Tuesday Open Thread [4.12.16]
NEW YORK—NBC/WSJ/Marist–Trump 54, Kasich 21, Cruz 18
NEW YORK—NBC/WSJ/Marist–Clinton 55, Sanders 41
NEW YORK—Monmouth–Clinton 51, Sanders 39
NEW YORK—NY1/Baruch College–Clinton 50, Sanders 37
NEW YORK—NY1/Baruch College–Trump 60, Kasich 17, Cruz 14
I have seen Sanders supporters here and there lately, including State Representative John Kowalko, saying the super delegate system is not fair. This newest round of complaining about the super delegates did not make sense to me, since as of right now, Hillary Clinton is leading Bernie Sanders by over 250 pledged delegates and 2.5 million popular votes. So Super delegates are not even figuring into this equation and are not relevant. It’s not like they are stealing the nomination away from Bernie Sanders. Indeed, only one campaign has made the argument that Super delegates should hand the nomination to someone who is not the pledged delegate leader, and that campaign is Bernie Sanders’. Talk about being undemocratic and hypocritical.
So why complain about the super delegates now? It didn’t make sense. Especially when you consider, no matter how undemocratic and hypocritical it is, winning over the super delegates really is the only way Bernie Sanders can win the Democratic nomination in 2016. Then I came upon this MSNBC graphic being passed around by some Sanders supporters on Twitter:
The graphic is misleading, but at first glance (and after several glances if you low-information independent voter unfamiliar with delegates, super delegates and proportional representation, which happen to be a lot a Bernie supporters), it seems unfair. How does Bernie win 56% of the vote and not win the most delegates??? Well, according to the Wyoming Caucus rules, rules put in place long before Hillary Clinton was a national figure, back in the 1970’s and 1980’s, you have to win a set percentage of the caucus vote in order to get a set number of delegates. Bernie had to win over 56.5% of the vote to win 8 of the 14 pledged delegates that Wyoming has. If Bernie wins below that 56.5 percentage, then the delegates split 7-7. It’s called proportional representation, and it is a progressive reform to the electoral process. If you don’t think that is fair, I don’t know what to tell you. Maybe you think the percentage levels should be 50-50 in order for there to be a 7-7 split, while a 55-45 split should be 8-6. That’s understandable. And we can change that for the next election year. But we will not be changing the rules in the middle of the election to benefit one candidate. That would be unfair.
Now, what MSNBC did to really inflame the sense of unfairness on the part of the Bernie supporters is that they included the 4 Super delegates that Wyoming has in Clinton’s total delegate count. Hence the 11-7 result on the graphic rather than the 7-7 pledged delegate result. It’s stupid and inaccurate and misleading. So Sanders supporters are now against Super delegates and they view the whole primary process as unfair.
Greg Sargent has a proposal, a way that the whole Clinton-Sanders Primary War could end well:
[I]f Sanders can keep Clinton short of a majority of delegates going into the convention, he could still try to use whatever leverage he has — after all, he’ll have the support of voters across the country that Clinton wants in her corner — to prod the Democratic Party to make changes to the way it selects its nominees. Some possibilities:
It’s possible that the party could discuss doing away with super-delegates, or at least scaling down the number of them. […]
It’s also possible that the party could discuss doing away with closed primaries. […]
And, finally: An end to caucuses. Here a nuance intrudes: Sanders, too, arguably benefited from a less-than-democratic element to the process, since he overwhelmingly won caucus states, which require a greater commitment from voters. “One reform should be getting rid of caucuses,” Berman says, adding that their sheer inconvenience ends up excluding lower-income voters, particularly those of color.
I am all for a deal that eliminates super delegates so long as caucuses are banned forever to Hell.
Rick Klein: “Does Donald Trump now want voters’ pity, because he still has to work for the nomination? His Tweet over the weekend, asking ‘isn’t a shame’ that a candidate with the most delegates and votes ‘still must fight,’ betrays either a lack of self-awareness of a lack of understanding of the rules of the game, if not both. Complaining now about delegate selection rules is a little like arguing with the league in the fourth quarter because you didn’t know there were such things as two-point conversions.”
“As Trump is apparently learning quite belatedly, you need to win elections and then also work to make sure the delegates you’re awarded actually support your candidacy. If Trump or anyone else needs lessons on that subject, they can start paying attention to what Ted Cruz is doing, as he sweeps delegate slates in places including North Dakota and Colorado, amid confusion in the Trump ranks. This stretch of time – with Cruz accruing delegates and lining up supporters, and Trump only now bringing in reinforcements to help him navigate the process – could be the one that determines the GOP nomination, even more than the early states, Super Tuesday, or even California.”
