Eric Yao 4 February 2016

Bernie Sanders versus Wall Street

Bernie Sanders, the Independent US Senator from Vermont, has been making the news and shaking up the 2015 presidential election. A self-proclaimed socialist who caucuses with Democrats in Congress, Sanders is running a campaign that focuses on fighting income inequality and saving the American Dream. He has proposed broad programs including taxpayer-funded public college and university education, overturning Citizens United and reforming campaign finance, investing in public infrastructure and sustainable energy, and a single-payer national healthcare system, among other progressive ideas. But perhaps the most resounding and contentious part of his platform is Wall Street reform.

According to his official campaign website, Sanders wants to break up the big banks. Such big banks would include JPMorgan Chase (JPM  ), Wells Fargo (WFC  ), Citigroup (C  ), Bank of America (BAC  ), and investment banks such as Goldman Sachs (GS  ). His argument is that today the six largest financial institutions hold assets equal to about 60 percent of US gross domestic product, issue more than two-thirds of all credit cards and over 35 percent of all mortgages, hold more than 40 percent of all bank deposits, and control 95 percent of all derivatives. He believes that they have become "too big to fail" and thus require the federal government to separate them in an antitrust fashion for the public good. Only with greater oversight and regulation, he states, will banks shun reckless behavior and serve the people better. In addition, Sanders has proposed a controversial excise tax on financial transactions, which he calls the "Robinhood tax," in order to pay for college for all. He says that the tax would deter Wall Street speculation. Finally, he wants to curb ATM and overdraft fees and charges that banks use to help generate revenue, stating that they are offensive and regressive.

Even if elected President in November, Sanders would face an uphill battle to implement his platform. He would need a liberal-leaning Supreme Court instead of the current conservative-leaning one. He would need a vastly Democratic Senate and House. He would need Congress to pass legislation even stronger than the Glass-Steagall Act of the New Deal. And he would certainly need over 60 votes in the Senate to overcome a filibuster. Already, his opponents are painting him as an incredible socialist. Goldman Sachs has said that his policies are dangerous. Hillary Clinton, funded partly by Wall Street institutions, has made her recent attacks more aggressive. And the Republican Party has warned that his programs would mean the nearing of the end of America. However, Bernie Sanders has managed to tap into the original republican contempt for banks, speculators, and the idle rich. His programs claim to hurt shareholders, investors, and big corporations, but greatly help the middle class. Thus, Sanders' message is especially popular with young, minority, and poor voters, who already disdain Wall Street to some degree.

The author does not hold any positions in any of the stocks above.