Sen. Bernie Sanders (I-VT), who won last month’s New Hampshire Democratic primary by the largest margin since John F. Kennedy, has centered his presidential campaign around the theme of economic inequality and decrying the actions of Wall Street and “the billionaire class.”

S. 1206 — the Too Big To Fail, Too Big To Exist Act — is one of Sanders’ main bills in this Congress confronting the financial sector. It aims to address a major issue of the 2008 financial crash, when much of the $700 million in taxpayer funds used for the Troubled Asset Relief Program (TARP) went to some of the largest corporations and financial entities in the country. In the view of Sanders and others, many of these groups were rewarded for contributing to the crash itself — including Bank of America, Citigroup, JP Morgan Chase, Wells Fargo, Goldman Sachs, and Morgan Stanley.

Too big to fail

The logic behind TARP, supported by most economists, was that these firms were so large that if they went bankrupt or became insolvent, the domino effect would drag along the entire economic system into collapse. This argument became popularly known as “too big to fail” and sparked much public outcry among those decrying the practice as “welfare for the rich.”

Too big to exist

Sanders’ bill would direct the Financial Stability Oversight Council (FSOC) to create a list of banks deemed too big to fail. Within a year, the Secretary of the Treasury — currently Jack Lew — would be required to break up entities on the list. The FSOC currently pegs that threshold at $50 billion in assets, which means that as many as 38 banks would have to be broken up into smaller companies. In a statement introducing the bill, Sanders said the initial list would include at least eight banks.

“Today… three out of the four largest financial institutions in this country — JP Morgan Chase, Bank of America and Wells Fargo — are 80 percent larger than they were on Sept. 30, 2007, a year before the taxpayers of this country bailed them out,” Sanders said. “If any of these financial institutions were to fail again, the taxpayers of this country would be on the hook for another bailout, perhaps even larger than the last one. We must not allow that to happen. No single financial institution should be so large that its failure would cause catastrophic risk to millions of Americans or to our nation’s economic well-being.”

Sanders has introduced this legislation in previous sessions of Congress, but it’s gotten nowhere. In addition to the concerns among Republicans that Sanders’ bill (and his ideology in general) constitutes an anti-business and anti-success mentality, even among Sanders’ fellow Democrats his bill has no cosponsors, not even such Wall Street crusaders as Sen. Elizabeth Warren (D-MA). Most Democrats at this time are focusing less on increased regulations and more on defending the Wall Street reforms already put in place by the Dodd-Frank law, which itself barely passed in 2010 and is under constant attack and repeal threats from Republicans.

Plus it faces logistical issues even in the unlikely chances of passage. As American Banker pointed out, four of the seven Federal Reserve governors would need to go along with such a plan, according to rules set forth in Dodd-Frank. “If the current Fed board thought the big banks needed to be broken up, it would be doing so already. Moreover, while Sanders could fill the two current vacant seats on the Fed board, the other five have long terms that extend until 2022 at the earliest,” they write. “That’s a long time to wait to gather the votes necessary for Sanders to implement his plan.”

Sanders’ bill has been referred to the Senate Banking, Housing, and Urban Affairs Committee. An identical bill was filed in the House by Rep. Brad Sherman (D-CA30) as H.R. 2600 and has one co-sponsor, Rep. Alan Grayson (D-FL9). It has been referred to the House Financial Services Committee.