CHARLOTTE, N.C. - Although the idea of breaking up the big banks - championed by a diverse group of economists, pundits, regulators and ex-bankers - has gained momentum in recent months, the leadership of both political parties has so far declined to embrace such a suggestion.
Yet in a series of interviews with delegates at both the Republican and Democratic national conventions, it appears the idea enjoys broad bipartisan support, suggesting there is an opportunity for a populist politician to make a cross-party appeal for a break-up.
Moreover, several observers argue that if the issue were brought to a vote in Congress, it almost certainly would pass.
While such an event is unlikely in the current political environment, the growing popularity of what was once a radical suggestion implies trouble for megabanks that have proven vulnerable to scandals and large errors over the past summer. More mistakes may shift public opinion even further against them - and potentially provoke a response from Washington.
"I don't have any doubt the American people favor it," said Rep. Brad Miller, D-N.C., a House sponsor of legislation that would establish strict limits on the size of banks. "They are not at all persuaded that banks need to be as big as they are for some economic function that they serve. And they think they have too much economic power, they think they have too much political power, and they don't want banks that are too big to fail."
Miller readily acknowledges, however, that support from voters will not be enough to ensure success on Capitol Hill, noting the reliance of members of Congress on campaign contributions from large banks.
"Leadership - certainly on the Republican side, but to some extent on the Democratic side as well - is not going to be in a big hurry to bring a vote like that to the floor," said Miller, who is not running for reelection this year. "It would take an event that changes the political circumstances. But given the circumstances now, the political environment now, I don't see it happening."
Still, it is worth noting how much public opinion has changed since 2008. When the financial crisis hit that year, the idea of breaking up the big banks was not part of the mainstream political discourse. That has changed over the last four years, so that if a 2008-style meltdown or perhaps even a smaller crisis were to occur, political conditions might be ripe for a major policy shift.
Such a rapid change has precedent. When Elizabeth Warren first suggested the idea of a consumer protection regulator for banks in 2007, few viewed it as politically feasible. But after the financial crisis, Democrats successfully pushed for the creation of the Consumer Financial Protection Bureau as part of the Dodd-Frank law in 2010.
Delegates at the Republican convention in Tampa, Fla., last week were generally more skeptical of breaking up the banks than their Democratic counterparts here in Charlotte.
"I think the financial world has been overregulated," said Dick Ackerman, a delegate to the Republican convention from Irvine, Calif., who noted that he has a son who works for Morgan Stanley. "I think coming in to break up the banks per se doesn't make any sense."
But some GOP delegates spoke in favor of the idea, while others suggested they could be persuaded by a politician who makes a strong free-market case that smaller banks would increase competition and end bailouts.
Sam Clovis, an alternate delegate from Sioux City, Iowa, said that today there is a massive concentration of power with just a few banks.
"The banks are nothing more than extensions of the government," he said. "I am all for competition."
David Harris, a New Mexico delegate who described himself as a member of the Tea Party, noted that the largest banks have only grown bigger in the last few years.
"Let them go away," he said. "The smaller banks would get bigger naturally."
Thomas O'Neill, a West Virginia delegate, was among the Republicans who seemed open to a conservative case for smaller banks, even though he is not yet sold.
O'Neill said that free markets work best when rules are applied evenly across the board, and to the extent there is a problem in the banking industry, it is that the rules are applied unevenly.
"Some players are allowed to act differently than others," he said, citing the government's decision in 2008 to let Lehman Brothers fail while other banks got bailouts.
Liz Martinez, a Republican delegate from Illinois, said that she could see either side of the argument over bank size.
"If you break them up, they will no longer be too large to fail," she said. "However, there is some security in having large banks."
At the Democratic convention, interviews found delegates who are uniformly dissatisfied with the nation's largest banks.
"They need tight regulation, and they need to be broken up," said Lauren Verdich, an Illinois delegate.
The only disagreement among Democratic delegates centered on whether the proper solution would entail a separation between commercial banking and investment banking, a limit on bank size, or some other remedy, such as better enforcement of antitrust laws.
"No company should have so much of any industry," said Maria Ehsan, a Democratic delegate from Washington state. "The bigger a company becomes, the less efficient it becomes."
Jacquie Helt, a Montana delegate who is state director of the Service Employees International Union, spoke in favor of establishing more state-owned banks. Today, only North Dakota has such a bank.
She also expressed openness to the idea of breaking up the big banks. "I work in organized labor. They don't want us to get too big. They call it racketeering," she said.
Democratic Sen. Sherrod Brown, who authored legislation to impose strict limits on bank deposits, liabilities and leverage, indicated in an interview Wednesday that he will keep pushing for the bill's passage.
"That legislation still matters, and you're seeing increasing support for it," he said.
In 2010, Brown's bill came to a vote in the Senate, and it failed by a 61-33 margin, with only one Republican voting in favor of the measure.
Since then, the view that America needs smaller, less complex banks has attracted a wider range of supporters in elite circles - from former Citigroup chief executive officer Sandy Weill to former Republican presidential candidate Jon Huntsman.
If there is another crisis, it will pit the growing ranks who would like to break up the big banks, who are applying pressure on politicians both from the top down and the bottom up, against the influence of the banks themselves.
"This doesn't come up for vote because leadership on both sides fear it could pass," Jaret Seiberg, financial services policy analyst with Guggenheim Securities, said in an email.
"If lawmakers ever got the chance to vote up or down on breaking up the banks, it would pass in landslide. Who wants to vote in favor of mega banks? Conservatives see it as a way to end too big to fail, while progressives worry about the economic clout of the mega banks. And the middle doesn't want to vote."
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