Financial Reform
![Financial Reform](https://webarchive.library.unt.edu/web/20121106223224im_/http://www.sanders.senate.gov/imo/media/image/financialreform290.jpg)
In the fall of 2008, after almost a decade of rampant greed and excessive risk taking, the global financial industry collapsed. In the aftermath, millions of hardworking Americans lost their jobs and their life savings, dashing the dreams of people who had nothing to do with Wall Street or the financial sector. While Wall Street bankers who are directly responsible for these problems have fully recovered and are now making more money than they ever have before, middle class and working families are struggling to find decent jobs, pay their bills and save for college. While millions of Americans have homes that are ‘under water' in terms of mortgages, the six largest financial institutions are larger than they were before the collapse on Wall Street. Sen. Sanders believes this is fundamentally wrong, and is committed to reining in Wall Street and reforming the financial industry as well as breaking up banks that are "too big to fail."
Sen. Sanders believes we should break up the giant financial institutions that pose a systemic risk to the financial system and the economy as a whole. While Wall Street bankers continue to gamble with other people's money, sooner or later, when their bets go wrong, they will come back to the American people to be bailed out again. To that end, Sen. Sanders introduced legislation that would have required these banks to be broken up into smaller companies which, if they make bad decisions, can more easily be allowed to fail. Sen. Sanders strongly opposed the Bush administration's bailout of failed Wall Street institutions during the fall of 2008 calling it "the most extreme example that I can recall of socialism for the rich and free enterprise for the poor."
Sen. Sanders has long felt that Federal Reserve policies have favored Wall Street at the expense of the needs of working families. During a March 2009 hearing, Sen. Sanders asked Fed Chairman Ben Bernanke to name the hundreds of banks that received secret loans from the Federal Reserve but Bernanke refused to name any of the financial institutions. In response, Sen. Sanders introduced a successful amendment to the Dodd-Frank Financial Reform bill that required the Federal Reserve to open its books and allowed the Government Accountability Office (GAO) to conduct a detailed audit of the financial supports the Fed gave to Wall Street and the banking industry. According to the GAO's audit mandated by Sen. Sanders' amendment, the Federal Reserve provided a staggering $16 trillion total in financial support to every major financial institution in the country, as well as a number of corporations, wealthy individuals and central banks throughout the world.
In addition, Sen. Sanders is working to address the blatant conflicts of interest inherent in the Federal Reserve's governance. Another GAO report requested by Sen. Sanders revealed that many of the people who serve as directors of the 12 Federal Reserve Banks came from the exact same financial institutions the Fed is in charge of regulating, and at least 18 current and former Fed board members were affiliated with banks and companies that received emergency loans from the Federal Reserve during the financial crisis. As a result, Sen. Sanders has formed an advisory committee consisting of some of the top economists in the United States to determine how to address the conflicts of interest at the Fed. He has in consequence introduced legislation to restrict bank directors and employees from serving on the Federal Reserve Bank boards.
Sen. Sanders warned of the dangers of deregulation in the financial industry long before the Wall Street meltdown of 2008. In 1999, then-Rep. Sanders opposed passage of the Gramm-Leach-Bliley Act which deregulated derivatives trading and allowed more large financial institution mergers. In a House floor speech, Sen. Sanders predicted the legislation would "lead to fewer banks and financial service providers, increased charges and fees for individuals, consumers and small businesses, diminished credit for rural America and taxpayer exposure to potential losses should a financial conglomerate fail. It (would) lead to more mega mergers and a small number of corporations dominating the financial service industry and a further concentration of economic power in our country."
For years, Sen. Sanders has taken on credit card companies to protect consumer rights. In 2009, Sen. Sanders introduced the Interest Rate Reduction Act to cap interest rates on all loans at 15 percent, the same cap that Congress imposed on credit union loans in 1980. Sen. Sanders supported the Credit Card Accountability, Responsibility and Disclosure Act which became law in 2009. Under the law, lenders would have to post their credit card agreements online, let customers pay their bills online or by phone for free and give customers 45 days notice before interest rates are increased. Another provision says customers would have to be more than 60 days late on a payment before seeing rates go up on an existing balance.