WASHINGTON (Reuters) - Bernie Sanders, a self-described socialist U.S. senator who has launched a bid for the 2016 Democratic presidential nomination, said on Tuesday he will introduce a bill to break up the biggest banks, a position far to the left of the party’s front runner, Hillary Clinton.
Calls for Wall Street’s largest firms to be cut down were numerous after taxpayers spent billions of dollars to prevent the financial system from collapse during the 2007-09 financial crisis, but they have since gradually died down.
Sanders faces long odds against Clinton’s fund-raising might, and his views might help position the former secretary of state and first lady more as a moderate and buttress her efforts to attract money from banks’ deep pockets.
Under the Sanders proposal, regulators on the existing Financial Stability Oversight Council would compile a list of institutions that are ‘too big to fail’ and implicitly rely on government support during a crisis.
“If an institution is too big to fail, it is too big to exist,” Sanders said in a statement.
Within a year of enactment of the bill, the Treasury secretary would be required to break up these firms. They would also be prohibited from using any customer funds for risky or speculative activities on financial markets.
Sanders, an independent from Vermont, launched his long-shot bid last week, highlighting his fight against authorizing the Iraq war, which Clinton voted to authorize as a senator, and putting pressure on her political agenda from the left.
Sanders is not alone in his view that large banks still pose an undue risk to the economy after causing the worst economic crisis since the Great Depression.
Senator Elizabeth Warren, a highly visible Democrat from Massachusetts, also wants to break up big banks. Among regulators, Tom Hoenig, second-in-command at the powerful Federal Deposit Insurance Corporation, wants the same thing.
Still, the bill stands a near-zero chance of becoming law. Representative Brad Sherman, a Democrat from California, also backed the bill, but it has no Republican support. Republicans hold the majority in both houses of Congress.
President Barack Obama is also opposed to making any changes to the 2010 Dodd-Frank law aimed at reforming Wall Street.
Reporting by Douwe Miedema; Editing by Dan Grebler