Dana Milbank says Republican Party Chairman Reince Priebus is in way over his head:
If the party accepts Trump, it could consign itself to political oblivion by antagonizing women, minority groups and immigrants. If it accepts Ted Cruz instead, it risks a riot by the Trump populists and the loss of all but far-right voters. And if Priebus and his fellow Republicans try to rally around a mainstream figure such as Paul Ryan, they could salvage the party in the long run but would risk alienating the majority of this year’s GOP voters. […]
Priebus failed to act to stop Trump when he could have, or to coordinate Republicans to clear the field for a mainstream alternative. And now he compounds the damage by sticking with the same moral neutrality and happy talk of GOP unity that allowed the situation to develop. […] history is unlikely to remember kindly a Republican chairman who turned the party of Lincoln over to a populist demagogue or to an ideologue loathed even by Republican colleagues. Hopefully those twin menaces will be enough to wig out Priebus — before his Republicans get Whigged out.
Taegan Goddard says Trump is now the underdog. Jason and I were right: Ted Cruz will be the Republican nominee:
Donald Trump leads the Republican presidential race in term of delegates won and he’s led the national polling averages for more than nine months. But after a rough few weeks, it appears Trump is now the underdog to win the GOP nomination.
In multiple states across the country, Trump has shown his campaign doesn’t understand the basic rules governing the Republican delegate process. Well organized campaigns keep track of their supporters and volunteers long after the votes have been cast. That’s because the delegate selection process in most states is a long slog that requires extreme attention to detail.
In this respect, Sen. Ted Cruz is crushing Trump. In fact, it’s not even close.
Harry Enten: “Trump’s 37 percent of the cumulative primary vote and 46 percent of delegates won so far may sound impressive, but his percentages make him the weakest Republican front-runner, at this point in the process, in decades. Of course, a front-runner is still a front-runner, but by historical standards Trump is limping along — hence the increased chances of a contested convention.”
“Past GOP nominees such as George H.W. Bush in 1988, George W. Bush in 2000, Bob Dole in 1996 and Ronald Reagan in 1980 had bigger shares of the vote at this point, even if they started out slowly. You’ll also note, however, that the two most recent Republican nominees, John McCain and Mitt Romney, weren’t doing too much better than Trump is now. McCain and Romney, though, were far ahead of Trump at this point in the delegate race.”
Jonathan Chait says Hillary is abandoning education reform:
New York is a hotbed of anti-testing activism, especially in affluent suburban districts, where parents who equate testing with excessive curriculum pressure have joined forces with teachers unions who see standardized tests as a tool that subjects them to unwanted accountability. Hillary Clinton has already distanced herself from the education-reform movement, which is a predictable course of action for a Democrat facing a contested primary. The looming New York primary has raised the pressure for her to placate the burgeoning “opt-out” movement, which encourages students to boycott standardized tests. Bill Clinton asserted last week that even one national test per year is too many. “The idea of having to give a national test every year for five years in a row for people from the third to the eighth grade doesn’t make as much sense as investing the same amount of money in helping the teachers to be better teachers.”
New York sounds a lot like Delaware in terms of the Opt out movement.
Conservative Review reports that at least two of Donald Trump’s four adult children — Ivanka and Eric — will be unable to vote for their father in New York on April 19th because they are not registered Republicans. LOL.
Politico: “First they spent tens of millions trying to boost their favorite presidential candidates, then they poured cash into ads attacking Donald Trump, and now some of the biggest donors on the right are turning their attention to the delegate fight.”
“Anti-Trump billionaires are funding ground operations in an increasing number of states to try to ensure the selection of national convention delegates who oppose Trump.”
Donald Trump told USA Today that he would consider Sen. Marco Rubio, Gov. Scott Walker and Gov. John Kasich as his potential running mate. Said Trump: “I do like Marco. I do like Kasich. … I like Walker actually in a lot of ways. I hit him very hard, … but I’ve always liked him. There are people I like, but I don’t think they like me because I have hit them hard.”
Washington Post: “The already freewheeling Republican presidential contest is fast turning into a personal persuasion game as the candidates pursue no-holds-barred efforts to lock up delegates — and there are relatively few limits on how far they can go.”
“Under regulations established in the 1980s, delegates cannot take money from corporations, labor unions, federal contractors or foreign nationals. But an individual donor is permitted to give a delegate unlimited sums to support his or her efforts to get selected to go to the convention, including money to defray the costs of travel and lodging.”
“A candidate’s campaign committee can also pay for delegate expenses. Some legal experts believe a campaign could even cover an all-expenses-paid weekend prior to the convention to meet with senior staff at, say, a Trump-owned luxury golf resort in Florida.”
On the liberal-sounding ads for PA Dem candidates: I think we are seeing the ads targeted for the more liberal Philadelphia market. I noticed the Repub Toomey’s ads seemed to downplay his position on police accountability. But checking out Toomey’s ads on YouTube, he is openly demonizing #BLM. I guess that is what he is running in PA outside of the Philly market.
I wonder if PA Dem candidates ads show them running to the center outside of Philly.
No mention of this in the NYTimes?
