What does it mean, exactly, to "break up the banks".

I believe it is to spin off businesses into smaller more manageable banks that aren’t too big to fail.

Also it could mean that to take power away from the banking system to f- up people’s lives for profit.

Not so long ago there were restrictions on bank’s involvement in other lines of business, such as running brokerage houses and using savers funds for proprietary trading in risky investments. It would mean making banks not allowed to do that stuff now.

As @zenvelo says, it would involve [re] compartmentalizing what financial transactions a single business can be involved in.

It’s sad to me that the ‘Too Big To Fail’ banks came out of the financial crisis as big as ever due to government assistance, yet my two fastest growing regional banks were forced to fire-sale assets to meet the newly mandated federal government reserves.

I bank locally at two banks, in two different towns, in two different states. Both banks were expanding to the point that there would be convenient locations available for either bank, in either town. Today, the expansions have been reversed, and 25–30+ locations have been reduced to, maybe, 10.

If the federal government can do it to the little guys, why doesn’t some of that apply to the big banks, that created the problem?
“Break up the banks” essentially means restricting one company to controlling no more assets than what the system can comfortably afford to bail out. If a bank owns x, y & z and only has liquid assets to assure the stability of x & y, then they have to sell z. That’s what was done on the local levels, and as far as I know none of our banks received any bail-out money from the government.

We could always read what’s actually been written by the Sanders campaign, such as:

https://berniesanders.com/issues/reforming-wall-street/

@Zaku That link is not big on specifics. Here is cut and pasted from the actions:
“Introduced the “Too Big to Fail, Too Big to Exist Act,” which would break up the big banks and prohibit any too-big-to-fail institutions from accessing the Federal Reserve’s discount facilities or using insured deposits for risky activities.”

So he writes “break up the big banks”. But again, what does that mean?

@Rarebear It’s the same thing as when the government broke up the Bell System. Basically, breaking up the banks would mean taking banks that are currently one large company and dividing them up into several competing companies. So instead of JP Morgan Chase & Co. (which is the largest bank in the United States and the sixth largest bank in the world), you might end up with the Pierpont bank, the Morgan bank, the Stanley bank, the Sturgis bank, and the Chase bank (all of which would be separate companies expected to compete with one another or else face prosecution under the competition clause of US antitrust law).

Prompted by this question, I revisited the Bell System breakup, @JeSuisRickSpringfield, and found it a poor analogy. Bell had a complete monopoly, and the breakup was consensual. Neither is the case with the big banks.

@Rarebear The link mentions the name of the act, which can be looked up easily enough. Here’s a four-page version of it: http://www.sanders.senate.gov/download/tbtfleg?inline=file

@ibstubro I never said the Bell System breakup was completely analogous. It’s just another use of the same terminology and probably the source of Sanders’ rhetoric. Since @Rarebear was having trouble understanding what the words “break up the banks” mean, I figured another case where the same words were used might be helpful. And the “breaking up” part is completely analogous. In each case, it’s one company being separated into multiple competing companies. It’s just the surrounding circumstances that are different.

Bell triggered existing anti-monopoly laws and the breakup left us with about the same thing as we have with big banks today – a few, too-large-to-fail companies operating under market rules. The Baby Bells cannibalized each other and swallowed ATT, the parent.

Breaking up the banks would be a completely different game. Under existing laws, “monopoly” is a simple concept. “Too big” is completely subjective. Not only would “Too Big” have to be defined and a line drawn in the sand, but laws would have to be written to prevent the smaller companies from re-grouping again.
The current banking market is roughly equivalent to the phone market after the Bell breakup.
How do you tell “Pierpont bank, the Morgan bank, the Stanley bank, the Sturgis bank, and the Chase bank” that they can no longer merge with other banks?

@ibstubro The question was what the phrase means, not whether the plan would work.

Right. You have to clearly define the issue before you determine if there is a problem that needs to be fixed.

The question was _“What does it mean, exactly, to “break up the banks”, @JeSuisRickSpringfield.

“Break up the banks” is a simple enough concept, leaving us with the question, “What law, method or agency of the government would be used to coerce banks into permanently smaller units?”

The Bell monopoly was contrary to existing law, and Bell bowed to that. None of which applies to the current US banking system.
Once broken up, the Baby Bells were set loose as independent companies that grew and morphed and merged with each other and other companies. Breaking the 5 largest banks into 100 smaller banks would just result in new mega banks unless there were laws specifically guiding the banking industry.

@ibstubro But again, I never said that the government would use the same laws to break up the banks as they did to break up the Bell System. The Bell System was simply an example to explain the meaning of the phrase. The word “exactly” in the question doesn’t demand a method (though asking “How does Sanders intend to break up the banks?” would).

“break up the banks”

How does the Bell system breakup help explain the phrase, “break up the banks” better than, say, a Hershey Bar?

Break up the Banks is actually a neologism based on the old saying “Break up the Yankees”

seriously

The expression arose in the 1920s-1930s when the NY Yankees were so dominant in the American League that they won the World Series several years in a row – they beat everyone, and so handily, that the other teams felt they didn’t have a chance.

So there were cries to the commissioner of baseball to “Break up the Yankees” in order to give the other baseball teams a fighting chance.

@ibstubro Because a Hershey bar isn’t a corporation. But you seem to be putting way more stock into the comparison than I was. Maybe a Hershey bar could be just as good. It’s just not the example I chose because I wasn’t trying to make an analogy, especially not one that was perfect down to the tiniest atomic detail. It was just one sentence in a paragraph-length answer, and I never said that the two cases were similar in any other way than both involving one company being divided into more than one company.