Despite seven years of bank bailouts and alleged financial reform, "Wall Street is still out of control," presidential candidate Bernie Sanders writes in a New York Times op-ed on Wednesday.
In particular, Sanders blames the Federal Reserve, the central banking system of the U.S., which oversees financial institutions and is charged with using monetary policy to maintain price stability and full employment.
"Unfortunately," the Vermont senator says in the scathing op-ed, "an institution that was created to serve all Americans has been hijacked by the very bankers it regulates."
Echoing the arguments of progressive economists, Sanders says the Fed's main reason for raising the interest rate—to keep inflation under control—is grounded in false premise. "Big bankers and their supporters in Congress have been telling us for years that runaway inflation is just around the corner," he wrote. "They have been dead wrong each time."
In fact, Sanders states, "[r]aising interest rates now is a disaster for small business owners who need loans to hire more workers and Americans who need more jobs and higher wages."
But who cares, Sanders points out, when the "chief executives of some of the largest banks in America are allowed to serve on [the Fed's] boards."
Noting that next year, four of the 12 presidents at the regional Federal Reserve Banks will be former executives from one firm—Goldman Sachs—Sanders declares: "If I were elected president, the foxes would no longer guard the henhouse."
Not only would he "fundamentally restructure the Fed’s governance system to eliminate conflicts of interest," Sanders calls for the Fed to:
- "prohibit commercial banks from gambling with the bank deposits of the American people";
- "stop providing incentives for banks to keep money out of the economy"; and
- force big banks to "commit to increasing lending to creditworthy small businesses and consumers, reducing credit card interest rates and fees, and providing help to underwater and struggling homeowners."
What's more, he writes, "We also need transparency."
"The sad reality is that the Federal Reserve doesn’t regulate Wall Street; Wall Street regulates the Fed," Sanders concludes. "It’s time to make banking work for the productive economy and for all Americans, not just a handful of wealthy speculators. And it begins by making the Federal Reserve a more democratic institution, one that is responsive to the needs of ordinary Americans rather than the billionaires on Wall Street."