Bernie Sanders, everyone’s favorite socialist running for the American Presidency, has been exciting his urchins by telling them how the big, bad wolves of Wall Street are stealing their breakfast, lunch and dinner. The other night he stated “The business model of Wall Street is a fraud.” Many people think Sanders is just a cute old Grandpa type. But since he just slandered everyone in the financial and banking business in America, I thought it might be a fine time to defend them and dispute the spurious statements he is making.
I don’t doubt that Sanders believes what he says. The press attacks Trump for some of the dubious statements flowing from his mouth, but they are not jumping on the filth flowing from Bernie’s, probably because of two reasons: First, they don’t know enough to question it; and, second, because they are on his team. But the ignorance of his followers is what Sanders feeds on and helps to perpetuate.
Let’s start with a straight-out statement: We have the finest banking and investment system in the world. It is also the safest. It is where the world flows its money as a safe haven. Is it perfect? Nothing is perfect. But our financial system has allowed our citizens to finance homes, finance cars, buy things instantaneously on a credit or debit card, gain monies to build businesses etc., etc., etc. Are there people who participate in that system who do illegal things? Yes. Are there people who prey on others outside the system to steal their money? Yes. But for a candidate for the American Presidency to make the statements Sanders has made is not only irresponsible, it shows his own ignorance of the problems he has helped create.
Let’s start with the banks being too big. I agree. They are, but what has caused the consolidation of the banks? Dodd-Frank, the overreaction to the debt crisis of the last decade. This was delineated in my column “Beers vs Banks.”
Since the inception of Dodd-Frank, which attempted to deal with the “Too Big to Fail” problem of the big banks, the law has made them bigger and their competition smaller. The immense cost of regulation has stalled the natural growth of competition in the business. As of June 2015, only three new banks had opened since 2010 where the norm was 100 new banks a year. The number of U.S. banks shrunk again in 2013 and 2014. While Sanders rails against the Big Banks there is blood on his hands for this and for what has he done to help open community banks or stem the loss of smaller banks – which is ZERO.
Sanders likes to spew “let’s break up the big banks.” Yes, Bernie, exactly what is your plan to do that? Reporters like to ask Trump where his plans are, but no one seems to ask Bernie about his plan to completely rearrange the foundation of our banking system. That is because he does not have one and he could not even conceive of how to do it. He and his followers would prefer to live in ignorant bliss.
Or there is the fault for the banking mess and the market crash in the first place. That I wrote about ages ago in “Kill All the Bankers.” The government ginned up all the home loans in a foolhardy attempt to expand homeownership, would not put a plug in it when it became obvious there was a problem, and then scurried like rats when the collapse came. Bernie likes to argue bankers should go to jail. How about the designers and implementers of these government policies? They never get blamed. Bernie also likes to argue the monies extracted from the big banks (ransoms to stay in business) are proof of their guilt. No, it is just proof of the legalized theft the government can do today not only to banks, but to you in their ability to confiscate assets. My favorite story of this mess is how the Feds begged Bank of America to buy Merrill Lynch and Countrywide and then fined them for the failed loans in the portfolios.
Where is Sanders arguing for the most important aspect of our financial system that is unaddressed: educating Americans about it? He is nowhere, just like his twin sister Elizabeth Warren. Americans graduate from high school with an agrarian understanding of our financial system. I have been arguing for years that it is mandatory to have a high-school-level financial class that teaches our citizens about our modern economy. Students need to learn what a bank account means. They need an understanding of establishing credit and the proper use of credit or debit cards. They need to understand pension plans and why they are important and what it means to buy a home and take out a mortgage. Most importantly they need to know if they are going on to college what the ramifications of taking out large student loans may mean to the rest of their lives. Sanders does not argue for education because he would rather keep us fat and sassy and down on the farm -- steeped in ignorance while he and the intelligentsia rule our lives.
Sanders is a demagogue. He is a man who has never had a place in the private economy and only wants to control the efforts of the people attempting to support their families and succeed in America. Bernie, please leave the economy to the grownups. You and your ilk created the rules for the income inequality that exists. Please leave and let us clean up your mess.