“What States Can Do on Birth Control”
By JACK A. MARKELL
http://www.nytimes.com/2016/04/12/opinion/what-states-can-do-on-birth-control.html
Why do republican conservatives so obsess on sexual issues
The fact that Bernie didn’t get the 4 super delegates after take 56% of the caucus blows a big hole in the lie that it really is a democratic process.
And that would be true no matter who is in the race. Super delegates were put in place to be king makers and as a stop gap measure in order to keep the peons from getting out of hand and running an actual populist that wants to represent something out of the parties comfort zone.
Ok, thanks to SA for providing Exhibit A. SA, would you agree to a deal where Super Delegates were eliminated in exchange for eliminating caucuses?
I’d take that deal.
Can someone provide me with an historical example of the SuperDelegates determining the election of a candidate… Better stated, has it ever come to pass that a party nominee needed the support of Superdelegates in order to secure the nomination? (No superdelegates, no nomination type of thing)
Thanks for the link Liberal Elite::
“When Colorado pioneered a similar program, in three years it saw savings of $5.85 in Medicaid costs for every $1 invested, because mothers and babies ended up healthier. Although the State Legislature’s failure to pass a bill providing further funding has hampered Colorado’s efforts, the program’s benefits — better birth outcomes, a reduced teenage birthrate and millions of dollars saved — are cause for celebration. With luck, the Legislature will change course this year.”
Good old luck!
I wonder if the Dem primary system was set up that way, because no one ever expected it to be a real race. They party would back their candidate and after 2 primaries (NH, and Iowa,) it was all over. The system seems flawed.
I would totally take that deal, No caucuses (I realize Obama would have been hurt by that and Sanders would be as well), no SD’s. All states stick to one standard (it can be different per-party, but every state should be the same) . However, I would stick with closed primaries. Independents may register for a party prior to the primary… OR, they may form another party… who knows, it might break this 2-party crap, cause more coalitions to form, and do away with the party-first factions.
Hawkeye, 1980 perhaps?
Super delegates were put in place to be king makers and as a stop gap measure in order to keep the peons from getting out of hand and running an actual populist that wants to represent something out of the parties comfort zone.
So what? This has been true for years and I don’t mind telling you that I am really over the folks who have newly discovered this thing. This almost upended Obama 8 years ago and not one of these newly outraged have gotten involved enough the change the rules. You know, the way democracy works? Democracies always set their own rules. It takes people who have their own and their community’s interests at heart to be involved and counter the special and self-serving interests.
Bernie Sanders knew what the rules were when he started his campaign. Shame his supporters don’t and certainly won’t be in the business of trying to fix it, either.
Sign me up for that deal… No caucuses… No Superdelegates… Same rules across the country.
I would also like to see some semblance of organization for the order in which the states hold their primaries… One year, NY is in mid/late April, the next year it’s at the beginning of March… Maybe the quickest way to solve it is that states hold their primaries in the order in which they joined the USA. Of course, we would have to exempt Iowa and New Hampshire since citizens in both states would lose their collective minds if you told them they could no longer be the first two states to vote,.
Yes, Just set a standard. I keep going back to my thought that the original intent was for the primaries to be a show all to bolster the party’s choice. It is not democratic at all. It’s legal, it’s the way the parties, which are allowed to set their own rules have chosen to operate… but that doesn’t mean it is the best or fairest way to do things.
I think as long as it stays this way, particularly in a progressive/liberal (tends to less lock-step with authority than right wing) Democratic party, we will have more and more issues like we are experiencing now where, depending on how it is reported or interpreted, anyone can claim to be in the lead. (Clinton is in the lead, in case anyone thinks i have reality confusion)
Can someone provide me with an historical example of the SuperDelegates determining the election of a candidate… Better stated, has it ever come to pass that a party nominee needed the support of Superdelegates in order to secure the nomination? (No superdelegates, no nomination type of thing)
I think 2008 is the only example. Both Barack Obama and Hillary Clinton could not garner a majority of the total delegates without the aid of super delegates. Obama was the pledged delegate leader with a lead of 110. Clinton was the popular vote leader, with a lead of about 500,000 votes.
There has never been an instance where the super delegates have not gone with the pledged delegate leader.
Sorry, Politico link — Progressive groups target Julian Castro
Interesting, although very lacking in data on exactly the scope of what HUD is doing with these mortgages. And in why the non-profits don’t qualify to buy these mortgages. Still — this looks like the first in an interesting set up, who can you count on to show up at the ballot to make themselves heard? Progressive or Latino voters?
Tooling around on Center for Politics… They referenced an article from Congressional Quarterly which said that the Superdelegate wasn’t actually born until 1982… Some interesting pull quotes from that piece:
* Indeed, the 1980 Democratic National Convention was host to a bitter rules fight, when Sen. Edward M. Kennedy of Massachusetts argued that pledged delegates, in the interests of promoting the party’s general election fortunes, should be free to abandon Carter and support him for the nomination instead.
