Warning that the White House was sewing the seeds of future bailouts, a top economic adviser on Thursday criticized the administration for clinging to the notion that some companies are “too big to fail.” Former Federal Reserve Chairman Paul Volcker said the expectation is being created that giant firms will enjoy government backing in tough times. In testimony prepared for a congressional committee, Volker distanced himself from that approach for non-bank behemoths like the insurance company, American International Group. Senator Sanders would go further. He has called for the breakup of big banks and other businesses so big that their failure would drag down the economy. “If an institution is ‘too big to fail,’ it is too big to exist.” Sanders said.
“In an orderly fashion, we must begin to break up big banks like Citigroup, Bank of America, and JP Morgan Chase; and insurance companies like AIG, so that taxpayers will not have to bail them out again if they fail,” the senator added.
Sanders also has proposed:
- A Financial Product Safety Commission to prevent big banks and other lenders from ripping off the American people by selling them virtually worthless financial products. Such a commission was recently proposed by President Obama, and Sanders is cosponsored the legislation to establish this new agency.
- A serious investigation into the collapse of Wall Street. The American people have a right to know how this financial crisis happened and what we can do to make sure that it never occurs again. And, we need to hold those Wall Street CEOs who caused this crisis accountable and throw those who acted illegally in jail. No one should be above the law – not even Wall Street executive who are worth hundreds of millions.
- A national usury law to cap credit card interest rates and fees. Today, more than a quarter of all credit card holders in this country are paying interest rates of more than 20 percent. I believe that when credit card companies charge 25 or 30 percent interest rates they are not engaged in the business of making credit available to their customers. They are involved in extortion and loan sharking.
- Stoping speculators on Wall Street from manipulating the price of gasoline, heating oil, and other commodities. Right now, there is mounting evidence that the volatility in oil and gas prices that we have seen over the last few years have little to do with supply and demand and everything to do with excessive speculation by some of the same Wall Street firms that received the largest taxpayer bailout in the history of the world.
“Unless Congress takes swift actions to reform Wall Street, making sure that the financial sector is used as a means to grow the productive economy instead of enriching wealthy speculators, our country will continue to hemorrhage jobs, more small businesses and factories will close their doors, and more middle-class Americans will slip into poverty. We cannot allow that to happen,” Sanders said.