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 "If a bank is too big to fail, it is too big to exist; when it
comes to Wall Street reform, that must be our bottom line," Sanders
said in a blistering speech. He said allowing banks that are too big
is essentially providing them with a "free insurance policy" to make
risky investments knowing the U.S. government will prevent their
collapse.
The U.S. senator from Vermont - an independent and a democratic
socialist popular with the Democratic Party's populist wing - gave
his speech at a theater near New York's Times Square, just "a few
subway stops away from the epicenter of the global financial
crisis," as his campaign put it.
Sanders also called for structural reforms to the Federal Reserve,
making credit rating agencies nonprofit entities, and a tax on
speculative investments. He urged increased penalties for financial
fraud or malfeasance by institutions, calling fraud the business
model of Wall Street.
His remarks were laced with direct and indirect criticisms of the
policies and track record of primary campaign front-runner Hillary
Clinton, whose constituency when she was a U.S. senator from New
York included the financial industry. The former secretary of state,
however, has taken a tougher stance against Wall Street as a
presidential candidate.
 Clinton, Sanders and former Maryland Governor Martin O'Malley are
vying to face the Republican nominee in the November 2016 election.
Sanders and Clinton have tussled over the best way to curb the risky
behavior on Wall Street that caused the 2008 financial crisis and
triggered the worst U.S. economic slump since the Great Depression.
Sanders favors breaking up too-big-to-fail banks and reinstating a
version of the Glass-Steagall Act, a Depression-era law that
prohibited commercial banks from engaging in investment banking
activities.
Clinton has endorsed an approach that would break up large banks if
they take excessive risks. She also believes that reinstating
Glass-Steagall, an idea popular with progressive Democrats, would
not address the types of institutions that have risen since the law
was written in the 1930s.
Glass-Steagall's main provisions were repealed in 1999 during the
presidency of her husband, Bill Clinton - a fact that Sanders
highlighted in his speech. The back-and-forth between Sanders and
Clinton over breaking up banks and regulating the so-called shadow
banking sector intensified this week, with one of Clinton's top Wall
Street advisers, former U.S. financial regulator Gary Gensler,
criticizing Sanders as not focusing on regulating non-bank
institutions such as hedge funds and insurance companies.
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Sanders said Tuesday that if elected, "Goldman Sachs and other Wall
Street banks will not be represented in my administration."
Gensler, before serving as chair of the Commodity Futures Trading
Commission under President Barack Obama and a U.S. Treasury
Department official under Bill Clinton, was an investment banker at
Goldman Sachs. Former Treasury Secretaries Robert Rubin and Henry
Paulson were also Goldman alumni.
Sanders highlighted how he has pushed for legislation to reinstate
Glass-Steagall alongside Democratic Senator Elizabeth Warren of
Massachusetts, a favorite of progressives. He also quoted another
progressive icon, former U.S. Labor Secretary Robert Reich, as
criticizing Clinton's proposals to regulate Wall Street as too weak.
New York City Mayor Bill De Blasio, a progressive, is among those in
Clinton's corner. In a statement on Tuesday, he said that "having
studied all the Wall Street reform proposals," he believes Clinton's
is the "toughest, farthest-reaching plan of anyone running for
president."
On the Federal Reserve, Sander said it should not pay financial
institutions interest for the money they keep at the Fed and that
such institutions should instead pay the U.S. central bank a fee. He
also said he would not put financial industry executives on the
Fed's presidentially appointed board.
Individual companies were also name checked by Sanders. He said that
JPMorgan Chase & Co <JPM.N>, Bank of America Corp <BAC.N> and Wells
Fargo & Co <WFC.N> are nearly 80 percent bigger than when they
accepted money from the U.S. government during the 2008 bailout.
(Reporting By Amanda Becker; Editing by Jonathan Oatis)
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