US Democratic presidential candidate Bernie Sanders, who has made reining in Wall Street a top campaign theme, warned on 5 January that financial-sector greed of Wall Street and corporate America is destroying the very fabric of our nation. Sanders delivered a speech in New York in which he detailed his plan for Wall Street reform.
The US senator from Vermont is challenging front-runner Hillary Clinton, a former US senator from New York, and former Maryland Governor Martin OMalley, for the Democratic nomination to run for president in November 2016. If a bank is too big to fail, it is too big to exist, he said.
Sanders and Clinton have tussled over the best way to curb the risky behaviour on Wall Street that caused the 2008 financial crisis and triggered the worst US economic slump since the Great Depression.
Sanders, who is popular with the Democratic Partys populist wing, pledged to create a 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, within the first 100 days of his administration.
Within one year, my administration will break these institutions up so that they no longer pose a grave threat to the economy. And together, we will reinstate a 21st century Glass-Steagall Act to clearly separate commercial banking, investment banking and insurance services, he added.
The Glass-Steagall Act is a Depression-era law, that Sanders has championed along with Democratic Senator Elizabeth Warren of Massachusetts, that prohibited commercial banks from engaging in investment banking activities. Sanders said the law would also target shadow banks.
Clinton has endorsed an approach that would break up large banks that take excessive risks. She also believes that reinstating Glass-Steagall would not address the types of institutions that have risen since the law was written in the 1930s. Glass-Steagalls main provisions were repealed in 1999 during the presidency of her husband, Bill Clinton.
Sanders criticised Clintons plan saying it does not provide the kind of change necessary to make a difference. My opponent says that as senator she told bankers to cut it out and end their destructive behaviour. But in my view, establishment politicians are the ones who need to cut it out.
Sanders also said he would restructure the Federal Reserve if he is elected in November. He believes the Federal Reserve, the US central bank, should not pay financial institutions interest for the money they keep at the Fed and that such institutions should instead pay the Fed a fee. He also said he would bar financial industry executives from serving on the presidentially-appointed Fed board.
