If Wall Street Reform Becomes 2016 'Litmus Test,' Clinton Will Have Lots of Explaining To Do
By Nadia Prupis
As Thursday marked the 16th anniversary of the repeal of the Glass-Steagall Act, which erected a firewall between investment and commercial banking, some are assessing if new measures to break up large banks will become a litmus test in the 2016 presidential race.
Because Glass-Steagall is seen as a challenge to Wall Street, many experts say Hillary Clinton's opposition to reinstating that provision makes it clear where she stands in the fight against the industry's powerful influence.
The call to reinstate Glass-Steagall has picked up steam from influential progressives like Sen. Elizabeth Warren (D-Mass.), who in July introduced a bill that would restore the banking barrier, as well as presidential hopefuls Sen. Bernie Sanders (I-Vt.) and former Maryland Governor Martin O'Malley.
"A lot of people view [Glass-Steagall] as a litmus test," Dennis Kelleher, who heads the financial reform advocacy group Better Markets, told The Hill on Thursday. A candidate who supports reinstating the law, Kelleher explained, is saying, "'I get it, I get it. I will be tough on Wall Street. Trust me.'"
But Clinton is opposed to the idea, putting her at odds on the issue with not only Warren and Sanders, but also Republicans like John McCain and Mike Huckabee .
As the only Democrat who has opposed reinstating a law similar to Glass-Steagall—and has been criticized for her longstanding ties to big banks—Clinton holds a singular position in the presidential race. Her plan to take on Wall Street's unchecked power, unveiled last month, promises to crack down on financial crimes and risky trading—but, as financial reform advocates cautioned, was "far less bold" than Warren's and Sanders' agendas. As CNN Money summed up at the time, "The reaction [to Clinton's plan] from the banking community was a shrug, if not relief."
TruthDig 's Robert Scheer noted last month that Clinton has benefited from her husband's repeal of Glass-Steagal even as she built her own record regarding Wall Street.
When it comes to the economic policies driving the 2016 election, wrote Scheer, "Hillary Clinton seems to be even less conflicted than her husband in serving the super rich at the expense of the middle class."
In a piece for the Huffington Post published Wednesday, Kelleher wrote, "If Glass-Steagall hadn't been repealed, there's little doubt it would have lessened the depth and breadth of the 2008 financial crisis, which has cost our country trillions of dollars and caused tens of millions of people to lose their jobs, homes, savings and much more."
He pointed to the case of Citigroup, which has "failed repeatedly over the past 100 plus years and has required frequent taxpayer and government bailouts."
Kelleher wrote:
In 2008, it was the single largest recipient of federal bailouts, the only Wall Street bank not to repay its $25 billion TARP "loan," a bank that would have been subject to Glass-Steagall and was supposed to be supervised by the New York Fed (headed by Tim Geithner at the time). (It also happens to be where two of Clinton's Treasury Secretaries, Bob Rubin and Larry Summers, worked after leaving the Clinton administration.)
During the Democratic presidential debate in October, both Sanders and O'Malley criticized Clinton over her relatively weak stance on Wall Street. Clinton countered that her plan was more comprehensive than the 21st Century Glass-Steagall Act.
She has also defended other banking regulation bills such as the Dodd-Frank Wall Street Reform and Consumer Protection Act. But as Common Dreams reported in July, many key components of the bill— five years after its passage —have yet to be implemented.
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So economically speaking, Hillary is to the right of John McCain and Mike Huckabee. Color me not surprised.
Those that are calling for reinstatement of Glass Steagall only do so because the liberal media brainwashed them into thinking it would have prevented the recession when it would not have.
It's like Bernanke says.
“I’m actually a little puzzled by the focus on that particular provision," Bernanke said during a discussion with POLITICO's Ben White at an America's Fiscal Future event in Manhattan. "I think that if you look at the actual, what happened a few years ago in the crisis, that Glass-Steagall was pretty irrelevant to it because you had banks like Wachovia or [Washington Mutual] that went bad because they made bad loans, and you had investment banks like Bear Stearns and Lehman that went bad because of their investment banking activities."
Even if Glass-Steagall were still in place at the time of the financial crisis, "it would have had no effect on most of these firms," he said, including AIG, which required massive and repeated bailouts.
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Well what else would a Wall Street shill like Bernacke say? He knows where his bread is buttered. In this, he is just like Hillary. Hey, but at least you are in good company.
Don't expect a rino like McCain or a socialist like Warren to admit it was the government doing too much that created the recession not too little. It was the governments involvement in Fannie and Freddie along with the government forcing banks to make loans to bad creditors that created the recession.
Here we see Ron Paul predicting the Fannie Freddie collapse way back in 2003.
And your thoughts on deregulation in the banking industry, Dean?
Yes I would like to see it deregulated. Right now it is heavily regulated and the government should let the free market operate without bailing out failed banks. Let the good ones survive and the bad ones fall. I don't believe in too big to fail. I think they should end the fed. I don't believe the government should set the interest rates the free market should.
So you want to go through a period of big bank failures as part of a reform process? Without regulatory oversight, the predatory lenders come out of the woodwork to feed the next recession with another round of toxic hot potatoes.
promises to crack down on financial crimes and risky trading
Risky trading provisions are unenforceable . All trading is risky . That's why banks which get bailed out by the govt should be : excluded from most trading activities OR not protected by the govt .
In this we are in complete agreement. Heck, I'm even gonna click your thumbs up button.