Reprinted from Campaign For America's Future
How do we fix Wall Street, a.k.a. "the banks"? How do the candidates compare? This question came up in the first Democratic debate and there has been lots of online commentary on this since.
The first place to look, of course, is CAF's Candidate Scorecard. "The Candidate Scorecard measures the positions of Democratic candidates for president against the Populism 2015 platform endorsed by organizations representing 2 million Americans." On Wall Street -- specifically, making "Wall Street serve the real economy" -- the Candidate Scorecard rates the candidates as follows:
-- Bernie Sanders: 100%
-- Martin O'Malley: 100%
-- Hillary Clinton: 63%
Note that Clinton's 63 percent rating is primarily based on not having a position on a financial transaction tax -- "Has yet to take a position, though has used rhetoric against high frequency traders who game the system" -- as well as opposing reinstating some form of a Glass-Steagall Act and a lack of specific proposals related to the categories "Break Up Big Banks" and "Affordable Banking."
Meanwhile, Sanders rates 100 percent. No one doubts Sanders' determination to break up the big banks and protect 99 percent of the country from the excesses of Wall Street and "the billionaires." But what if Clinton's proposals will have the same positive effect as reinstating Glass-Steagall and breaking up the big banks? Paul Krugman at The New York Times, Democrats, Republicans and Wall Street Tycoons, writes that Clinton's position might be as good as Sanders':
"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.
"[...] 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.
"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."
Krugman later writes that we can probably trust Clinton on this, because Wall Street is mostly giving money to Republicans these days.
Mike Konczal at Next New Deal, agrees with Krugman on the merits of Clinton's policies, in "Structural Reform Beyond Glass-Steagall":
"My opinion is that reinstating GS isn't an important goal for financial reform. I don't think the story it tells is the one we want to tell, and the reforms it would bring aren't particularly effective. I think in terms of structural changes, there are better aspirational objectives for the debate to focus on and better options for achieving those objectives. In particular, breaking up the banks through higher capital requirements would meet the same goals while building on the work that has been done -- work that is already showing significant success and could use more of a spotlight.
"["] My general thought since the crisis has been that we should be extending the regulatory environment of commercial banking to shadow banking. ... The goal, then, should be to expand that regulatory structure out into shadow banking while weakening the economic and political power of the largest players.
"I don't think reinstating GS would help with this. If separating investment banking from commercial banking split the regulatory structures, it would be a move in the wrong direction. If it didn't, it's still not clear that there would be much to gain for all the energy spent."
However Matt Taibbi at Rolling Stone, in "Hillary Clinton's Take on Banks Won't Hold Up," writes,
"First, it's definitive now that Hillary has no intention of reinstating Glass-Steagall. [CNN's Anderson] Cooper gave her a prime opportunity Tuesday night to announce otherwise, stories have filtered out of her campaign that she has no plans along those lines, and she's explicitly stated that she wants to find a 'different way' to reduce risk.
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