U.S. Sen. Bernie Sanders of Vermont has done it again: exposed simple facts that show how the American financial system works, and how it needs to be corrected.
Most recently an audit of the secretive Federal Reserve, requested by Sanders and others but most vocally by Sanders, revealed that during the financial crisis of the last several years, the Fed had strewn around $16 trillion to prop up the stability of American and foreign banks and corporations, some as far away as the Middle East and Asia—and some of the money no doubt parceled out to further American foreign policy as well as shore up the economy.
It’s important to understand that that largesse didn’t represent $16 trillion in taxpayer money; the Fed is self-funded, and legally has the right to lend to foreign institutions.
What’s outrageous is that the Fed moved “boldly, aggressively, and with a fierce sense of urgency,” as Sanders put it, to help the behemoths of the financial system, but hasn’t acted with comparable alacrity—or any alacrity at all—to help small businesses and the middle class.
Now Sanders has come up with a program to move the economy in a direction that would meet the middle-class needs being expressed by the Occupy Wall Street movement.
The program’s six points include two the outspoken Vermonter has advocated earlier: breaking up the so-called “too big to fail” banks, and capping the interest that could be charged on credit cards (in the past, Sanders has advocated a 15 percent cap; see “Taking On Wall Street,” March 25, 2010).
In addition, Sanders is now calling for an end to Wall Street speculation in oil, which is raising the price of home heating, personal and commercial transportation and business operation. He’s demanding that Wall Street foster lending to small businesses, to help create jobs. He wants to see the Federal Reserve provide loans to small businesses at the same low interest rate it charged for loans to large financial institutions.
And a very specific proposal that rounds out his program is to charge a “speculation fee” on the trading of stock options and futures, credit default swaps and derivatives.
It’s not an exotic idea, nor is it un-American; there actually was such a fee for over 50 years, from 1914 to 1966. A speculation fee, says Sanders, would “reduce gambling on Wall Street, encourage the financial sector to invest in the productive economy, and significantly reduce the deficit without harming average Americans.””
