Bernie Sanders unveils foundation-shattering Wall Street reform plans
Vows to break up Wall Street’s biggest banks; sweeping reform of credit ratings agencies
It’s not exactly a stretch to say that Sen. Bernie Sanders, I-VT, is not the biggest fan of Wall Street.
On Tuesday, Sanders again took on the Fed in a wide-ranging speech on Wall Street and the economy, but the Fed got off easy compared to the rest of Wall Street, especially the country’s biggest banks.
In his speech, Sanders detailed just how different life would be for the “too big to fail” banks under a Sanders administration. In fact, there would be no life for the “too big to fail” banks if Sanders is elected president, only death.
In the speech, Sanders said “if a bank is too big to fail, it is too big to exist.”
According to Sanders, in his first 100 days as President, he would order the secretary of the Treasury Department to establish a “too big to fail” list of “commercial banks, shadow banks and insurance companies whose failure would pose a catastrophic risk to the United States economy without a taxpayer bailout.”
After establishing that list, Sander said that his administration would “break up” those financial institutions “so that they no longer pose a grave threat” to the country’s economy.
“Greed, fraud, dishonesty and arrogance, these are the words that best describe the reality of Wall Street today,” Sanders said, according his prepared remarks.
“So, to those on Wall Street who may be listening today, let me be very clear,” Sanders continued. “Greed is not good. In fact, the greed of Wall Street and corporate America is destroying the fabric of our nation. And, here is a New Year’s Resolution that I will keep if elected president. If you do not end your greed, we will end it for you.”
Sanders credited President Obama for improving the economy in the wake of the financial crisis, but said that there is still a lot of “unfinished business” when it comes to reforming the country’s financial system.
“We will no longer tolerate an economy and a political system that has been rigged by Wall Street to benefit the wealthiest Americans in this country at the expense of everyone else,” Sanders said.
“Dodd-Frank should have broken up Citigroup and other ‘too big to fail’ banks into pieces,” Sanders said. “And that’s exactly what we need to do. And that’s what I commit to do as president.”
Sanders said that in 2008, the U.S. taxpayers bailed out Wall Street because they were told they were “too big to fail.”
But, according to Sanders, today, three out of the four largest financial institutions (JPMorgan Chase, Bank of America and Wells Fargo) are nearly 80% bigger than before “we bailed them out.”
According to Sanders, the six largest banks in this country issue more than two-thirds of all credit cards and more than 35% of all mortgages. Sanders said that those six banks control more than 95% of all financial derivatives and hold more than 40% of all bank deposits.
“Their assets are equivalent to nearly 60% of our GDP,” Sanders said. “Enough is enough.
“If a bank is too big to fail, it is too big to exist,” Sanders said. “When it comes to Wall Street reform that must be our bottom line. This is true not just from a risk perspective and the fear of another bailout. It is also true from the reality that a handful of huge financial institutions simply have too much economic and political power over this country.”
In Sanders' mind, the federal government failed in the aftermath of the crisis, and he said he has plans to fix that.
“Wall Street cannot continue to be an island unto itself, gambling trillions in risky financial instruments, making huge profits and assured that, if their schemes fail, the taxpayers will be there to bail them out,” Sanders said.
“The reality is that Congress doesn’t regulate Wall Street,” Sanders said. “Wall Street, its lobbyists and their billions of dollars regulate Congress. We must change that reality, and as president I will.”
Sanders said under his administration, the banks will not only be held responsible for their actions, but the executives that lead those banks will also be held responsible.
“Not one major Wall Street executive has been prosecuted for causing the near collapse of our entire economy,” Sanders said.
“That will change under my administration. ‘Equal Justice Under Law’ will not just be words engraved on the entrance of the Supreme Court,” Sanders said.
“It will be the standard that applies to Wall Street and all Americans,” Sanders continued. “Under my administration, Wall Street CEOs will no longer receive a get-out-of jail free card. Big banks will not be too big to fail. Big bankers will not be too big to jail.”
But it wasn’t just the Fed or the country’s biggest banks that Sanders placed in the crosshairs.
The credit ratings agencies are also one of Sanders’ targets for sweeping reform.
“We cannot have a safe and sound financial system if we cannot trust the credit agencies to accurately rate financial products,” Sanders said.
“And, the only way we can restore that trust is to make sure credit rating agencies cannot make a profit from Wall Street,” Sanders continued.
“Investors would not have bought the risky mortgage backed derivatives that led to the Great Recession if credit agencies did not give these worthless financial products triple-A ratings – ratings that they knew were bogus,” Sanders said. “And, the reason these risky financial schemes were given such favorable ratings is simple. Wall Street paid for them.”
Sanders said that under his administration, “for-profit” credit ratings agencies would be turned into “non-profit institutions” that are independent from Wall Street.
“No longer will Wall Street be able to pick and choose which credit agency will rate their products,” Sanders said.
“Yes. Wall Street has enormous economic and political power. Yes. Wall Street makes huge campaign contributions, they have thousands of lobbyists and they provide very generous speaking fees to those who go before them,” Sanders said.
“Yes. They have an endless supply of money. But we have something they don’t have. And that is that when millions of working families stand together, demanding fundamental changes in our financial system, we have the power to bring about that change,” Sanders continued.
“Yes, we can make our economy work for all Americans, not just a handful of wealthy speculators. And, now more than ever, that is exactly what we must do,” Sanders said.
“And so my message to you today is straightforward: If elected president, I will rein in Wall Street so they can’t crash our economy again,” Sanders said.
“Will they like me? No,” Sanders concluded. “Will they begin to play by the rules if I’m president? You better believe it.”
(Image above courtesy of Juli Hansen / Shutterstock.com)