Bernie Sanders had a tough time explaining his biggest campaign platform in a tough new interview with the Daily News that was published Monday.
The Democratic presidential candidate told the New York tabloid that he didn’t know whether the Federal Reserve has the authority to break up the big Wall Street banks he decries along the campaign trail.
He also said he hadn’t studied the legal implications of doing so, and couldn’t explain how he would have actually gone about prosecuting major Wall Street executives following the 2008 financial crisis.
Sanders was repeatedly pressed on his plans to break about the major financial institutions after he told the Daily News editorial board that JPMorgan Chase “and virtually every other major bank in this country” are destroying the fabric of the US.
First, the Daily News asked Sanders how he would go about breaking up the major banks — or separating commercial banking from investment banking — under the assumption that they wield too much power, as Sanders has frequently argued.
Sanders said you either “have legislation passed” or you can give authority to the secretary of treasury to “determine, under Dodd-Frank, that these banks are a danger to the economy” because they’re too big to fail.
He was then pressed on if he believed the Federal Reserve currently has the authority to break up the banks, such as JPMorgan Chase. Sanders said he didn’t know and added that the executive branch “can have it.”
“How?” the Daily News asked, according to the interview transcript. “How does a president turn to JPMorgan Chase, or have the Treasury turn to any of those banks and say, ‘Now you must do X, Y and Z?'”
To follow up, the Daily News then asked what would happen to the more than 240,000 employees and roughly $192 million in assets that JPMorgan — just one of the banks a Sanders administration would target — holds.
What I foresee is a stronger national economy. And, in fact, a stronger economy in New York State, as well. What I foresee is a financial system which actually makes affordable loans to small and medium-size businesses. Does not live as an island onto themselves concerned about their own profits. And, in fact, creating incredibly complicated financial tools, which have led us into the worst economic recession in the modern history of the United States.”
But the Daily News didn’t let him off the hook. The editorial board told the senator:
I get that point. I’m just looking at the method because, actions have reactions, right? There are pluses and minuses. So, if you push here, you may get an unintended consequence that you don’t understand. So, what I’m asking is, how can we understand? If you look at JPMorgan just as an example, or you can do Citibank, or Bank of America. What would it be? What would that institution be? Would there be a consumer bank? Where would the investing go?
“I’m not running JPMorgan Chase or Citibank,” Sanders shot back.
“No. But you’d be breaking it up,” the Daily News replied.
Sanders said it would be up to the major financial institutions to figure out how to reconfigure themselves after being broken up.
“That’s not my decision,” he said.
Sanders also said it was a fair question regarding what would happen to the many employees in the industry, but he compared it to his views on the fossil-fuel industry. He said he values a cleaner planet more than the jobs provided by that sector.
“If you’re saying that we’re going to break up the banks, will it have a negative consequence on some people? I suspect that it will,” Sanders said. “Will it have a positive impact on the economy in general? Yes, I think it will.”
But then, the Daily News brought up a recent case involving MetLife, in which a federal court ruled in favour of the insurance giant over federal regulators who were attempting to brand it as a threat to the financial system. The paper asked him what that ruling would mean for his plan to have the executive branch break up the banks.
“It’s something I have not studied, honestly, the legal implications of that,” Sanders admitted.
The Daily News moved on to another prominent of Sanders’ Wall Street talking points: prosecuting Wall Street executives for the 2008 economic crisis.
Sanders said he’d have a “much more aggressive attorney general” than Obama when it came to looking into the industry.
“But do you have a sense that there is a particular statute or statutes that a prosecutor could have or should have invoked to bring indictments?” the Daily News asked.
That’s when the interview hit one of its most uncomfortable points:
Sanders: I suspect that there are. Yes.
Daily News: You believe that? But do you know?
Sanders: I believe that that is the case. Do I have them in front of me, now, legal statutes? No, I don’t. But if I would…yeah, that’s what I believe, yes. When a company pays a $5 billion fine for doing something that’s illegal, yeah, I think we can bring charges against the executives.
Daily News: I’m only pressing because you’ve made it such a central part of your campaign. And I wanted to know what the mechanism would be to accomplish it.
Sanders: Let me be very clear about this. Alright? Let me repeat what I have said. Maybe you’ve got a quote there. I do believe that, to a significant degree, the business model of Wall Street is fraud.
Twitter lit up with critics trashing Sanders on his inability to explain exactly how he’d go about breaking up the banks:
“I don’t know.”
“It’s something I have not studied.”
“I haven’t thought about it a whole lot.”
If main policy is break up banks/reg wall st how can you not even know what’s legal or what regulators do. Sanders interview is disturbing
— Austan Goolsbee (@Austan_Goolsbee) April 5, 2016