Paul Krugman on Wall Street reform: Hillary vs. Bernie

[BainsBane]

For what it’s worth, Mrs. Clinton had the better case. Mr. Sanders has been focused on restoring Glass-Steagall, the rule that separated deposit-taking banks from riskier wheeling and dealing. And repealing Glass-Steagall was indeed a mistake. But it’s not what caused the financial crisis, which arose instead from “shadow banks” like Lehman Brothers, which don’t take deposits but can nonetheless wreak havoc when they fail. Mrs. Clinton has laid out a plan to rein in shadow banks; so far, Mr. Sanders hasn’t. . . .

Well, if Wall Street’s attitude and its political giving are any indication, financiers themselves believe that any Democrat, Mrs. Clinton very much included, would be serious about policing their industry’s excesses. And that’s why they’re doing all they can to elect a Republican.

To understand the politics of financial reform and regulation, we have to start by acknowledging that there was a time when Wall Street and Democrats got on just fine. Robert Rubin of Goldman Sachs became Bill Clinton’s most influential economic official; big banks had plenty of political access; and the industry by and large got what it wanted, including repeal of Glass-Steagall.

This cozy relationship was reflected in campaign contributions, with the securities industry splitting its donations more or less evenly between the parties, and hedge funds actually leaning Democratic.

But then came the financial crisis of 2008, and everything changed. . .

While this is good news for taxpayers and the economy, financiers bitterly resent any constraints on their ability to gamble with other people’s money, and they are voting with their checkbooks. Financial tycoons loom large among the tiny group of wealthy families that is dominating campaign finance this election cycle — a group that overwhelmingly supports Republicans. Hedge funds used to give the majority of their contributions to Democrats, but since 2010 they have flipped almost totally to the G.O.P.

http://www.nytimes.com/2015/10/16/opinion/democrats-republicans-and-wall-street-tycoons.html?_r=1

[bumprstickr]

1. With a GOP congress that is owned by the corporations,

passage of any real reform is a long shot.

[upaloopa]

2. Well Krugman is obviously in the tank for

Last edited Fri Oct 16, 2015, 06:05 PM - Edit history (1)

Hillary.
He says her plan is the better case
Hillary is serious about policing the financial industry
Glass Steagall was not the cause of the financial crisis

[Hortensis]

5. Krugman has an excellent reputation, Upaloopa. If he were "in the tank"

for anyone as you imagine, his reputation would be in shreds and he'd be an immediate object of contempt among those whose opinions he most respects.

Experts in highly technical fields, like economics and nuclear physics, cannot deviate far from what their readers know to be the truth specifically because their readership is sophisticated and knowledgeable. It's very hard, and usually impossible, to put over lies on people in the know.

[upaloopa]

6. I guess I should have added the sarcasm smilie

I will do that now

[Hortensis]

7. Sorry! But, yes, I was forced to find out where that sarcasm smilie

was not long ago myself. Well, maybe someone else who doesn't need my input will agree too.

[Agnosticsherbet]

3. Thank you Paul Krugman

Great article.

[Hortensis]

4. What an excellent big-picture view of this important topic. Sweet and simple.

Thanks, Mr. Krugman and BainsBane.

[Doctor_J]

8. What a shame. one of the few liberal media members joins the campaign of

a "centrist" who wants to let wall street run loose, continue the perpetual war, cut social security benefits, and continue heritage care.

Hillary is the candidate of conservatives who find Ted Cruz too much of a loose Cannon.

[BainsBane]

10. He hasn't joined the campaign

He provided information, which clearly doesn't interest you. Heaven forbid actual facts influence political discussion.

I love how none of you have bothered to inform yourself even marginally on the positions of someone you are so certain is bad for the country, even when you must have heard some of them just the other night. I know very well it is because the opposition to Clinton has absolutely nothing to do with policy. If it did, you would care enough to discuss her actual proposals, which clearly don't interest you in the slightest.

[reformist2]

9. Hillary is claiming the schemes are the problem. Bernie is saying the BANKS themselves are.

I'm with Bernie.

You can make one of their reckless schemes illegal, but it will do you little good. The problem is, these banks will always be cooking up new schemes!

You can't just target an individual scheme, or even a kind of banking like "shadow" banking, and expect things to improve. These banks are so big, that when their schemes go awry, they end up wrecking the economy.

