2016 Postmortem

portlander23

(2,078 posts) Wed Oct 14, 2015, 04:58 PM Oct 2015

MATT TAIBBI: Hillary Clinton's Take on Banks Won't Hold Up

Last edited Thu Oct 15, 2015, 07:37 AM - Edit history (1)

Hillary Clinton's Take on Banks Won't Hold Up
MATT TAIBBI
Rolling Stone

The key exchange began with a question from CNN's Anderson Cooper:

"Just for viewers at home who may not be reading up on this, Glass-Steagall is the Depression-era banking law repealed in 1999 that prevented commercial banks from engaging in investment banking and insurance activities. Secretary Clinton, he raises a fundamental difference on this stage. Sen. Sanders wants to break up the big Wall Street banks. You don't. You say charge the banks more, continue to monitor them. Why is your plan better?"

Backing up: When Bill Clinton took office, it was still illegal in the United States for commercial banks to merge with investment banks and insurance companies. But toward the end of Clinton's second term, he signed a bill called the Gramm-Leach-Bliley Act that essentially created Too Big to Fail "supermarket" banks like Citigroup.

This isn't the only reason the financial system is so dangerous now. There's also the matter of the extreme interconnectedness of the financial services industry. This problem came violently into play in 2008, when the failure of a single idiot investment bank, Lehman Brothers, caused a chain reaction that nearly blew up the whole financial system.

So Cooper's question to Hillary Clinton was really about a financial system that became dangerously over-concentrated thanks to multiple laws passed during her husband's administration. Her answer:

"Well, my plan is more comprehensive. And, frankly, it's tougher because of course we have to deal with the problem that the banks are still too big to fail. We can never let the American taxpayer and middle-class families ever have to bail out the kind of speculative behavior that we saw. But we also have to worry about some of the other players: AIG, a big insurance company; Lehman Brothers, an investment bank. There's this whole area called 'shadow banking.' That's where the experts tell me the next potential problem could come from."

By going out of her way to downplay the influence of bank corruption, Hillary is probably signaling that she doesn't plan on leaning into the reform effort all that much. This is consistent with her history as a politician who has accepted an enormous amount of money from Wall Street (both in donations and speaking fees) and has surrounded herself with policy advisors who in many cases bear primary responsibility for the very messes we're talking about.

It's smart politics, well thought-out. Or is it? The modern Democratic Party seems forever to be looking for nuance, when taking a stand would do just as well. Let gay people be soldiers, don't invade the wrong country, break up dangerous banks. An idea isn't automatically bad just because it's simple.