Democratic presidential candidate made an historic pledge today by promising to breakup the same global U.S. banks that caused the 2007 recession, wiped out trillions in wealth for all Americans, and have been abusing their privileged status for generations.
In his speech today, Sanders said:
“If a bank is too big to fail, it is too big to exist,” Sanders will say, according to excerpts released by his campaign. “When it comes to Wall Street reform, that must be our bottom line.”
This is a long-overdue action that will create more competition, reduce the dangers of systemic market risk, and let banks specialize in a specific function (small business loans, mortgages, credit cards, etc.) as opposed to converting revenues from individuals into assets used in leveraged trades that benefit only a few.
Sander’s proposal (see video) is Glass-Steagall re-enacted again after the worse recession since the Great Depression.
And for those who say this is unnecessary, even the heads of the largest banks, as well as many Wall Street pros, say another recession, possibly linked to high-risk trading, is inevitable.
You will never hear this proposal for Wall Street reform from any Republican candidate. Even Hillary Clinton’s take on this topic is hedged so much that it is toothless.
Thinking Outside the Box to Get a Fiduciary Standard
While Sander’s chances to be the Democratic candidate seem less than Clinton’s, his fresh, honest public positions are long overdue. He is the ultimate outsider, so its unfortunate that so many Republican’s have been swayed to vote against their own economic self-interests by supporting candidates who will lower their standard of living by the oldest political trick in the book: divide-and-conquer by pitting one group of workers against another.
People who advocate for Wall Street reform are fighting the odds. While there is big money in politics thanks to Citizens United, there is also huge money from Wall Street pushing for the status quo. This means no changes as the banks continue to victimize their own customers and employees with impunity.
Advocates for fiduciary reform should also take note of Sander’s bold proposal. The real key to making the fiduciary standard a reality is to break up the banks. This will shock the Wall Street lobbyists and dissipate their power. Advocates of the fiduciary standard think they have a partial victory based on a partial adoption of the standard, but a partial adoption is a defeat. Wall Street thrives in regulations that have a gray area and are intentionally confusing. If there is a partial DOL fiduciary ruling, it won’t work for average investors.
Sander’s economic positions expand economic opportunities for all (except the most powerful top 1%), but manipulating fear and hatred of the media, liberals, Muslims, blacks…. is good business for the professional Republican establishment.
So if anything, Sanders’ proposal should make Wall Street more reactionary than it already is. It may also bring the global banks back into a reality that they don’t get a free ride on U.S. citizens forever.
