It seems as though nearly 200 of the nation’s top economists “feel the Bern,” as they release a letter publicly endorsing Democratic presidential candidate Bernie Sanders’ plans for Wall Street reform.
The letter was signed by former Labor Secretary Robert Reich, who, under the Clinton Administration in the 1990s, oversaw a huge increase in employment and who has, like Bernie Sanders, been pushing for an increase in the minimum wage and heavier restrictions and higher taxes on corporations. Along with Robert Reich, University of Texas Professor James K. Galbraith, Dean Baker, co-director of the Center for Economic and Policy Research in Washington, DC., Brad Miller, former U.S. Congressman from North Carolina, and William K. Black, University of Missouri-Kansas City openly and enthusiastically endorsed the Sanders plan to reform Wall Street.
“In our view, Sanders’ plan for comprehensive financial reform is critical for avoiding another ‘too-big-to-fail’ financial crisis. The Senator is correct that the biggest banks must be broken up and that a new 21st Century Glass-Steagall Act, separating investment from commercial banking, must be enacted,” the economists wrote.
Robert Reich explains what he perceives as the very real danger of Wall Street and the impact it has on the economy in the video below.
Bernie Sanders has been open about his plans for big banks, often summing up his view with a gruff but succinct, “Break ’em up.” Sanders cites the fact that just six financial institutions in the nation hold assets equal to 60 percent of the nation’s gross domestic product, and that those same six banks issue more than two-thirds of all credit cards, as well as over 35 percent of all the mortgages in the country. In addition, those six banks control 95 percent of all derivatives and also hold more than 40 percent of all bank deposits in the United States.
In short, Bernie Sanders believes that if a bank is too big to fail, it is too big to exist; now, 170 of the nation’s top economists back him up, writing about their fears that the banks which needed to be bailed out before because they were simply “too big to fail” are, today, even bigger now than they were before. And, for them, Sanders’ plans address those problems.
“Wall Street’s largest banks are now far bigger than they were before the crisis, and they still have every incentive to take excessive risks. No major Wall Street executive has been indicted for the fraudulent behavior that led up to the 2008 crash, and fines imposed on the banks have been only a fraction of the banks’ potential gains. In addition, the banks and their lobbyists have succeeded in watering down the Dodd-Frank reform legislation, and the financial institutions that pose the greatest risk to our economy have still not devised sufficient ‘living wills’ for winding down their operations in the event of another crisis.”
The economists mentioned the plans of Bernie Sanders’ rival and Democratic presidential front runner Hillary Clinton, dismissing them as not being aggressive enough to deal with the massive banks.
“Secretary Hillary Clinton’s more modest proposals do not go far enough,” the economists wrote in the letter endorsing Sanders’ plans. “They call for a bit more oversight and a few new charges on shadow banking activity, but they leave intact the titanic financial conglomerates that practice most shadow banking. As a result, her plan does not adequately reduce the serious risks our financial system poses to the American economy and to individual Americans. Given the size and political power of Wall Street, her proposals would only invite more dilution and finagle.”
As for Bernie Sanders, he summed up Hillary Clinton’s Wall Street proposals as simply, “Not good enough.”
The 170 economists who signed the letter endorsing Bernie Sanders and his campaign against Wall Street believe that bold, decisive action is required in order to rein in the banks which have again managed to swell to such tremendous sizes that they are, once again, too big too fail.
In conclusion, the economists wrote, there is only one candidate whose ideas on reforms will work and that candidate is Bernie Sanders.
“The only way to contain Wall Street’s excesses is with reforms sufficiently bold and public they can’t be watered down. That’s why we support Senator Sanders’s plans for busting up the biggest banks and resurrecting a modernized version of Glass-Steagall.”
[Photo by Andrew Burton/Getty Images]