BREAKING UP THE TOO-BIG-TO-FAIL, TOO-BIG-TO-MANAGE, TOO-BIG-TO-JAIL
FIRMS BEFORE THEY BREAK US
While the vast majority of our financial system works quite well, a handful of too-big-tofail,
too-big-to-manage, and too-big-to-jail megabanks continue to pose an enormous
risks: to our financial system, the economy, and American families.
As President, Governor O’Malley will work tirelessly to eliminate the unique danger
posed by too-big-to-fail banks, by making the following structural reforms.

Separate Risky Investment Banking from Ordinary Commercial Banking

For 70 years, the 1933 Glass-Steagall Act kept the U.S. economy safe from major
financial crises by requiring commercial banks to be separate from investment banks to
prevent them from putting everyday Americans’ deposits at risk. If Glass-Steagall hadn’t
been repealed in 1999, the financial crisis will likely have been far less severe.

Governor O’Malley will:

• Immediately Reinstate Glass-Steagall. The Volcker Rule, sometimes referred to as
“Glass-Steagall Lite,” is excessively complex, providing too many opportunities for
banks to exploit loopholes and ambiguities. O’Malley will introduce legislation to
once again separate traditional banks from riskier financial services, while updating
protections to account for new banking activities and prevent the new rules from
being watered down. This will be one of his top priorities.

End “Too Big to Fail”

Five megabanks still control half of the financial industry’s $15 trillion in assets. The
largest banks should be subject to strict size limits to prevent this small number of toobig-
to-fail financial institutions from threatening our economy.

Governor O’Malley will:

• Right-Size Big Banks Using Living Wills. Although major banks are required to
produce living wills under Dodd-Frank, they have resisted compliance. The FDIC
found that the banks’ plan are “not credible,” and the banks continue to drag their
feet without fixing them. If banks cannot produce a living will that credibly sets
forth a detailed plan on how they would be resolved in bankruptcy without causing a
crash of the financial system and without any bail outs, O’Malley will require the Fed
to take remedial action to make the bank smaller and less dangerous to our families,
workers, financial system, and entire economy.

• Mandate Higher Capital Requirements for Big Banks. Higher capital
requirements are a straightforward, effective, and fair way to make the financial
system significantly safer. In addition to requiring banks to fund themselves with
equity instead of risky debt, they give regulators more leeway in the event of a crisis
– without posing additional burdens on smaller banks. O’Malley will strengthen
capital reserve requirements for the largest banks, requiring institutions with more
than $500 billion in assets to have capital reserves of not less than 15 percent.