There will be a lot of talk about holding big banks and Wall Street to account in coming days, as the Senate takes up the question of how to overhaul a financial services industry that is currently defined by a toxic combination of blind greed, unsustainable speculation and “too-big-to-fail” threats not just to the economy but to the stability of this country’s democratic experiment.
Most of the measures of success or failure when it comes to regulating big banks, payday lenders, credit card sharks and the Federal Reserve will be made by Republicans who are taking their marching orders from Wall Street lobbyists and Democrats who are inclined toward compromises that will keep the corporate campaign cash flowing their way in a tough election season.
Who to trust?
How about someone who was complaining about the speculators before they crashed the economy in the fall of 2008?
How about someone who voted against the bank bailout?
How about someone who has demanded accountability from the Fed not just in recent years but across the past two decades?
How about someone who, as a lonely member of the House back in 1999, voted against deregulating the financial services industry in a manner that set the stage for the orgy of greed, the boom-and-bust economy and the predictable meltdowns?
How about Bernie Sanders?
What does the Vermont independent say?
He begins by arguing, correctly, that the great mass of Americans want a lot more than Republican talking points and Democratic compromises.
“Disgust at Wall Street is profound,” says Sanders. “The American people want us to change in a very profound way how Wall Street functions, and Congress must deliver.”
What’s the Sanders Standard profound change of how Wall Street functions?
The senator says the Senate should amend a tepid financial reform bill to:
1. Break Up Huge Banks
The four biggest U.S. banks -- Bank of America, Citigroup, JPMorgan Chase and Wells Fargo -- issue two-thirds of all credit cards, write half the mortgages and control nearly 40 percent of bank deposits in the United States. “We must break up these behemoths because of the incredible economic power they exert through their concentration of ownership,” Sanders said. “It is simply not acceptable that a small handful of giant financial entities can exert such enormous influence over the economic well-being of hundreds of millions of Americans.”
2. Make Wall Street Part of the Real American Economy
“With rampant unemployment and when small- and medium-size businesses are unable to obtain affordable credit, it is insane that our largest financial institutions continue to trade trillions in esoteric financial instruments which make Wall Street the largest gambling casino in the world,” Sanders said. Instead, he said, we need to create millions of new jobs by rebuilding our manufacturing base, transforming our energy system and addressing our transportation and infrastructure crisis. We need to make sure that businesses get the credit they need to expand and create employment.
3. Cap Credit Card Interest Rates
Millions of middle-class Americans who pay their bills on time are being charged interest rates of 30 percent or more. “That is not only obscene but, according to every major religion, immoral. Banks cannot be allowed to engage in usury and charge outrageous interest rates,” Sanders said. He will offer an amendment that would cap interest rates for private banks at the same level federal law allows for credit unions: 15 percent except under exceptional circumstances.
4. End Fed Secrecy
During the bailout, large financial institutions received trillions of dollars in near-zero-interest loans. “Who received those loans and under what terms? The Fed won’t say. Did some of them turn around and, in a mammoth welfare scam, invest that Fed money in government treasury bonds at 3 percent or 4 percent interest rates? The Fed isn’t telling. It’s time we had transparency at the Fed so that the American people know what our central bank is doing with taxpayer dollars,” Sanders said.
That’s the Sanders Standard.
It’s the right one to begin with.
Senators, be they Democrats or Republicans, should be expected to rise to it by backing the four amendments. This message goes especially to Wisconsin Democratic Sens. Russ Feingold and Herb Kohl. Feingold has been generally supportive of real reform; Kohl has been a more cautious player. Both need to step up and embrace the Sanders Standard.
But they should not stop there. Senators who are serious about reform should embrace specific proposals developed by top economists and analysts such as Rob Johnson, the former chief economist for the Senate Banking Committee; Robert Kuttner, the former chief investigator for the Senate Banking Committee; Dean Baker, the co-director of the Center for Economic and Policy Research; and former Secretary of Labor Robert Reich.
Under the auspices of the Agenda Project’s campaign to “Repair the Foundation of Our Economy,” these experts argue that eight specific elements must be included in financial reforms, else our economy remains at risk.
The debate over financial services reform will get rough, and complex at times. But the measure of real reform is easy.
Begin by meeting the Sanders Standard.
Then get serious about the Agenda Project proposals.
Do that, and the Senate is talking about real reform. Anything less and the Senate is just talking.