Bernie Sanders: ‘Congress Doesn’t Regulate Wall Street. Wall Street Regulates’

President Barack Obama said much the same thing in 2008 and that proved to be wishful thinking as his Justice Department appointees declined to prosecute individual bank executives and his “tough” regulatory appointments, such as Mary Jo White as chair of the Securities and Exchange Commission, turned out to be paper tigers.

But it was repealed in 1999 by President Bill Clinton, husband of current Democratic frontrunner for president, Hillary Clinton. Mr. Sanders has long voiced concerns about guest-worker programs, both because of working conditions and also because he says that allowing more temporary foreign workers drives down wages for American workers and hampers efforts to reduce unemployment.

As a candidate for president, she refused to give a concrete position on the issue, until she said last month that she opposed the project – after a number of liberal donors made clear that they saw opposition to it as a litmus-test issue.

This is a much more significant measure that would raise more revenue and more effectively tame not only the abuses of high-frequency trading but other forms of churning and short-termism dear to Wall Street’s greedy heart.

Democrats have proposed new rules that would essentially bring back a Glass-Steagall type of firewall separating a big bank’s consumer operations from its investing division. On her fact sheet, Clinton speaks of “billions” of dollars leaving retirement accounts through high fees and conflict of interest.

“In my view, Congress does not regulate Wall Street, Wall Street regulates Congress”, the senator warned.

Clinton wants to give regulators authority to break up banks “too large or too risky to be managed effectively” – but this is authority they already have under Dodd-Frank and are unlikely to use because it’s a lot to ask of unelected regulators.

In an oft-cited column, New York Times columnist Andrew Ross Sorkin goes point by point through how Glass-Steagall would have done nada to prevent the problems at Bear Stearns, Lehman Brothers, Merrill Lynch, AIG or Fannie and Freddie or even Bank of America’s acquisition of Countrywide Financial. “Look at all the grief I got for signing the bill that ended Glass-Steagall”.

Mr. Sanders is more focused on reducing the size and political influence of the biggest banks.

Clinton and the Republican candidates do not want to reinstate Glass-Steagall.

“My plan is more comprehensive”. Principally, the plan seeks to limit risk-taking by the banks and increase accountability for financial crimes. There are also hedge funds and other players that wouldn’t fall under Glass-Steagall.

The Wall Street Crash in 1929 led one in every five banks to fail. CNN’s Maggie Lake discusses the Glass-Steagall Act and why it matters with Here & Now’s Jeremy Hobson.