* The superdelegate was born — with the clear mandate of restoring more nominating power to the top echelon of party leadership.
* But the one issue that was never in doubt, Hunt says, is that superdelegates were supposed to be free to decide how to vote — not just rubber-stamp the results of the primaries and caucuses. “We fully expected them to use their discretion, or judgment,” said Hunt. “There certainly was never any attention to making them just automatically have to follow the results in their states.”
full article link: http://bit.ly/1oUvo3d
“This has been true for years and I don’t mind telling you that I am really over the folks who have newly discovered this thing. ”
That seems like a jaded perspective. “The folks” are new voters. I don’t think the Democratic party can afford to be resentful and contemptuous (how that comes across… not making any statement about you personally) of it’s future.
I think it’s possible to have two entirely separate conversations on this issue, one about Bernie operating within the scope of how things currently are and also a more long-form discussion about what a more equitable delegate structure would look like.
Agreed. Talking about how it could be better and more (small D) democratic isnt necessarily whining about how it is now. I think a lot of people understand how it is now (true, some dont…but more do than are given credit for) … and how it will have to be for this cycle.. but look to the future rather than just doing something because that’s how some old white men decided it should be decades ago.
There are a couple of questions which I always tell my kids to ask: “Why?” and “Says who?”… Maybe not exactly in those very words, but those two usually unearth enough to start forming an opinion on just how legit something is…
And when I ask “Why” and “Says Who” regarding the existence/purpose of Superdelegates, it comes across as nothing but shady “Tammany Hall” nonsense. So we get through this election “as is” and change it.
Am I hopeful that change will happen? Absolutely not, because, unless I’m mistaken, the people in charge of shaping those very rules are ones who benefit from the power bestowed by the current system… so it’d be asking them to give up their personal power for the good of society… And how often has that happened in human history!
You also have people who will defend the system… even if they could benefit from change… out of loyalty to their “team”.
Which is why I am fine doing away with super delegates, but I want something in return, and that is the end of caucuses.
One thing the Sargent column mentions that I do disagree with is open primaries. Sargent says one concession to Sanders is to offer more open primaries as opposed to closed primaries (i.e. only registered party members can vote). I oppose open primaries, and believe they should be eliminated across the board. Why? Because there is literally no other way to grow a political party. You want to participate in choosing the Democratic Party’s nominee? Well, then, you have to register to vote as a Democrat. You can change your mind later, if you are one of those self righteous holier than thou too left for you independents, and leave the Party as soon as the primary is over. Plus, it is a guard against Limbaugh-style ratf*cking.
I agree with everything you just said.
Here, here!
You want to join the party, join the group. No guest passes should be allowed.
PEACE IN OUR TIME. Delaware Dem and Ben have reached an accord. LOL.
Interesting thoughts from Josh Marshall on this very topic: “The simple fact is this: there are a number of reforms that would help make the nomination process more fair, democratic and transparent on the Democratic side. They all fix parts of the process that are currently helping Bernie Sanders.”
The Super Delegate and Caucus issue helps BS. I will have to read more of the piece to see what else.
“The folks” are new voters.
The ones I see having on about this were in this discussion in 2008 when Superdelegates were a possible threat to Obama. So they aren’t that new.
And I am not defending Superdelegates, but the GOP wishes they had them right about now.
“the GOP wishes they had them right about now.” <== This
“You can change your mind later, if you are one of those self righteous holier than thou too left for you independents, and leave the Party as soon as the primary is over. Plus, it is a guard against Limbaugh-style ratf*cking.”
You can change affiliation online in a couple of minutes. How good of a guard is it really? Seems like the deadline for affiliation change is the actual stopgap. Requires Limbaugh-types to be aware of deadlines before they round up their rats but wouldn’t necessarily stop them from doing the nasty.
The current system doesn’t bother me, at least in terms of what’s happening this year. A long-term look at making the process more democratic would be great, but you never know what you’re gonna get.
Whenever you make major changes, it’s b/c you want to prevent what happened last time from happening next time.
So, the R’s, seeking to avoid the long drawn-out battle that wounded Mitt Romney, decided to frontload stuff this time to benefit a strong front-runner (uh, like Jeb! was supposed to be). Never dawned on them that Trump would be that front-runner.
In Delaware, if you want to participate in committees, etc, you have to have not been a member of another political party in the previous year. There may be some nuance in there, but it does put a cost to the process.
I personally think the nomination process is too long. I get that it exists to drive ratings and media narratives, (pretty much our entire society exists for that reason) but it does more harm than good.
Id be for a system where the least delegate/ least populous states go first, and end with giants like Florida, Texas and California. It is the fairest way to make every state matter… also, 10 states a week for 5 Weeks May-June. And as long as I’m dreaming, 5 million dollar ad-buy caps. for your entire run for office. If you spend all your money in the primary, you will have to find another way to get attention.
