Nicole Gaudiano

USA TODAY

Sen. Bernie Sanders said Tuesday that Wall Street’s business model is “fraud,” the Federal Reserve has been “hijacked” by bankers and Democratic presidential frontrunner Hillary Clinton’s plan to regulate the financial industry won’t solve the problem.

The Vermont independent, who is running for the Democratic presidential nomination, offered a host of financial policy proposals to overhaul Wall Street during a major address in Manhattan. Among them was a plan to break up the biggest banks and reinstate the Glass-Steagall financial law that separated commercial and investment banking activities.

He said Clinton, who has not endorsed that plan, is “wrong” in her approach. In an apparent dig, he later highlighted Wall Street's "very generous speaking fees," a likely reference to more than $3 million Clinton received in 2013 alone from speaking to firms that included Morgan Stanley, Deutsche Bank and The Goldman Sachs Group, according to a list from her campaign.

“My opponent says that, as a senator, she told bankers to 'cut it out' and end their destructive behavior,” Sanders said. “But, in my view, establishment politicians are the ones who need to cut it out. The reality is that Congress does not regulate Wall Street….”

The cheering crowd at his invitation-only event finished his thought, saying “Wall Street regulates Congress.”

“You got it,” Sanders said. “As president, we’re going to end that reality.”

Clinton, whose husband, former president Bill Clinton, signed legislation repealing Glass-Steagall, says her “more comprehensive approach” will rein in large financial institutions and address risk.

Sanders has co-sponsored legislation with Sen. Elizabeth Warren of Massachusetts, a hero of progressives, to reinstate Glass-Steagall.

During his 50-minute address, Sanders called for a banking system that is part of “the productive economy,” making affordable loans to small- and medium-sized businesses, and not “gambling trillions in risky financial instruments.”

He cast himself as the anti-Gordon Gekko, telling Wall Street that “greed is not good” and warning, “if Wall Street does not end your greed, we will end it for them.”

“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,” he said.

Along with reinstating Glass-Steagall, Sanders said he would require within his first 100 days of being elected president the Treasury Department to target financial institutions whose failure would destabilize the economy unless they received government assistance.

Current law allows regulators to break up "too big to fail" institutions, but Sanders said he would break up the institutions within a year so that they no longer pose “a grave threat to the economy.”

“If a bank is too big to fail, it is too big to exist,” he said.

If elected, Sanders also pledged to:

• prosecute Wall Street executives for the 2008 financial crisis, saying “fraud is the business model of Wall Street.”

• establish a tax on Wall Street speculators to discourage “reckless gambling” and help make public colleges and universities tuition-free.

• turn for-profit credit rating agencies into non-profit institutions, independent from Wall Street.

• cap interest rates on credit cards and consumer loans at 15% and ATM fees at $2.

• allow post offices to offer banking services.

• ban banking industry executives from serving on the Federal Reserve’s boards.

Former Treasury official Tony Fratto, now a partner at a public affairs consulting firm that represents large financial institutions, said Sanders’ proposal to reinstate Glass-Steagall is “nonsensical and would damage the U.S. economy.”

Ahead of Sanders’ speech, Gary Gensler, the Clinton campaign’s chief financial officer and former top regulator at the Commodity Futures Trading Commission, questioned Sanders’ “hands-off approach” to risks in the so-called “shadow banking” sector — including certain activities of hedge funds, investment banks, and insurance companies — which were among “the biggest culprits during the 2008 crisis.”

“Senator Sanders should go beyond his existing plans for reforming Wall Street and endorse Hillary Clinton’s tough, comprehensive proposals to rein in risky behavior within the shadow banking sector,” Gensler said in a statement.

Sanders, however, said that, while shadow banks gambled “recklessly,” the money came from federally-insured bank deposits of big commercial banks. Glass-Steagall would have prevented that, he said.

“I will rein in Wall Street so they cannot crash our economy again,” he said. “Will the folks on Wall Street like me? No. Will they begin to play by the rules if I am president? You better believe it.”

Sen. Sanders would break up banks considered too big to fail