures to end the era of “Too Big to Fail” banking in the lingering wake of the 2008 financial crisis and the Great Recession that followed.
At a D.C. policy forum organized by the Main Street Alliance, Senator Sherrod Brown (D-Ohio), FDIC Vice Chairman Thomas Hoenig, economist Simon Johnson, and a panel of small business owners and policy experts each spoke of the need for renewed attention to megabank limits in order to stabilize the financial system and support the Main Street economy.
“For too long, our nation’s policies have focused on expanding Wall Street at the expense of investing on Main Street,” said Senator Sherrod Brown (D-Ohio). “It’s time we end the taxpayer-funded subsidy that Wall Street megabanks receive as a result of their too-big-to-fail status. Instead, we should level the playing field for Main Street banks, credit unions, and small businesses by demanding that only megabanks pay for their risky practices.”
“The structure of our financial system has a tremendous effect on the strength and stability of the broader economy and its participants,” said FDIC Vice Chairman Thomas Hoenig. “I have called for reforming that structure by pulling back the government support the largest financial conglomerates receive in order to have a more stable, more innovative, more competitive financial industry that supports businesses of all sizes.”
Thursday’s forum built on months of increasing momentum for steps to restrain the scale and scope of “Too Big to Fail” banks. Federal regulators have proposed a set of new capital requirements for the biggest banks. Senators Sherrod Brown (D-Ohio) and David Vitter (R-La.) have introduced a bill that would further raise these requirements. Senators Elizabeth Warren (D-Mass.), John McCain (R-Ariz.), Maria Cantwell (D-Wash.) and Angus King (I-Maine) have introduced legislation to restore the Glass-Steagall wall between commercial banking and investment banking.
“Global megabanks are not working for small business – they are working for themselves in ways that actually make the financial system more dangerous,” said MIT’s Simon Johnson. “We need credit to become more stable and more reliably available to small firms. This requires limits on the scale and scope of the largest five bank holding companies – exactly as proposed by the 21st Century Glass-Steagall Act.”
“The current financial system just doesn’t work for Main Street small businesses of America, and yet we continually find our fortunes and futures subject to the whims of Big Banks who are deemed ‘Too Big to Fail,’” said Deb Field, owner of PaperJam Press in Portland, Oregon and a member of the national Steering Committee of the Main Street Alliance. “But the real fabric that holds our country together, Main Street small businesses, are being fed to the wolves. Whenever the big banks decide they don’t want to help support a local business anymore, they’re free to freeze our accounts, raise our interest rates, and do whatever they want to squeeze every last penny out of our pockets. Something needs to change now.”
“Wells Fargo told me I should be borrowing from friends and family,” said Geetha Jayaraman, owner of Grab Em Snacks, Basking Ridge, New Jersey. “The SBA told me I should look into crowd-funding. When even the SBA is suggesting crowd-funding, it’s evident the financial system isn’t working for small business.”
“As Wall Street’s share of the economy has grown, economic instability has increased and the real economy has suffered,” said Americans for Financial Reform Policy Director Marcus Stanley. “Thanks to deregulation, we’ve expanded the public safety net to far to many financial institutions and activities, including many that don’t benefit Main Street and even harm the broader economy. We need to address this with strong reforms like the Warren/McCain Glass-Steagall proposal.”