Bernie Sanders NYT Opinion Page: To Rein In Wall Street, Fix the Fed

[JonLeibowitz]

WALL STREET is still out of control. Seven years ago, the Federal Reserve and the Treasury Department bailed out the largest financial institutions in this country because they were considered too big to fail. But almost every one is bigger today than it was before the bailout. If any were to fail again, taxpayers could be on the hook for another bailout, perhaps a larger one this time.

To rein in Wall Street, we should begin by reforming the Federal Reserve, which oversees financial institutions and which uses monetary policy to maintain price stability and full employment. Unfortunately, an institution that was created to serve all Americans has been hijacked by the very bankers it regulates.

<snip>

What went wrong at the Fed? The chief executives of some of the largest banks in America are allowed to serve on its boards. During the Wall Street crisis of 2007, Jamie Dimon, the chief executive and chairman of JPMorgan Chase, served on the New York Fed’s board of directors while his bank received more than $390 billion in financial assistance from the Fed. Next year, four of the 12 presidents at the regional Federal Reserve Banks will be former executives from one firm: Goldman Sachs.

These are clear conflicts of interest, the kind that would not be allowed at other agencies. We would not tolerate the head of Exxon Mobil running the Environmental Protection Agency. We don’t allow the Federal Communications Commission to be dominated by Verizon executives. And we should not allow big bank executives to serve on the boards of the main agency in charge of regulating financial institutions.

<snip>

Much much more in the full article.
Full opinion piece link: http://www.nytimes.com/2015/12/23/opinion/bernie-sanders-to-rein-in-wall-street-fix-the-fed.html

Go Bernie Go!

[orpupilofnature57]

1. Hillary used a snippet of a Roosevelt Quote " Feather their nest " She left out the most important

part about those who feel entitled, I wonder if that was on purpose ?

[billhicks76]

12. "Just Cut It Out"

Wow. Can anyone believe she really said that? Oh the hubris of the false ones.

[reformist2]

14. It was a telling moment... these were crimes the banks were committing, and she made it sound like

...they were kids teasing each other in the back seat of a car.

[billhicks76]

24. Fools Errand To Nominate Her

[Proserpina]

2. It is a common misconception that the Federal Reserve's primary purpose is to "regulate banks"

The Federal Reserve System?—?also known as the Federal Reserve or simply as the Fed?—?is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907.

Over time, the roles and responsibilities of the Federal Reserve System have expanded, and its structure has evolved. Events such as the Great Depression in the 1930s were major factors leading to changes in the system.

The U.S. Congress established three key objectives for monetary policy in the Federal Reserve Act: Maximum employment, stable prices, and moderate long-term interest rates. The first two objectives are sometimes referred to as the Federal Reserve's dual mandate. Its duties have expanded over the years, and as of 2009 also include supervising and regulating banks, maintaining the stability of the financial system and providing financial services to depository institutions, the U.S. government, and foreign official institutions. The Fed conducts research into the economy and releases numerous publications, such as the Beige Book...wikipedia

The primary purpose of the Fed was and is to provide action when Congress refuses to, or cannot, to keep major financial catastrophe at bay.

If that means sticking a cash IV line into the Big Banks to keep them from collapsing...they do it. After all, it's the only thing they can do with the powers they have.

The Fed cannot do all of Congress' heavy lifting. For example, the Fed cannot create a federal budget with large infrastructure expenditures to boost demand for goods and services, which is what this country desperate needs, and has needed for 1.5 decades. Only Congress can do that.

The Fed cannot authorize and fund a safety net for America's struggling people, only Congress can.

The Fed cannot institute universal single payer health care.

Etc, ad nauseum.

Even regulating the banks...that's a congressional job. There's a definite limit as to what a non-government agency can do, and this current crisis has shown us just how powerless the Fed really is. The Fed can do a lot to make things worse in its struggles to compensate for a do-nothing Congress, but it cannot do much to make things better. That is Congress' job.

I'm not saying that Bernie doesn't have good points to make, but that's more like trimming the weeds into topiary shapes, rather than eradicating them and planting a cash crop, or a nature preserve for valuable plants, or anything of more use to the property.

[JonLeibowitz]

5. Indeed...but your post's purpose is lost on me at least.

I am glad that Bernie is not proposing for the Fed to take any of the actions you mention that clearly fall outside its purview. However, the things he does mention are specific to the Fed, right? Why are you mentioning entirely unrelated topics?

