Newspaper article International New York Times

Breaking Up Too-Big Banks ; Plans Offered by Sanders in Candidate Interview Show Familiarity with Law

Newspaper article International New York Times

Breaking Up Too-Big Banks ; Plans Offered by Sanders in Candidate Interview Show Familiarity with Law

Article excerpt

He was criticized for seemingly unclear answers in an interview, but taken as a whole, they mostly track with a plan he has put before Congress.

Bernie Sanders probably knows more about breaking up banks than his critics give him credit for.

On Monday, The Daily News published an interview with him that led some commentators to say he didn't know how to break up the country's biggest banks. Downsizing the largest financial institutions is one of Mr. Sanders's signature policies, so it would indeed raise questions about his candidacy if he had little idea of how to do it.

In the interview, with The Daily News's editorial board, Mr. Sanders does appear to get tangled up in some details and lacks clarity. Breaking up the banks would involve arcane and complex regulatory moves that can trip up any banking policy wonk, let alone a presidential candidate. But, taken as a whole, Mr. Sanders's answers seem to make sense. Crucially, his answers mostly track with a reasonably straightforward breakup plan that he introduced to Congress last year.

Here are the most relevant parts of the exchange.

Daily News: "Now, switching to the financial sector, to Wall Street. Speaking broadly, you said that within the first 100 days of your administration you'd be drawing up ... your Treasury Department would be drawing up a too-big-to-fail list. Would you expect that that's essentially the list that already exists under Dodd-Frank? Under the Financial Stability Oversight Council?"

The Daily News may be referring here to the contents of Mr. Sanders's bill. The legislation says that, in no more than 90 days, the Financial Stability Oversight Council, a high-level regulator set up by the Dodd-Frank Act of 2010, would have to draw up a list of firms that appear to too big to fail. Then steps would be taken to break them up.

The Daily News comes back to the mechanics of breaking up the banks.

Daily News: "Okay. Well, let's assume that you're correct on that point. How do you go about doing it?"

Mr. Sanders: "How you go about doing it is having legislation passed, or giving the authority to the secretary of Treasury to determine, under Dodd-Frank, that these banks are a danger to the economy over the problem of too-big-to-fail."

Mr. Sanders's recognition here of the need for legislation is significant. Many banking experts say that Congress would need to pass a new law to give regulators the explicit authority to introduce direct caps on bank size. The Federal Reserve has introduced many measures since the financial crisis of 2008 that have created incentives for banks to shrink -- and many banks are declining in size.

But senior officials at the Fed believe that Congress would need to do more. Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, favors extra measures to tackle too-big-to-fail banks and is working on a plan to do this. …

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