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Time to break up Citibank?
America's largest banks are so big they put the whole financial system at risk, argues Alan Greenspan and others
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ormer Fed chairmen Paul Volcker and Alan Greenspan are part of a growing chorus in Washington saying the government should consider breaking up enormous banks. Members of Congress are trying to harness outrage over Wall Street bailouts and bonuses to push through a plan letting regulators preemptively break up financial institutions so large that their collapse could endanger the whole financial system. Are the days of giant banks numbered?

The left and right agree -- break them up: A bill introduced by left-wing Vermont senator Bernie Sanders would require Treasury to "break up too-big financial institutions within one year," says William Grieder in The Nation. There's a building political consensus behind it. "When the socialist from Vermont [agrees with] the right-wing" Greenspan, "can Barack Obama be far behind?"
"Why not tax Wall Street?"

Let big banks fail—don't break them up: Size isn't the problem, says Jaime Dimon in The Washington Post. Corporations and governments depend on the massive lending capabilities of the world's largest banks. Instead of imposing "artificial limits" on size, why not create smart regulations "to allow for the orderly failure of" big banks?
"Banks should be allowed to expand -- and fail"

Congress might do it to score points with voters: Next year, Democrats will enter the midterm elections "with little to show for their time in power," says David Reilly at Bloomberg. Wall Street's "huge profits" could make banks an inviting "political target"—particularly if the Dems fail to pass a health care bill. How better to "deflect populist anger than to collect a big-bank scalp?"
"JP Morgan may hear break-up talk in health debate"

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