Economist Dean Baker says Federal Reserve Chairman Ben Bernanke is "a huge setback to financial reform" and should be shown the door.
"Bernanke, in his role as Fed chair and a Fed governor since 2002, was as guilty as anyone could possibly be of ignoring financial abuses," Baker says.
Baker points out that the Fed had all the power necessary to prevent the buildup of a dangerous housing bubble but looked the other way with disastrous consequences.
"The Obama administration and Congress then patted Bernanke on the back, said, ‘Heckuva of a job, Ben,’ and gave Bernanke a second term," Baker writes at The Business Insider.
Despite Bernanke, Baker is still hopeful the financial industry can be fixed. He notes an amendment put forward by Ohio Senator Sherrod Brown will cut the biggest banks down to size, though they will still be “too big to fail” by any reasonable measure.
“The better route involves a downsizing of the industry as a whole,” Baker says. “This can best be accomplished through a modest financial speculation tax (FST) like the 0.5 percent tax on stock trades that the United Kingdom has imposed for decades.”
Such a tax, Baker notes, would quickly eliminate many risky deals by making them unprofitable. It would also reduce the size of the industry, making it less politically powerful — and a FST could easily raise more than $100 billion a year.
“Congress is not going to include an FST in this round of reform, but bills for such a tax have been introduced by Peter Defazio in the House and Tom Harkin in the Senate,” Baker observes. “With Congress becoming obsessed with deficit reduction, the public should insist that an FST be at the center of the agenda.”
Labor leaders say they're urging U.S. lawmakers to incorporate a "financial speculation tax" in legislation that would overhaul the nation's financial system, The Wall Street Journal reports.
The AFL-CIO, said "a small tax on small securities transactions, including derivatives trading" could be used to raise billions of dollars in needed tax revenue to finance proposed job-creation packages.
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