NEW YORK — Democratic presidential hopeful Bernie Sanders took aim at the nation’s financial sector in a fiery speech Tuesday, declaring that “fraud is the business model of Wall Street” and calling for regulatory reforms to address “a lot more illegal behavior than we know of."
Speaking just blocks from Wall Street, Sanders vowed to break up banks that are “too big to fail,” jail unscrupulous Wall Street executives and provide an array of new protections for consumers. Among other steps, the Vermont senator called for capping interest rates on credit cards at 15 percent and capping ATM fees at $2.
Sanders also took some jabs at Democratic presidential front-runner Hillary Clinton. Sanders said the former senator from New York, whom he has accused of being too close to the financial sector, has put forward a Wall Street plan that amounts to merely imposing “a few more fees and regulations on the financial industry.”
In a not-too-subtle knock, Sanders also dryly noted that Wall Street provides "very generous speaking fees to those who go before them," a reference to a series of speeches Clinton gave before becoming a candidate.
During his 48-minute speech, Sanders suggested sweeping reforms would be necessary to curtail “the greed of Wall Street and corporate America.”
“We will no longer tolerate an economy and a political system that has been rigged by Wall Street to benefit the wealthiest Americans in this country at the expense of everyone else,” Sanders told a crowd of about 1,300 in a packed theater in Manhattan, where enthusiastic supporters repeatedly interrupted him with applause and even finished some lines of his speech before he spoke them.
Clinton, who was campaigning in Iowa on Tuesday, called Sanders "a friend" but said that she believes she has a "broader, more comprehensive set of policies about everything, including taking on Wall Street."
"Everybody who's looked at my proposals says my proposals are tougher, more effective and more comprehensive, because yeah, I take on the banks, but remember part of the cause of the mess we had in '07 and '08 was not the big banks," Clinton said during a stop in Sioux City. "It was Lehman Bros., it was Bear-Stearns. It was AIG the giant insurance company. I want to go after everybody who poses a risk to our financial system."
The campaign also offered two high-profile supporters, New York Mayor Bill de Blasio (D) and former Rep. Barney Frank (D-Mass.), both of whom offered testimonials as to why Clinton's approach is better. In an interview, Frank said that Sanders's focus on breaking up the big banks amount to "one size fits all" and could be destabilizing to the economy.
Sanders, meanwhile, quoted an assessment during his speech from former labor secretary Robert Reich, who endorsed Sanders's approach of breaking up the big banks and said Clinton's plans "would only invite more dilution and finagle."
As he has on the campaign trail, Sanders also called Tuesday for the reinstatement of a modern Glass-Steagall Act to separate commercial banking, investment banking and insurance services. Critics have argued that the law’s repeal in 1999 under President Bill Clinton contributed to the global credit crisis. Hillary Clinton has not embraced its reinstatement.
Wall Street has been a frequent target of Sanders, a self-described democratic socialist who has railed against the political influence of the “billionaire class.”
He spoke Tuesday about the 2008 “bailout” of Wall Street by taxpayers and lamented that three of the four largest financial institutions are nearly 80 percent larger than they were at the time.
Sanders announced plans to direct the secretary of the treasury within the first 100 days of his administration to establish a “Too-Big-To-Fail” list of “commercial banks, shadow banks and insurance companies whose failure would pose a catastrophic risk to the United States economy without a taxpayer bailout.”
Within a year, Sanders promised, his administration will break up those institutions “so that they no longer pose a grave threat to the economy,” using authority granted by the Dodd-Frank Act.
During his speech, Sanders also vowed he would convert credit rating agencies into nonprofit institutions, independent from Wall Street, and pushed his idea to allow post offices to offer limited banking services. And he was sharply critical of financial institutions that charge customers "sky-high interest rates and outrageous fees."
"The Bible has a term for this practice. It's called usury," Sander said. "And in 'The Divine Comedy,' Dante reserved a special place in hell for those who charged people usurious interest rates. Today, we don't need the hellfire and the pitchforks, we don't need the rivers of boiling blood, but we do need a national usury law."
To bolster his contention that fraud is rampant on Wall Street, Sanders shared a series of headlines about big banks engaging in illegal and other questionable activities and cited several findings of a study last year from the University of Notre Dame. Among the findings: 51 percent of Wall Street executives making more than $500,000 a year found it likely that their competitors have engaged in unethical or illegal activity in order to gain an edge in the market.
"The reality is that fraud is the business model of Wall Street," Sanders said. "It is not the exception to the rule. It is the rule. And in a very weak regulatory climate, the likelihood is that Wall Street gets away with a lot more illegal behavior than we know of."
Staff writer Anne Gearan contributed to this report.