I have always wanted regional primaries on Saturday.
First Saturday Feb – Iowa
Second Saturday Feb – New Hampshire
Third Saturday Feb – Nevada, Arizona, New Mexico, Utah, Colorado
Fourth Saturday Feb – Kentucky, Arkansas, Louisana, Alabama, Mississippi, Georgia, North Carolina, South Carolina, Florida
First Saturday Mar–New York, Connecticut, Rhode Island, Massachusetts, Maine, Vermont
Second Saturday Mar–Washington, Hawaii, Alaska, Oregon, Idaho, Wyoming, Montana
Third Saturday Mar-Minnesota, Wisconsin, Michigan, Ohio, Indiana, Illinois, Missouri
Fourth Saturday Mar–Pennsylvania, New Jersey, Delaware, Maryland, Virginia, West Virginia, DC
First Saturday April–Texas, Oklahoma, Kansas, Nebraska, North Dakota, South Dakota
Second Saturday April–California
Super delicates are party cronies buying for power
@B “I personally think the nomination process is too long.”
Not just the nominating process. In most countries, when an election is called for, the whole thing is over and done in 4 months or less.
Look at the most recent Canadian election… this from Wikipedia:
“The Canadian federal election, 2015 (formally the 42nd general election) was held on October 19, 2015, to elect members to the House of Commons of the Canadian parliament. The writs of election for the 2015 election were issued by Governor General David Johnston on August 4. The ensuing campaign was one of the longest in Canadian history”
That’s right… The longest campaign in Canadian history was just over two months!!
And what do we have to tolerate??? …a 24 month campaign??? We are nuts.
and 24-7 Trump reporting
There is a chapter in Tom Wolfe’s “The Right Stuff” titled “The Unscrewable Pooch,” referring to the fact that NASA so needed a great reputation for the first astronauts that even when they (in fighter pilot lingo) “screwed the pooch” like John Glenn did in his first mission, the organization could never publicly admit it.
This reminds me of the Hillary Clinton campaign to date. More and more, it seems, Clinton is prone to Reagan-like missteps, including the latest kerfluffle with Bill De Blasio and her anti-gun charges against Bernie Sanders and Vermont that even WaPo couldn’t find a way to defend. Intriguingly, when called on the Vermont distortion in gun stats, instead of admitting to the badly stretched statistic, the Clinton campaign doubled down on it. Put this together with her Nancy Reagan eulogy, Bill vs Black Lives Matter, and a variety of other missteps over the course of a rather easy primary campaign thus far, and multiply it by the documents released today that hint at a much closer relationship between the Clintons and the Trumps, then factor in that the real rough and tumble phase of the campaign hasn’t even started yet …
I’m seriously wondering where the enthusiasm for Clinton is supposed to come from. She’s got the resume, all right, but where’s the tag line, where’s the signature issue? Well before this time in 2008 Obama had “Hope and Change,” Dubya at least unofficially had “Stay the Course,” Bill had something (I just don’t remember it), GHW Bush had “Read my lips,” and Reagan in 1980 had “Are you better off today than you were four years ago.” So far the most prominent tag line I’ve seen from the Clinton campaign is “That man [Trump] can never be allowed in the White House,” which could just as easily have come from the Sanders campaign.
I get the arguments that pandora makes that the numbers shape up to give Clinton a strong (some would say insurmountable) position in the General, except … Bernie Sanders wasn’t supposed to be even in mathematical contention (which he still is, even if just barely) by this time, and his supporters come off as highly motived, whereas Clinton’s (even here) come off as either (a) arguing that the rules really are in her favor, or that (b) she’s being unfairly subjected to a different standard of vetting than Bernie.
Not much I see in Clinton, or the Clinton campaign, right now is giving me incredible confidence about their ability to manage the General when the other 75-80% of the voters finally start paying attention to the election around Labor Day.
Samantha Bee and the case for super delegates. Watch it! She does an amazing job of explaining – so much so that now I’m conflicted. Not so sure anymore about getting rid of them. I’d have to think about it.
Steve, I can only speak for myself, but one of the main reasons I haven’t really attacked Bernie or crowed about Clinton is because I’ve been in general election – let’s not make this any fight any nastier – mode for a while.
Yet, pandora, I’d ask if you aren’t at least somewhat concerned with the increasing consistency of unforced errors coming out of the Clinton campaign.
She should not be allowing the public perception to be created that Bernie can get under her skin, and she should not be sounding this defensive with an 11-14 point lead in the polls in New York. She has gone a long way to create the perception that if she gets upset in NY that her campaign is in real trouble. I keep wondering why she’d do that.
Nope. Not concerned about Hillary just like I’m not concerned about Bernie. Both would win in November.
You WERE concerned about Bernie. Mind if I ask what changed?
Hillary’s biggest liability right now…. Possibly as always… Is Bill .
