Democratic presidential candidate Bernie Sanders traveled to the heart of the nation’s financial sector Tuesday to issue a scathing denunciation of Wall Street and repeat his call to break up the biggest banks.
“The greed of Wall Street and corporate America is destroying the very fabric of our nation. And here is a New Year’s resolution that I will keep if elected president, and that is, if Wall Street does not end its greed, we will end it for them,” he told a wildly enthusiastic crowd of several hundred people at New York’s Town Hall. He added: “Our goal must be to create a financial system and an economy that works for all of our people, not just a handful of billionaires.”
The Vermont senator proposed a series of new laws that would go far beyond the regulatory regime that emerged from the financial crisis of 2008, including a major overhaul of the Federal Reserve:
“We need to structurally reform the Federal Reserve to make it a more democratic institution responsive to the needs of ordinary Americans, not just billionaires on Wall Street.
“When Wall Street was on the verge of collapse, Federal Reserve acted with a fierce sense of urgency to save the financial system. We need the Fed to act with that same boldness today, that fierce sense of urgency to combat unemployment and low wages.”
Since 1977, the Fed has been mandated by Congress to pursue a “dual mandate” of maximum employment and low inflation, but Fed officials are often criticized for pursuing one at the expense of the other.
Sanders also attacked the practice of allowing the CEOs of major banks to serve on the boards of the New York Fed.
“As president I will not allow the foxes to be guarding the hen house at the Fed,” he said.
Sanders repeated his calls to break up the biggest banks. He noted they have gotten considerably larger than they were in 2008, when federal officials were forced to bail out several large financial institutions deemed “too big to fail.”
The solution is a new version of Glass-Steagall, the Depression-era law that barred commercial banks from engaging in certain kinds of speculative activities, he said.
Former Secretary of State Hillary Clinton, Sanders’ main rival in the race for the Democratic nomination, has said that Glass-Steagall would not have prevented the financial crisis, because many of the riskiest activities were performed by non-banks such as Lehman Brothers and Countrywide Financial.
Instead of breaking up big banks, regulators need to focus on so-called “shadow banks” such as hedge funds and insurance companies that perform many of the same functions, Clinton has said.
Sanders took issue with that Tuesday, saying, “Shadow banks did gamble recklessly, but where did that money come from? It came from the federally insured bank deposits of big commercial banks — something that would have been banned under the Glass-Steagall Act.”
Sanders also appeared to aim a dart at a recent remark made by Clinton. At the Dec. 19 Democratic debate, Clinton was asked whether corporate America should love her.
“Everyone should,” she replied.
On Tuesday, Sanders generated laughs when he asked the crowd, “Will the folks on Wall Street like me? No. Will they begin to play by the rules if I am president? You better believe it.”