[Proserpina]

7. Because the problem is structural, and there are no quick fixes

For the average person on the street, to attract the public's attention, Bernie's doing the right thing.

But to really revolutionize the US economy and stabilize the global one, it's going to take a lot more.

Personally, I think a Sanders White House with a revolutionary Congress installed because of Bernie's coattails will make all the difference in the world.

I would be doing the readers on DU a disservice by not broadening the scope of the discussion. I also should invite people to stop by the Economy Group and see our little daily thread on issues economic and political at home and abroad. There's a lot to be had there.

[JonLeibowitz]

9. Ah I understand better now, thanks.

I will check that out, I enjoy reading economics.

And you are right, the US economy needs a lot more. This is but one small piece.

[Hortensis]

15. Thanks for your explanation, Proserpina.

I tend to think of the Fed mostly in terms of money supply and interest rates, so your depiction of their primary purpose as the first-responder to economic emergency is interesting.

A progressive president with a "revolutionary" congress -- Hmmm, we did have something like that last century. Progressive liberals and conservatives working across the aisle to formulate big solutions for big problems. A lot of political scientists say that couldn't happen again that way in these conditions, but I like to think we're working toward it once again.

[Proserpina]

25. From your lips to God's ear

because we surely need it!

[Hortensis]

27. From yours and so very mant.

[libdem4life]

26. He's got a target and saying nationally what many of us have known for years. No one else

even dare whisper about some of the things he's shouting out as his "People Revolution" It's turning around an Oligarchy (the Fed is certainly a player there) back into something that resembles Democracy. One of the easy definitions of Oligarchy, is when a substantial group of people feel they have no say in the face of powerful leaders...unions, politics, voting rights, economy, war, DC Beltway bureaucracy, etc.

The conversation has begun and I'm glad to be a part of it. It may take 50 years to turn things around, but 8 years of Bernie and hopefully some coattails by the time is over, would be a good start.

That was a great article.

He has now drawn a very distinct line in the sand with HRC. She can't follow him there.

[beam me up scottie]

3. More:

In 2010, I inserted an amendment in Dodd-Frank to audit the emergency lending by the Fed during the financial crisis. We need to go further and require the Government Accountability Office to conduct a full and independent audit of the Fed each and every year.

Financial reforms must not stop with the central bank. We must reinstate Glass-Steagall and break up the too-big-to-fail financial institutions that threaten our economy. But we need to start with fundamental change. The sad reality is that the Federal Reserve doesn’t regulate Wall Street; Wall Street regulates the Fed. 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.

K & R!

[peacebird]

4. "We must reinstate Glass-Steagal"

Exactly.

[Scuba]

6. There's no need to rein in Wall Street. Hillary already told them to "cut it out."

[JonLeibowitz]

8. An accurate slogan for Sec. Clinton might be "to reign in Wall St., DON'T fix the fed!" n/t

[Helen Borg]

10. We will elect Hillary!

... If necessary... But Bernie will make it unnecessary!

[Segami]

11. Kick

[reformist2]

13. Wow, a Federal Reserve actually run by "We the People"? An excellent idea!

[Hortensis]

16. Oh, no! I'm an enormous We-the-People supporter,

but that way would lie disaster after disaster. Can we agree on very answerable to the People? If We the People were doing our job in even an almost half-assed way, all those supposedly working for us would be afraid to cross us.

[raouldukelives]

17. K&R Couldn't happen soon enough for my tastes. nt

[Dustlawyer]

18. We need major restructuring in a lot of areas.

All of the regulatory agencies have corporate industry toadies at or near the top. They are all underfunded to the point they cannot actually do their jobs. This is by design!

[JonLeibowitz]

19. Kick.

[LWolf]

20. K & R

[WillyT]

21. HUGE K & R !!! - THANK YOU !!!

[Uncle Joe]

22. Kicked and recommended.

Thanks for the thread, JonLeibowitz.

[ieoeja]

23. For the record: only one of five governors on the top board was a banker.

One of the others was with the Carlyle Group which is pretty much the epicenter of world evil. But that still leaves the majority having spent their entire lives as educators and/or government service.

All five were appointed by Obama which is kind of surprising given that each term lasts 14 years.

Or maybe not that surprising since they can make much bigger money as Bankers. Do the banks' bidding for a bit, then gather their reward. Most probably do not finish the 14 year term.