@Ben I never made an electability argument – and every time I was accused of making one I clarified my position. I made a vetting argument. I made a policy argument. I made a financing a campaign argument. I said: anything can happen in a two person race; let’s not handicap ourselves by not vetting our candidates.
The only thing that can beat a Dem this year is Dems. If Trump or Cruz or ? wins it will be because we let them.
If Trump wins the nomination a ton of R voters will vote D or stay home. If Trump doesn’t get the nomination – BOOM! Complete chaos. Not seeing Trump as a party unifying person. The GOP is nuts if they think he’ll go away quietly.
He could go away quietly…. frame it all as some gigantic victory for him. You cant rule anything out when dealing with someone with no shame.
@B “You WERE concerned about Bernie. Mind if I ask what changed?”
He lost.
Well… there is that. 😉
I’d ask if you aren’t at least somewhat concerned with the increasing consistency of unforced errors coming out of the Clinton campaign.
Some of this is a result of the attention that Clinton gets vs Sanders — no one parses his every move the way that Clinton is subject to. Almost all of the news I get on this campaign is from NPR or newspapers and while I’ve heard about most of those issues, they aren’t spun into the campaign in trouble narrative that I suspect comes directly from TV. And there are no perfect campaigns — Obama had plenty of issues along the way. Remember Reverend Wright, or “you’re likable enough, Hillary?” or 57 states, or “they cling to their guns”, or even the excessive parsing of Obama’s code switching which didn’t make much difference along the way. It helped the TV shows get a few more eyes but didn’t hurt the overall effort.
And I am going to repeat that if Hillary Clinton had provided the same kind of interview with the NYDN, she’d be close to toast right about now. Because this would have been the news cycle for DAYS and she’d have to really address the expectations game.
“And I am going to repeat that if Hillary Clinton had provided the same kind of interview with the NYDN, she’d be close to toast right about now. ”
Um… Hillary DID give the same kind of interview to NYDN. She too was asked about breaking up the big banks and prosecuting the culprits, and gave some very evasive answers, burying the question in double-speak. As far as I can tell the media has given her a complete pass on this interview. But she did score an endorsement from another billionaire out of it.
Why would Hillary have to put forth a plan to break up the banks? She isn’t running on that issue. Are you suggesting that she has to defend and come up with a plan on Bernie’s platform? Should she also explain how she would implement free tuition at public universities and colleges even tho she’s not running on that?
Sorry, Hillary did not botch any part of that interview the way that Bernie botched his breaking up the banks question. If one of your signature issues is breaking up the banks you should be able to tick off in generalities how it gets done. And he couldn’t do it. Clinton goes back to the need to deal with shadow banking (the real risk) and also talks about the crazyness of a judge overturning the regulator’s judgement re: MetLife. Not evasive.
Hillary got the endorsement of the NYDN. For whatever that’s worth.
Her responses speak for themselves, for those who care to read them.
Perhaps you could point out the problems you have with the interview?
I read every bit of it, like I did Bernie’s. Which is how I came up with the comparison above and puck did not.
First Q and A on banks:
First of all, this answer relies on a toothless law, with Hillary’s stance on “too big to fail” conspicuously absent. And no, I am not impressed that she memorized the section numbers of the law. The conditions of those tests are inadequate and are easily lawyered or politicked around. That is what is meant by “rigged.” Hillary seems to revel in the mechanics of the rigging.
First Q and A on banks, part 2:
Is anybody besides billionaire Mort Zuckerman really buying this “lots of blame to go around” dodge? By the way, if insurance companies are part of the problem, there is a handy mechanism to prevent that – Glass-Steagall.
Second Q and A on banks (to its credit, NYDN followed up on the previous answer):
Hillary peels off the “reciting current law” gambit and tries a different tack: “too big to jail.” For the largest financial crime in history. Is anybody besides Mort Zuckerman taking this as a serious answer?
Third Q and A on banks (again with the follow-up!):
All of a sudden Hillary doesn’t know the law anymore. She’s going to “look into it.”
Fourth Q and A on banks:
Isn’t that basically what Bernie said, just with more words?
@puck RE: 4th Q&A: It’s not what you say but how you say it, you know.
Neither candidate should know how they’d proceed with breaking up too-big-to-fails because it’s relatively uncharted territory. The last big bust up was, what? AT&T into the Baby-Bells? And look where AT&T is now with its sizable siblings- Verizon, Comcast, and whatever amalgamation T-Mobile, Sprint, US Cellular etc. end up becoming part of. Those are telecoms though, not financial behemoths. The gravity of AT&T collapsing is dwarfed by, say, Wells Fargo or JP Morgan/Chase or State Farm collapsing.
All-in-all: Glass-Steagall 2016 version, please followed by Teddy Roosevelt’s ghost on a trust-busting rampage.
First of all, this answer relies on a toothless law, with Hillary’s stance on “too big to fail” conspicuously absent. And no, I am not impressed that she memorized the section numbers of the law. The conditions of those tests are inadequate and are easily lawyered or politicked around.
