Bernie Sanders detailed a number of his financial-policy proposals in New York on Tuesday. Though he’s been clear in the past that he thinks America’s biggest banks should be broken up, one particularly notable section of his speech on Tuesday was the part outlining how exactly he plans to reform the Federal Reserve, the U.S.’s central bank:
In my view, it is unacceptable that the Federal Reserve has been hijacked by the very bankers it is in charge of regulating. I think the American people would be shocked to learn that Jamie Dimon, the CEO of JPMorgan Chase, served on the board of the New York Fed at the same time that his bank received a $391 billion bailout from the Federal Reserve. That is a clear conflict of interest that I would ban as president. When I am elected, the foxes will no longer be guarding the henhouse at the Fed. Under my administration, banking industry executives will no longer be allowed to serve on the Fed’s boards and handpick its members and staff.
Sanders is referring to what critics call the “revolving door,” the shuffle of financiers between positions at the Fed and jobs in the financial sector. This public-private overlap has prompted concerns that regulators are going easy on the firms they oversee, with the hope that someday they’d get a job from one of those firms—which would be a huge conflict of interest.
The list of government officials who have passed through the revolving door is long, and includes high-ranking regulators such as former Fed Chairman Alan Greenspan, who became a consultant to not one, but three Wall Street firms shortly after leaving the Fed, and former Treasury Secretary Timothy Geithner, who became the president of the private-equity firm Warburg Pincus. Even Ben Bernanke, a tenured professor at Princeton before he became Fed Chairman, became a senior adviser for the billion-dollar hedge fund Citadel not long after his government job ended.