Instead, Bernanke said that of all the solutions proposed, requiring big banks to hold more capital was likely the most effective because there is an increasing cost that comes with being large that might automatically force some banks to break up.
Sanders also asked Bernanke if the Fed's policy of paying interest on excess reserves that banks park with the central bank was limiting lending. Bernanke said that banks had no control on the level of excess reserves in the system. He also said the interest rate that the Fed paid was not high enough to prevent banks from lending, as banks could get much higher yields on commercial loans. Another issue that bothers Sanders is the "absurdity" in the Fed's charter that allows people like JPMorgan Chase CEO Jamie Dimon to sit on the board of the Federal Reserve Bank of New York, a clear example of a "Fox guarding the hen house." Under the current structure, all regional reserve banks have a nine-member board of directors. Three of the directors are bankers in their respective districts, known as Class A directors. The remaining six, known as Class B and Class C directors, represent the interests of the public.