The bottom line is, the banks are too big. They need to be broken up. It's extreme, but it needs to be done.

[BainsBane]

11. The banks are too big for my liking as well

but Krugmam points out that Bernie's proposals do nothing to address the problems or the shadow banks that caused the financial crisis of 2008.

[Fawke Em]

13. Except that he does.

Details do matter.

[That Guy 888]

14. Most Important part of this column is the last paragraph

In other words, while there are some differences in financial policy between Mrs. Clinton and Mr. Sanders, as a practical matter they’re trivial compared with the yawning gulf with Republicans.

As things stand now, I'm voting for Sanders in the primary, but I'm voting for the Democratic nominee in the Presidential election.

[BainsBane]

15. Great. And that is what is important

We need a Democrat in the White House.

[Cha]

16. "For what it’s worth, Mrs. Clinton had the better case" Thanks BB

[BainsBane]

17. and the crucial point that Wall Street money is going to the GOP

almost exclusively.

[TheKentuckian]

18. If you don't believe you can get legislation through and you are picking an executive position anywa

who they will appoint and nominate for administrative positions, how they will chose to interpret existing and any future laws, and how they will seek to influence both system and party seems most critical and on every point Sanders is for more credible and far less likely to lead in another round of foxes to watch the henhouses.

Krugman is telling himself sweet little lies to himself and as a consequence others to excuse doing the wrong thing for the wrong reasons motivated by desperate fear and a false sense of risk aversion.

[BainsBane]

19. Krugman isn't the one lying to himself.

He's not endorsing a candidate. He's presenting information that contradicts the contrived narrative about Clinton. That so many are completely uninterested in actual policy or the reality of campaign donations tells me that their opposition has nothing to do with issues.

[TheKentuckian]

20. Some will embrace whatever construct you manufacture as far as I've been able to tell over the years

Turd Way minded folks have been running like the wind from policy discussion for years and I don't expect you to be convinced of anything you didn't set out to find a way to rationalize toward in the first place.

Gamesmanship, spin, flogging fear, excuses, rand rationalizations are not policy.

Yes, the Turd Way lullaby is a lie. These people serve wealth and power and have done so for decades everything else 8s cover for the extraction con.

[stevenleser]

21. That poster responded with "turd way" and complained about your "construct" LOL!

[Tierra_y_Libertad]

22. Get back to me when the indictments come in for the banksters.

[WhaTHellsgoingonhere]

23. Guns Shmuns. THIS is a policy issue I care about. BainsBane!!!!

Thanks for posting this



Critics say Hillary Clinton is pro-Wall Street. Her Wall Street reform plan says otherwise.

In April, amid growing speculation that she would run for president, Sen. Elizabeth Warren gave a pivotal speech titled "The Unfinished Business of Financial Reform." In it, Warren laid out what the next Democratic president could and must do to complete the task of post-crisis financial reform.

Specifically, Warren said the next president’s agenda should:

1. Defend Dodd-Frank against attempts to weaken or compromise it.
2. Scale up enforcement, investigations and convictions: "When big financial institutions are not deterred from breaking the law… then that’s what they will do."
3. "Tackle the shadow-banking sector," which created "runs and panics in the short-term debt markets that spread the contagion across the financial system."
4. Create a "targeted financial transactions tax."
5. Break up the biggest banks. First "cap the size of the biggest financial institutions," then create a new Glass-Steagall Act "that rebuilds the wall between commercial banking and investment banking."
Warren didn’t wind up running for president. But her five points are a good rubric for evaluating Hillary Clinton’s newly released plan to tame Wall Street. Clinton’s agenda is a very detailed and comprehensive dive into financial reform. It is broad, covering parts of the financial markets that aren’t often discussed. If anything, it goes into such footnoted specifics that it can be overly wonky. But it fits into the Warren framework well enough to compare and contrast the two approaches.

Using the Warren criteria, Clinton gets points on the first four, but approaches the fifth by working through Dodd-Frank rather than against it. Bernie Sanders gets major points on the last two, but hasn’t gotten specific on tackling shadow banking and the broader financial sector. Rather than stronger or weaker, we’re left with two different ways of prioritizing financial reform, with Sanders focusing on eliminating the threat of the largest banks and Clinton looking to the financial markets as a whole.

More at link

http://www.vox.com/2015/10/8/9482521/hillary-clinton-financial-reform