Skip to main content

House and Senate Revisit Ending "Too Big to Fail" Institutions
Apr 11, 2013

Rep. Brad Sherman (D-CA) and Sen. Bernie Sanders (I-VT) have reintroduced the “Too Big to Fail, Too Big to Exist Act,” in the House and Senate respectively. Under the legislation, any institution that is too big to fail will be broken up and reorganized to avoid more government bailouts and future risk to the economy. If passed, this legislation would require the Secretary of the Treasury to identify, then later break up, institutions that are deemed too big to fail to avoid the potential for a future government bailout and undue risk to our nation’s economy. “Too big to fail should be too big to exist,” said Congressman Sherman who has advocated this position since 2008. “Never again should a financial institution be able to demand a federal bailout. They claim; ‘if we go down, the economy is going down with us,’ but by breaking up these institutions long before they face a crisis, we ensure a healthy financial system where medium sized institutions can compete in the free market.” Sherman continued, “No longer should giant financial institutions be able to get low-cost funds by telling large depositories that even if the institution is mismanaged and faces financial default, by virtue of its sheer size it will be able to obtain a bailout from the federal government. Every financial institution should compete for funds based on the soundness of its balance sheet, and no financial institution should be able to claim that there is a special federal safety net available to its investors because of the institution’s sheer size.” “In my view, no single financial institution should have holdings so extensive that its failure could send the world economy into crisis,” Senator Sanders said. “At the very least, no institution, no CEO in America should be above the law. If an institution is too big to fail, it is too big to exist.” Richard Fisher, President of the Federal Reserve Bank of Dallas, argued that when markets presume a systemically important institution has implicit government backing, access to capital is easier. A recent study by International Monetary Fund researchers showed a potential advantage of these firms as high as 80 basis points (0.8 percent). Carrying out that estimation, Bloomberg News asserts taxpayers could be creating a subsidy of $83 billion dollars annually. This legislation would require the Secretary of the Treasury to submit to Congress a list of all commercial banks, investment banks, hedge funds, and insurance companies that the Secretary believes have become too big to fail. Those entities deemed too large would then be broken up in a managed process of reorganization, so a single failure would no longer cause a catastrophic effect on the United States or global economy without a taxpayer bailout. The Senate recently passed an amendment unanimously to its budget resolution to end subsidies or funding advantages for institutions over $500 billion in assets. Unfortunately, the Budget is still a resolution, not law. “Too Big to Fail” refers to 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.”
Apr 11, 2013
CFPB Reports Trends In Financial Assistance

The latest developments from this study reveal that most consumers have exited the payment assistance they received at the start of the pandemic.

Analysis and Data
Jul 14, 2021
CFPB Orders GreenSky To Refund $9M In Unauthorized Loans

The consent order requires GreenSky to refund or cancel up to $9 million in loans for the customers harmed by this illegal conduct.

Regulation and Compliance
Jul 13, 2021
CFPB Warns Landlords And Consumer Reporting Agencies To Report Accurate Rental Information

Inaccurate rental or eviction information can unfairly block families and individuals from safe, affordable housing.

Regulation and Compliance
Jul 01, 2021
FHFA Mandates Quarterly Fair Lending Reports

FHFA issued orders for all enterprises to submit quarterly Fair Lending Reports with data and information to improve the FHFA’s capabilities. 

Regulation and Compliance
Jul 01, 2021
FHFA Follows CFPB To Protect Borrowers Once COVID-19 Foreclosure And Eviction Moratoriums End

The Federal Housing Finance Agency made it clear that Fannie Mae and Freddie Mac servicers are not permitted to make first notice or filing for foreclosure that would be prohibited by the CFPB protections for borrowers affected by COVID-19.

Regulation and Compliance
Jun 30, 2021
CFPB Finds Evidence Of Redlining And Deceptive Acts In 2020

Enforcement actions resulted in more than $124 million in consumer remediation and civil money penalties in 2020

Regulation and Compliance
Jun 29, 2021