Not toothless. They haven’t been used yet, but it does put considerable power in the hands of regulators. The test, of course, is who gets appointed to the regulatory body. And while you may not be impressed that she knows where the regulatory authority for breaking up banks comes from in Dodd Frank, Bernie did not. Period. And this is still his signature issue.
Hillary: “So right now, I don’t know what the analysis of the existing potential for a grave threat or the suitability and completeness of their living wills might be. ”
Bernie: “It is time to break up the largest financial institutions in the country.”
Is anybody besides billionaire Mort Zuckerman really buying this “lots of blame to go around” dodge?
I do. And I wrote alot about this when the banks were melting down and I was advocating letting them circle the drain. Lehman failed because Barclays’ (British) regulators blocked them from the acquisition. BoA bought Merrill and JPMC bought Bear Stearns. These banks already had investment arms, but bought these massive problems which put their own banks at serious risk. The Fed let Morgan and Goldman become bank holding companies. Again, the essential problem of TBTF is putting FDIC-backed assets at risk. And all of this started with prolific subprime lending for property, which started outside of traditional banks, but they were the ones buying up the securities.
“The Fed let Morgan and Goldman become bank holding companies. Again, the essential problem of TBTF is putting FDIC-backed assets at risk.”
No, the problem of TBTF is the implicit guarantee that Federal resources will be used to prevent the largest institutions from failing, FDIC-backed products or not.
lurching off topic here…. can you imagine the outrage that would have insued if Bernie made a C.P time joke (it would be disqualifying)… right after his spouse yelled at BLM that they were defending people who killed their children? the Clintons are teflon. edit…. i know Deblasio made the joke… and she sort of cringed… but nothing they do isnt pre-scripted.
I thought it was de Biaso’s comment and Hillary just unfortunately happened to be standing next to him. Was she more involved than that? Anyway, I had never heard that particular slur before and had to have it explained to me.
Are we really going to discuss the financial collapse without discussing derivatives and credit default swaps and, as Cassandra mentioned, sub-prime mortgages? Because I’m not seeing how we can avoid these mechanisms that played a massive role in the collapse while solely focusing on breaking up the banks. It’s way more complicated.
Tephlon is needed against the Republican attack machine. It was a poor decision, but most people are not quite as uptight as those who lurk on news sites and blogs all day 🙂
I actually didn’t hear about it on one of those blogs… i heard about it through my FB feed in the form out outrage by people who i have never seen one political peep from. It’ll probably end up hurting DeBlasio more.
“Because I’m not seeing how we can avoid these mechanisms that played a massive role in the collapse while solely focusing on breaking up the banks.”
“Break up the big banks” is shorthand Bernie uses in his stump speech. The longer version from his web site is “We must break up too-big-to-fail financial institutions. ” Trying to rebut that by claiming “big banks did not cause the Great Recession primarily” is kind of precious and… to use a word I don’t think I’ve used before – Clintonian.
@Ben It was a stupid comment, and despite his personal/family situation he shouldn’t have said it.
Shorthand is fine for stump speeches, but it’s what got him in trouble with the NY Daily News interview – where he should have gotten into detail.
Signed,
Precious Clintonian
yeah. I would say because of his personal/family situation he REALLY should have known better. It could be that Im still annoyed at Bill (the older one) for his remarks that he “almost wanted to apologize” for… But the Clintons really seem to take the minority vote (recently, specifically African Americans) for granted. Im sure if the choice is her or Trump, most people will vote against genocide, but that’s the kind of crap that keeps people at home during the mid-terms. Im ready to call this thing over and done with if for no other reason than to give Hillary a break from campaigning. I think the longer a campaign gets, the more she messes up… or the more likely Bill is to do something dumb… She’ll be fine at governing, but campaigning is not her strong suit.
“And while you may not be impressed that she knows where the regulatory authority for breaking up banks comes from in Dodd Frank, Bernie did not. Period. And this is still his signature issue.”
He may not be impressed, but I am. That she can fire off those 2 sections is, at a minimum, indicative of some deeper exposure to and thought regarding the topic. That depth matters to me.
She didn’t just give an off hand kind of answer, she said:
“There are two approaches. There’s Section 121, Section 165, and both of them can be used by regulators to either require a bank to sell off businesses, lines of businesses or assets, because of the finding that is made by two-thirds of the financial regulators that the institution poses a grave threat, or if the Fed and the FDIC conclude that the institutions’ living will resolution is inadequate and is not going to get any better, there can also be requirements that they do so.”
If someone doesn’t like Clinton they will not be impressed of course. While someone can assert that a Clinton supporter is predisposed to thinking the answer was a good one, conversely those who are against Clinton can also suffer from such confirmation bias.
If Clinton gives a polished answer, it is proof that she is a scripted, programmed political-bot. If Sanders gives a meandering unpolished answer, it’s proof he is genuine and more like a “real person”… the reverse perception is also equally applied and equally foolish.
