Bernie Sanders has promised to break up Too Big To Fail institutions and outlined how he will do it.
This afternoon, presidential candidate Bernie Sanders delivered a major address on his plan to break up Too Big To Fail Wall Street institutions.
Beginning his remarks with “Here’s a New Year’s resolution that I will keep if I am elected president: If Wall Street does not end its greed, we will end it for them.”
In his speech, Sanders noted that three of the four largest banks—JP Morgan Chase, Bank of America and Wells Fargo—are nearly 80 percent bigger than they were prior to the 2008 collapse. He noted the assets of the 6 largest banks in the nation issue more than 2/3 of all credit cards and more than 35 percent of all mortgages, control more than 95 percent of all financial derivatives and hold more than 40 percent of all bank deposits. He stated that their assets today are nearly 60 percent of the GDP, giving them huge economic and political power over the country.
Sanders promised that if elected, in his first 100 days, he will “require the Secretary of the Treasury 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. Within one year, my administration will break these institutions up so they no longer pose a grave threat to the economy.”
He went on to say his administration will reinstate a 21st century Glass Steagall Act to clearly separate commercial banking, investment banking and insurance services.
He took a shot at rival candidate Hillary Clinton and her statement that she went to Wall Street and told them to “cut it out,” saying, “In my view, establishment politicians are the ones who need to cut it out.”
He cited her comment that Glass Steagall would not have prevented the financial crisis because shadow banks like AIG and Lehman Brothers, not big commercial banks, were the real culprits. Sanders proclaimed that she was wrong and explained that the money they played fast and loose with came from big commercial banks that were backed by the FDIC and had Glass Steagall been in effect, those practices would have been banned.
He also attacked Clinton’s plan to impose more fees and regulations on the large institutions as an invitation for more watering down of already weak strictures imposed on Wall Street.
He noted the average American citizen can face prison time for a small amount of marijuana and yet, the CEOs of Wall Street who caused people to lose their life savings, their homes and their employment faced no punishment whatsoever. He promised that in a Sanders administration, that will change.
He listed a shocking number of statistics of fines and settlements paid by Wall Street since 2009: a total of $204 billion in fines paid out for offenses, including Bank of American paying $16 billion for misleading investors about the risk in mortgage backed securities, JP Morgan Chase paying $13 billion for knowingly selling securities made up of low quality mortgages to Fannie Mae and Freddie Mac. This last is in direct contradiction to the GOP argument that it wasn’t the banks, but the activities of Fannie Mae and Freddie Mac that caused the housing meltdown.
The list of offenses including Wachovia, which was purchased by Bank of America, acting as a money launderer for Mexican cocaine cartels and JP Morgan foreclosing on 4,000 military families in violation of federal law is sickening and illustrates the pressing need for reform and for prosecution of those who engaged in clearly illegal activities.
The speech is far ranging and includes how he will change the system to prevent the continued abuses, including ending the 20-30 percent interest rates imposed by banks on credit card customers and the $4-5 ATM fees regularly charged to banking customers to withdraw their own money. He also went after payday loan companies that prey on low-income communities and put forward his idea about allowing Post Office locations to engage in basic banking services.
There are those who ask what will happen if the banks are broken up and fear that doing so will cause damage to the economy by the loss of banking jobs. To those people, I say this: no jobs will be lost. We will still need tellers and bank managers and loan officers. It is just that once the banks are broken up, the American taxpayer will no longer be on the hook for the excesses of Wall Street because the risky activities will no longer be covered under the Federal Deposit Insurance Agency. No one is saying investment banks can’t take risks. Bernie is just saying they can’t do it with our money.
You can watch the entire speech here. No matter which candidate you favor, this is a speech that demands your attention.
Ann Werner is the author of thrillers and other things.
Visit her at Ann Werner on the Web