Democratic presidential hopeful Sen. Bernie Sanders on Wednesday issued an impassioned plea to rein in an out of control Wall Street, writing in an op-ed for The New York Times that "we should begin by reforming the Federal Reserve," a central bank "that was created to serve all Americans" but has "been hijacked by the very bankers that it regulates."
The Federal Reserve, which oversees the nation's banks and uses monetary policy to maintain price stability and good employment levels, allows the chief executives of the biggest banks in the U.S. to serve on its board, Sanders said.
"These are clear conflicts of interest, the kind that would not be allowed at other agencies," the Vermont senator wrote. "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."
Sanders said that if he were elected president, to ensure that the banking system remains safe and sound, he would restructure the Federal Reserve's governance system so that board members are nominated by the President and chosen by the Senate. "Banking industry executives must no longer be allowed to serve on the Fed's boards and to handpick its members and staff. Board positions should instead include representatives from all walks of life - including labor, consumers, homeowners, urban residents, farmers and small businesses," he said.
Alongside Democratic Sen. Elizabeth Warren, Sanders has long fought for reform in the banking industry, introducing numerous bills that would break up the country's largest banks. He's been so outspoken that many believe he has forced Democratic presidential front-runner Hillary Clinton to take a tougher stance on banks, which are her largest donors, notes the International Business Times.
Sanders went on to criticize the Fed's long-anticipated Dec. 16 rate hike - which ended a seven-year policy of near zero interest rates by raising its benchmark rate - saying it was done to appease bankers and is "latest example of a rigged economic system."
"Big bankers and their supporters in Congress have been telling us for years that runaway inflation is just around the corner," he said. "They have been dead wrong each time. Raising 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."
Sanders proposed a rule that would prevent the Fed from raising interest rates until unemployment is lower than 4 percent.
Even further, Sanders laid out a plan for requiring financial institutions to invest in the productive economy and provide affordable loans to small businesses and consumers that create jobs. He said that to do this, he would first reinstate the Glass-Steagall banking law, which barred commercial banks from gambling with Americans' deposits in risky investment markets. Then, the Fed should charge banks a fee on excess reserves parked at the central bank and use the money to provide direct loans to small businesses. And third, large banks should increase lending to creditworthy small businesses and consumers, reduce credit card interest rates and fees, and provide help to struggling homeowners.
He also called on the Government Accountability Office to conduct a "full and independent audit" of the Fed, something that Republican presidential candidates Sen. Rand Paul and Sen. Ted Cruz have long pressed for.
"The sad reality is that the Federal Reserve doesn't regulate Wall Street; Wall Street regulates the Fed," he wrote. "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."
