Congress Warned Of Breaking Up Big Firms (JPM, GS)

Financial Services giants Goldman Sachs (NYSE: GS) and JPMorgan Chase (NYSE: JPM) warned the U.S. House of Representatives Financial Services Committee not to go ahead with the big bank break up. They urge that such break up could lead to long-term damage to the U.S. economy.

The Financial Services Forum said that size alone does not make firms risky but over-concentration in specific markets raises levels of risk. These large firms can make bigger loans, offer customers more products and services and achieve greater geographic reach.

U.S. House of Representatives Financial Services Committee will debate a bill that would give the government far-reaching powers to regulate and restructure large financial firms whose failure could undermine the broader financial system and the economy.

The Senate Banking Committee has tentatively scheduled a working session for Thursday on similar legislation, introduced last week by committee Chairman Christopher Dodd.

Results of both these debates are not expected until 2010 and are expected to continue for sometime.

Democratic Representative Paul Kanjorski, chairman of the House capital markets subcommittee, is expected to offer an amendment that would try to prevent firms from getting "too big to fail" in the first place.

All actions on breaking up will take place only after a couple of years from now.