Editorial: Sanders score shows populist's pragmatism

Burlington Free Press

The passage of Sen. Bernie Sanders' amendment calling for auditing how the Federal Reserve handled the bank bailout shows the growing pragmatism of the passionate populist that allows him to be an effective player in the upper house.

The yearlong path to the amendment's passage reflects a different style for Sanders, an independent often described as socialist, and definitely on the far left edge of the congressional mainstream. That the amendment passed 96-0 puts Sanders in the unlikely role of one to bridge the deep, bipartisan divide that prevails in Congress.

One key to success in politics is choosing your battles. Sanders chose an issue that would have cast opponents as shielding big banks from public scrutiny.

The Sanders amendment is a compromise that vastly improves on the senator's original proposal to give Congress broader powers to audit the Fed. The bill focuses narrowly on bringing transparency to how the central bank doled out $1 trillion in emergency loans to major financial firms to stave off a credit collapse in 2008.

Giving Congress broader powers over the Fed would have compromised the central bank's ability to fine-tune its policy or react quickly to market conditions. Having senators looking over the shoulder of the Fed chairman would further politicize the conduct of the central bank's ordinary business.

Yet the financial industry in the fall of 2008 was anything but ordinary. Given the extraordinary circumstances and the amounts of taxpayer-backed money being tossed around, questions about the Federal Reserve's conduct of the bailout call for some answers.

The bailout money took time to trickle into the credit markets as some institutions were seen using the money to shore up their balance sheets. Then there's the worry that some of the bailout money went to shore up compensation for executives.

In his speech in the Senate calling for the amendment's passage, Sanders nailed the need for more transparency in how the Fed handled the bailout:

"Why was Lloyd Blankfein, the CEO of Goldman Sachs, invited to the New York Federal Reserve to meet with federal officials in September of 2008 to determine whether AIG would be bailed out or allowed to go bankrupt? I wasn't invited to that meeting. Other senators were not invited to that meeting. Lloyd Blankfein was invited to that meeting."

The bailout funds ultimately helped Goldman Sachs recover some of its investments with AIG.

The people deserve to know their money was put to good use and have their suspicions allayed about backroom deals benefiting the too-big-to-fail banks. Sanders crafted an amendment that addresses those concerns and displayed the political maturity to navigate the measure through roiling partisan waters to passage.