Hillary is wrong on Glass-Steagall...Robert Reich

[pinebox]

When Bill Clinton's former economic adviser is saying Hillary is wrong on Glass-Steagall, you know you've got a problem.

Hillary Clinton’s Glass-Steagall
http://robertreich.org/post/124114229225

Hillary Clinton won’t propose reinstating a bank break-up law known as the Glass-Steagall Act – at least according to Alan Blinder, an economist who has been advising Clinton’s campaign. “You’re not going to see Glass-Steagall,” Blinder said after her economic speech Monday in which she failed to mention it. Blinder said he had spoken to Clinton directly about Glass-Steagall.

This is a big mistake.

It’s a mistake politically because people who believe Hillary Clinton is still too close to Wall Street will not be reassured by her position on Glass-Steagall. Many will recall that her husband led the way to repealing Glass Steagall in 1999 at the request of the big Wall Street banks.

It’s a big mistake economically because the repeal of Glass-Steagall led directly to the 2008 Wall Street crash, and without it we’re in danger of another one.

[99th_Monkey]

1. Good one, timing-wise! K&R nt

[frazzled]

2. I'll take the word of the guy with the Nobel Prize in Economics

And that wouldn't be this guy--much as I think he's cute and I did go door to door working for him back when he ran (and lost) for governor of MA.

[think]

3. And who would that be? Joseph Stiglitz?

Nobel Laureate Joseph Stiglitz on "Rewriting the Rules of the American Economy"

OCTOBER 27, 2015

AMY GOODMAN: Glass-Steagall?

JOSEPH STIGLITZ: Glass-Steagall is another important—

AMY GOODMAN: Explain what it is.

JOSEPH STIGLITZ: So, Glass-Steagall was—again, after the Great Depression, we divided the banks into two groups: the commercial banks, that take your deposits, ordinary people, supposed to give money to small businesses to help grow the economy; and then you had the investment banks, taking money from rich people, investing it in more speculative activities. And we had a big fight during the Clinton administration over whether we should eliminate that division. I strongly opposed it. And when was chairman of the Council of Economic Advisers, it didn’t happen.

AMY GOODMAN: Under Clinton.

JOSEPH STIGLITZ: Under Clinton. But then, instead—you know, Citibank wanted to bring together these various financial institutions, and—

AMY GOODMAN: Who surround Clinton.

JOSEPH STIGLITZ: And the result of that was that we repealed Glass-Steagall. And what I was worried about precisely happened. We wound up with bigger banks that became too big to fail. The culture of risk taking, that’s associated with the investment bank, spread to the whole banking system, and so all the banks became speculators, actually lending to small businesses lower than it was before the crisis. And the kinds of conflicts of interest that were rampant in the years before the Great Depression started to appear all over the place in our financial sector.

AMY GOODMAN: So Bernie Sanders has called for the reinstatement of Glass-Steagall. Hillary Clinton has not.

JOSEPH STIGLITZ: Yeah, I hope that she will. But I think the fundamental issue here is, we have to tame the financial sector. And in our book, Rewriting the Rules, we describe how that can be done.

Full interview:
http://www.democracynow.org/2015/10/27/nobel_laureate_joseph_stiglitz_on_rewriting

[Duval]

19. We saw that! Thanks so much for the info and

the link. Glass-Steagall needs to be reinstated.

[saturnsring]

4. Repeal of Glass-Steagall was indeed a mistake. But it’s not what caused the financial crisis

Repeal of Glass-Steagall was indeed a mistake. But it’s not what caused the financial crisis

Paul Krugman

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

If a Democrat does win, does it matter much which one it is? Probably not. Any Democrat is likely to retain the financial reforms of 2010, and seek to stiffen them where possible. But major new reforms will be blocked until and unless Democrats regain control of both houses of Congress, which isn’t likely to happen for a long time.

[pinebox]

5. And Reich says otherwise

So in the end, net zero.

[saturnsring]

6. not really one has a nobel prize the other has an opinion - i dont think that's a net 0

[pinebox]

7. And one was Bill Clinton's econ advisor

who is saying his policy was wrong.
Touche.

[saturnsring]

11. good thing bill's not running

[pinebox]

21. Nope but his wife is who is defending his actions on killing this very policy

[saturnsring]

23. that's right bill isnt running

[pinebox]

24. LOL I know, when you dislike facts throw out the desperate card. It's cute!

And yes I saw your post before you edited it

[saturnsring]

28. well it is but bill isnt running nor does reich have a noble in economics - net not 0

[Admiral Loinpresser]

34. I believe Milton Friedman had one also.

And Kissinger had a peace prize.

[ozone_man]

43. +1

And Obama has a Nobel Peace prize too. Good company!

Regarding the economics Nobel, it was not part of the original prize categories. I trust Reich a lot, and certainly Elizabeth Watren, not so much Krugman. He seems resigned to supporting the status quo.

[pinebox]

40. It's a net zero

because Krugman has never been in position to put a policy into actual function.
Bill isn't running but Hillary is defending his policy of NOT reinstating Glass-Steagall.
It's really not hard dude.

