WASHINGTON – Sen. Bernie Sanders, who has a long history of standing up to Wall Street, on Thursday pressed for critical reforms that he said must include breaking up of too-big-to-fail banks and restoring the Glass-Steagall Act, the 1930s law which separated commercial and investment banking.
“Given the image of big banks today, it is easy now to take on Wall Street. I was there when it was not so popular,” Sanders said.
Sanders this year introduced legislation to break up too-big-to-fail financial institutions. He also is a co-sponsor of legislation by Sen. Elizabeth Warren (D-Mass.) to reinstate Glass-Steagall. As a member of the House Financial Services Committee, Sanders fought the push to deregulate Wall Street by then-Treasury Secretaries Lawrence Summers and Robert Rubin and former Federal Reserve Chairman Alan Greenspan. In 1999, Sanders was one of only 57 Members of the House of Representatives who voted against the Gramm-Leach-Bliley Act that repealed Glass-Steagall.
“I was proud to lead the fight in the House against repealing the Glass-Steagall Act. I predicted then that such a massive deregulation of the financial services industry would seriously harm the economy. I would give anything to have been proven wrong about this, but unfortunately what happened to the economy during the financial collapse of 2008 was even worse than I predicted,” Sanders said.
During the House floor debate, Sanders warned that the measure “will lead to fewer banks and financial service providers; increased charges and fees for individual consumers and small businesses; diminished credit for rural America; and taxpayer exposure to potential losses should a financial conglomerate fail. It will lead to more mega-mergers; a small number of corporations dominating the financial service industry; and further concentration of economic power in our country.”
In the Senate, Sanders in 2009 voted against the bailout of the biggest Wall Street financial institutions whose greed, recklessness and illegal behavior had plunged the nation’s economy into a terrible recession. The nation’s largest financial institutions put taxpayers on the hook for a $700 billion bailout and more than $16 trillion in virtually zero interest loans from the Federal Reserve. Today, three of the four largest financial institutions are bigger today than before they were bailed out.
The six largest financial institutions in this country today (JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley) have assets of nearly $10 trillion, a figure equal to about 60 percent of the nation’s gross domestic product. Those six financial institutions issue more than two-thirds of all credit cards, over 35 percent of all mortgages, control 95 percent of all derivatives and hold more than 40 percent of all bank deposits in the United States.