NEW YORK (TheStreet) -- Wells Fargo (WFC) - Get Report is an example of the problem America faces with "too big to fail" institutions, Rep. Brand Sherman (D-CA) said on Fox Business' "Cavuto: Coast to Coast" Thursday afternoon. 

His comments come after Wells Fargo CEO John Stumpf testified before Sherman and the rest of the House Financial Services Committee in a hearing that began this morning at 10 a.m. EDT on Capitol Hill. The hearing was related to the revelation that some of the bank's employees opened fraudulent accounts for customers to boost sales numbers.  

After the 2008 financial crisis, we learned that institutions like Wells Fargo are "too big not to bail out," Sherman said. 

We also learned that they're "too big to jail" because you can't prosecute a bank like Wells Fargo or its top executives because it would put a dent in the whole economy, he said. 

In addition, they're "too big to compete against," because they have a lower cost of capital than medium-sized banks since Wall Street figures if they get into trouble, then the majority of Sherman's colleagues will just bail them out, Sherman noted. "So the markets are smarter than any one congressman."

And now with the Wells Fargo scandal, we've learned that such institutions are also "too big to manage and too big to regulate," he said. 

Sherman believes that in order to fix the problem of the 'too big to fail' institutions, we need to break them up.

"We would be in a much better system if we had medium-sized banks, rather than eight giant banks controlling the system and endangering our economy," Sherman said.

Shares of Wells Fargo were lower in mid-afternoon trading on Thursday. 

(Wells Fargo is held in Jim Cramer's charitable trust Action Alerts PLUS. See all of Cramer's holdings with a free trial.)

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

TheStreet Ratings team rates Wells Fargo as a Buy with a ratings score of B. This is driven by a few notable strengths, which the team believes should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks the team covers.

You can view the full analysis from the report here: WFC

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