[saturnsring]

44. oh ffs

[UglyGreed]

9. Obama has a Nobel peace prize

how did that work out? Are the wars over, peace in the Middle East? More troops on the ground in Iraq and now Syria??? Drones????

[Fuddnik]

13. Henry Kissinger has a Nobel Prize. Not to mention the Drone King.

[saturnsring]

15. not in economics

[think]

22. Joseph Stiglitz opposed the repeal & stated that it was the largest indirect cause of the meltdown

Capitalist Fools

By Tiziana Fabi - JANUARY 2009

~Snip~

The most important consequence of the repeal of Glass-Steagall was indirect—it lay in the way repeal changed an entire culture. Commercial banks are not supposed to be high-risk ventures; they are supposed to manage other people’s money very conservatively. It is with this understanding that the government agrees to pick up the tab should they fail. Investment banks, on the other hand, have traditionally managed rich people’s money—people who can take bigger risks in order to get bigger returns. When repeal of Glass-Steagall brought investment and commercial banks together, the investment-bank culture came out on top. There was a demand for the kind of high returns that could be obtained only through high leverage and big risktaking.

Source:
http://www.vanityfair.com/news/2009/01/stiglitz200901-2

Additional background:

Looking Back at the Repeal of Glass-Steagall, or, How the Banks Caught Casino Fever

By Roosevelt Institute | 11.12.09

Weissman notes that Glass-Steagall remained law until 1998, when Citicorp and Travelers Group announced they were merging:

Such a combination of banking and insurance companies was illegal under the Bank Holding Company Act, but was excused due to a loophole that provided a two-year review period of proposed mergers. The merger was premised on the expectation that Glass-Steagall would be repealed. Citigroup’s co-chairs Sandy Weill and John Reed led a swarm of industry executives and lobbyists who trammeled the halls of Congress to make sure a deal was cut. But as the deal-making on the bill moved into its final phase in Fall 1999, fears ran high that the entire exercise would collapse. (Reed now says repeal of Glass-Steagall was a mistake.)

Robert Rubin stepped into the breach. Having recently stepped aside as Treasury Secretary, Rubin was at the time negotiating the terms of his next job as an executive without portfolio at Citigroup. But this was not public knowledge at the time. Deploying the credibility built up as part of what the media had labeled “The Committee to Save the World” (Rubin, Fed Chair Alan Greenspan and then-Deputy Treasury Secretary Lawrence Summers, so named for their interventions in addressing the Asian financial crisis in 1997), Rubin helped broker the final deal.

The Financial Services Modernization Act, also known as the Gramm-Leach-Bliley Act of 1999, formally repealed Glass-Steagall. Among a long list of deregulatory moves large and small over the last two decades, Gramm-Leach-Bliley was the signal piece of financial deregulation.

The result? Casino fever took over commercial banking industry. Weissman quotes Roosevelt Institute Braintruster and Nobel Prize-winner Joseph Stiglitz:

“‘Commercial banks are not supposed to be high-risk ventures; they are supposed to manage other people’s money very conservatively…It is with this understanding that the government agrees to pick up the tab should they fail. Investment banks, on the other hand, have traditionally managed rich people’s money — people who can take bigger risks in order to get bigger returns. When repeal of Glass-Steagall brought investment and commercial banks together, the investment-bank culture came out on top. There was a demand for the kind of high returns that could be obtained only through high leverage and big risk-taking.”...

http://rooseveltinstitute.org/looking-back-repeal-glass-steagall-or-how-banks-caught-casino-fever/

[Unknown Beatle]

29. "until and unless Democrats regain control of both houses of Congress,

which isn’t likely to happen for a long time."

Well, of course not. As long as republicans control voting e-machines, it'll only get worse, plus gerrymandering, voter purges, voter id laws, disenfranchising voters of all colors who tend to vote democratic, etc.

So where is the big stink by democratic leaders when it comes to all of the above, especially e-machines? Nary a whisper. It's seems like they want to continue with the status quo.

Democrats: Look, as long as we have some power, you can have the rest.

Repugs: Thanks. We'll let you have some power in return for letting us lie, steal and cheat. (At the same time trying to wrest complete control from the gullible dems.)

[dreamnightwind]

39. I actually believe we can change that

by abandoning the third-way corporate party rulers. Voter turnout isn't this low only because of GOP obstruction, it's also a result of how people don't feel either side works in their interest. An honest and consistent candidate like Sanders, who isn't owned by the monied elite, could bring a lot of people to the polls who have long ago checked out.

I think these people would show up more in the general election than the primaries. Many of them are no longer registered Democrats, and belong to no party, calling themselves independents. Some of these are registering just to vote for Bernie, some live in states with open primaries, but I suspect the larger part of this group will not participate in the primaries.

The way to overcome gerrymandering and possible voting machine fraud is to drive turnout way up. With turnout so low, it is entirely possible to do so, we just have to give people a reason to show up.

