Economists endorse Bernie Sanders

16 January 2016 1:16 pm

Some of America’s top economists have endorsed Democratic presidential candidate Bernie Sanders’ plans for Wall Street reform.

The letter says that Sanders is right saying that the biggest banks have to be broken up and that a new 21st Century Glass-Steagall Act, separating investment from commercial banking, must be enacted.

“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,’’ the letter says. “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.

“Secretary Hillary Clinton’s more modest proposals do not go far enough. 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.”

The letter is signed by former labour secretary 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 from the University of Missouri-Kansas City.

The campaigns are now rolling out endorsements on a daily basis but Sander’s growing popularity is driven by but anger over Wall Street crashing the US economy and walking away with a slap on the wrist.

One of the best examples of that this week was Goldman Sachs, one of the banks responsible for the meltdown, agreeing to a $5 billion settlement for its role in kicking off the biggest financial disaster since the Great Depression.

Goldman was under investigation for lying about the value of the mortgage-backed securities it sold in the years leading up to the crash. The sale of toxic securities helped trigger the global economic recession. Under the terms of the tentative settlement, Goldman will pay billions in civil penalties. No one will go to jail.

The ruling was slammed by Sanders. “The $5 billion settlement with Goldman Sachs should make it clear to everyone that the business model on Wall Street is fraud. In my view, the time has come to shut the revolving door between Wall Street and the federal government. Goldman Sachs and other Wall Street banks will not be represented in my administration,” Sanders said in his press release.

That will keep fuelling his surge in the polls which, until now, the mainstream media has ignored.