Jon Hunstman: Wall Street’s Big Banks Are the Real Threat to Our Economy
Coddling big banks has been a bipartisan effort. TARP passed in the Bush administration, and President Obama appointed TARP architect Tim Geithner as his Treasury Secretary and reappointed Fed Chairman Ben "bailout" Bernanke. Mitt Romney's background is in the financial industry and he thinks the bailout was necessary; look for more bank bailing should he become President.
Jon Huntsman has taken a strong and intelligent stance against bank bailouts and proposed a concrete plan for eliminating too-big-to-fail banks and allowing community banks to flourish – they can be allowed to fold if they fail. If he can manage a third place or better showing in New Hampshire Tuesday, Americans may have a strong and experienced alternative on the ballot in November.
This is Huntsman's statement on too-big-to-fail banks:
Rebuilding our economy and restoring trust in our government will require a leader with the independence to implement bold reforms that take on the establishment, from Washington to Wall Street.
Thus far, however, we are the only campaign willing to confront honestly and directly one of the greatest threats to our long-term economic prosperity: Too-Big-To-Fail Wall Street banks.
In 2008, with the nation's economy in crisis, Washington and Wall Street offered American taxpayers a Sophie's Choice: spend hundreds of billions of dollars to save big banks from failure, or witness the collapse of our financial system and irreparable economic harm.
This was not only a betrayal of the public's trust; it was also a betrayal of our free market system, which only works when every business plays by the same rules.
Taxpayers were promised those bailouts would be a one-time, emergency measure. Yet today, we can already see the outlines of the next financial crisis and bailouts.
The six largest financial institutions are significantly bigger than they were in 2008, having been encouraged to snap up Bear Stearns and other competitors at bargain prices.
These banks now have assets worth over 66% of gross domestic product – at least $9.4 trillion – up from 20% of GDP in the 1990s.
Dodd-Frank, which purportedly designed to fix Too-Big-To-Fail, has only made things worse. Not only has it left us with larger banks, but it imposes massive new regulations and unreasonable compliance costs on smaller banks, which hurts small business lending.
President Obama has offered no real solutions other than to demonize capitalism, which may score political points but does nothing to solve the problem.
My opponents have also failed to take on Wall Street with substantive reforms. This includes – unsurprisingly – the establishment's preferred front-runner, Mitt Romney.
Governor Romney, who has accepted more Wall Street money than any other candidate, has offered no concrete solutions to protect taxpayers in the event of a future financial crisis.
The Obama and Romney plan simply appears to be to cross our fingers and hope no Too-Big-To-Fail banks fail on their watch – a stunning lack of leadership on such a critical economic issue.
As president, I will break up the big banks, end future taxpayer bailouts, and restore capitalist principles – competition and creative destruction – to our financial sector.
We will accomplish this by imposing a fee on banks whose size exceeds a certain percentage of GDP, proving them an incentive to slim down and localize.
Many of us can recall an earlier time when we had community banks that were actually a part of the community, instead of a faceless Wall Street entity. They sponsored our kids' baseball teams. You knew the president on a first name basis. Your small business or farm's credit was based as much on your reputation and character as your FICO score.
We need banks that are closer to our communities that, if mismanaged, are small and simple enough to fail – not financial public utilities.
The federal government cannot afford to wait until the next financial crisis is upon us to act, which will be too late and cost taxpayers too much.
Whether it is ending Too-Big-To-Fail, reforming the corrupted culture of Congress, or eliminating special interest preferences in our tax code, we need a president who is not indebted to the power brokers in Washington or on Wall Street.
We need a president who will take on the establishment from the outside, and deliver the bold reforms our country desperately needs. That is what I will continue to offer the American people.