[daybranch]

31. another nobel laureat Joseph Stiglitz says repealing glass -Stegall led to the financIial crisis

so the count is two Nobel laureates in disagreement and Robert Reich as a tie breaker.

[saturnsring]

33. yeah but not exactly. he said

What were the critical decisions that led to the crisis? Mistakes were made at every fork in the road—we had what engineers call a “system failure,” when not a single decision but a cascade of decisions produce a tragic result. Let’s look at five key moments.


krugman said Repeal of Glass-Steagall was indeed a mistake. But it’s not what caused the financial crisis
stiglitz is saying repeal of g/s isn't what caused it but it was a culmination of events

[sabrina 1]

38. And Krugman is wrong. It was like unlocking the doors to the vault and the robbers rushed in

as predicted at the time by some of the best Dems who knew that it was insane to think that people 'can be trusted not to walk in and take what's in there'.

Krugman is slipping lately.

[jwirr]

8. Without it we're in danger of another one. What people

need to remember is that without Glass-Steagall if the banks fall then we all fall with them.

After the repeal of Glass-Steagall commercial banks (that we used to safely deposit our money in) are now combined with the investment banks (that gamble on WS). That is what is meant by too big to fail. They are all tied together. Lehman Brothers went down and it effected everything. With Glass-Steagall the banks are separated and can withstand a crash.

I have always wondered why Bill came out and apologized for the tough on crime laws but never apologized to all the people who lost money because they were forced into the investment banks? Poor people and people who never would have gambled with their money if not forced.

[FlatBaroque]

10. This is all just RW talking points, obviously

Lloyd already told Hill that Shadow Boxing or Banking ...whatever....was the cause of the collapse!

[Jack Rabbit]

12. Concerning Hillary and Glass-Steagall . . .

Thank you for your interest in the open position, Mrs. Clinton.

Please don't call us; we'll call you.

[zappaman]

14. ok. n/t

[Lunabell]

16. She is absolutely wrong!

Too big to fail is too big to exist!

[AzDar]

17. Hillary is wrong about A LOT of things...

[EndElectoral]

18. She's "evolving"

[AzDar]

20. Unfortunately, if she gets the Nomination, she'll be "revolving"... So shady.

[d_legendary1]

25. Glass-Steagall is what kept banks from gambling our savings away

This needs to be brought back.

[randys1]

26. It is more complicated than that, but I agree. Need it back, and when Hillary said

"cut it out" I almost threw something at the TV.

[d_legendary1]

49. Yeah I know. Derivatives, sub-prime lending, and all the other shell games

Wall Street and the big banks used to fuck us over. Still a useful piece of legislation that can help with future legislation of Wall Street. Hearing what HRC said about Glass-Steagall makes me think of the mechanic that had too many screws left over from the engine rebuild.

[Enthusiast]

27. Reinstate Glass-Steagall!

[Thinkingabout]

30. But you did not talk about Dodd Frank. Reich knows Glass Stegall would not bave prevented

The financial crisis. Another note, the Commodities Futures Modification Act also contributed to the financial crisis. Sanders voted yes on this bill.

[SoapBox]

32. She still has plenty of time to "Evolve"!

Or Flip and Flop...either or.

[senz]

35. She's irresponsible.

[WillyT]

36. HUGE K & R !!! - Thank You !!!

[Live and Learn]

37. K&R nt

[raindaddy]

41. Robert must have missed the debate. Hillary already told NASDAQ to "cut it out".

Last edited Fri Nov 13, 2015, 08:44 PM - Edit history (1)

Now if someone would please give her the directions to Wall Street she can tell them the same.... Maybe they'll even pay her to tell them in a speech..

[NorthCarolina]

42. Corporate masters say "Glass-Steagall Bad", Hillary complies. eom

[gordyfl]

45. Hillary ---> "Bought and Paid For"

If you or I want to gamble on Wall Street, we should be able to. If we want to put some of our money in a safe and secure place, we have our local banks. Merging banks, insurance companies and Wall Street brokers was a Bad Idea, as we witnessed in 2008.

FDR knew what he was doing.

This should be a no brainer.

The only reason Hillary won't support this is she's "bought and paid for" by the people who profit from this giant merger.

[Cosmic Kitten]

46. K&R

[1norcal]

47. Thank you pine box and Robert Reich

This is important because it points out from someone who knows Hillary's history of big business support her inclination toward Oligarchy. It will clearly separate Hillary from Bernie and if elected we will see more of the same from her...

[TiberiusB]

48. What is the reason?

Why oppose the reinstatement of Glass-Steagall? Even if it won't 100% solve our economic problems involving Wall Street, why not at least treat it as a step in the right direction? Has anyone anywhere offered a coherent reason for not bringing it back? If anything screams "red flag", it's this. Opposing something with no obvious downside other than putting a firewall between government (aka "taxpayer&quot backed deposits and private Wall Street investment (aka "gambling&quot , seems questionable to say the least.

[George II]

50. What's the point of resurrecting a 4-month old opinion piece?