“And all of this started with prolific subprime lending for property, which started outside of traditional banks, but they were the ones buying up the securities.’
Cassandra is spot on. I continue to be amazed that people have distilled the entire mess down to the simplistic Big Banks and TBTF, which yes, started outside of traditional banks.
There were a host of reasons that contributed to a perfect storm. Government encourage subprime lending, people were sold affordability by the housing industry and their mortgage broker partners. Investors bought securities based on promises of fantastic returns. It was an entire Ponzi scheme with many players.
Everyone bears some responsibility, including the banks. Our entire economy was guilty of irrational exuberance. It’s very proletariat to put it all on the banks’ shoulders. But that doesn’t make it accurate.
It’s not Dodd-Frank, it’s the economy (reinstate Glass-Steagall) stupid!
Public Citizen’s Congress Watch Division statement to Maryland General Assembly:
Summary: Restoring the principle that monies insured by the Federal Deposit Insurance
Corporation (FDIC) should only fund prudent, socially useful goals will best serve our economy. Violating this principle, as happened through regulatory fiat beginning in the 1980s, and then completely with a 1999 congressional act, led to the financial crash of 2008. There is no question that reckless, fraudulent banking caused the crash. Consequently, the Maryland legislature should support a return to prudent banking, which can be accomplished through reinstatement of a modern Glass-Steagall act.
Unlike every other industry, the debt of the banking sector is guaranteed by the federal government. When clients enter buildings with the initials “FDIC” on the outside, they make loans to the banks that are called “deposits.” Unlike other loan-making decisions, depositors need not be concerned with the bank’s ability to repay because the government will make good on the debt (up to $250,000 per customer), even if mismanagement leads to the bank’s failure. Because of FDIC insurance, depositors expect less in interest income than if they loan to a start-up business, or even purchase a corporate bond.
Overview of the original Glass-Steagall’s demise
When it created the FDIC in 1933, Congress understood that the abundant, low-cost funding that would flow into banks because of the government’s guarantee might attract the wrong kind of entrepreneur—an entrepreneur bent on making big, fast profits by taking excessive risks. So the law that created the FDIC placed clear restrictions on what the bank could do with those funds.
FDIC-insured banks must confine their activities to safe loan making. Explains the Independent Community Bankers of America, “Banks are accorded access to federal deposit insurance and liquidity facilities because they serve a public purpose: facilitating economic growth by intermediating between savers and borrowers, i.e., taking deposits and making loans, and by maintaining liquidity in the economy throughout the economic cycle. These activities constitute the fundamental business of banking.”1
President Franklin Roosevelt signed the National Banking Act, on June 16, 1933. Known as “Glass-Steagall” in reference to Sen. Carter Glass (D-Va.) and Rep. Henry Steagall (D-Ala.), this act established the FDIC and also forced the mega-banks of the day to divorce their investment banking affiliates. For instance, JP Morgan split into JP Morgan (a commercial bank) and Morgan Stanley (an investment firm). It split the Bank of Boston into a bank and an investment bank named First Boston (which later became part of Credit Suisse). The government insured the depositors of JP Morgan and Bank of Boston, but not the creditors of Morgan Stanley and First Boston. Although the banking industry had naturally resisted the 1933 legislation, selling off securities business did not deprive the firms of substantial income immediately because the 1929 crash had soured America’s interest in stocks.
As interest in investing reawakened in the aftermath of World War II, regulatory and court decisions gradually eroded the firewall between commercial and financial services, such as investment banking and insurance. Money market funds and brokerage firms such as Merrill Lynch began offering checking account services. Commercial banks increasingly lost market share to other financial institutions. Pressure grew from commercial banks to allow them greater flexibility to compete. In the 1980s, the Comptroller of the Currency, which regulates national banks, allowed commercial banks to engage in derivatives activity, broadly interpreting a statute to declare that some derivatives are part of loan-making. Regulators approved additional powers to expand the activities traditional commercial banks were allowed to undertake. For example, in 1989, the Federal Reserve permitted JP Morgan to underwrite a certain volume of corporate bonds. In 1998, Citicorp, with the help of a temporary exemption from the Glass-Steagall prohibition on mixing banking with insurance, merged with the giant insurance firm Travelers Group to form Citigroup.3 Then Congress ratified this merger when it approved the Gramm-Leach-Bliley Financial Services Modernization Act of 1999. This formally repealed the Glass-Steagall firewall. This punctuation to the end of Glass-Steagall’s piece-by-piece demise most conspicuously provided the main provision that Citigroup sought, namely housing banking and insurance under one corporate roof. Nine years later, in 2008, the financial system collapsed. This is clearly because the repeal of Glass-Steagall transformed Wall Street.
Wall Street apologists who object to the restoration of the Glass-Steagall restrictions on banking routinely point out that Lehman Brothers was strictly an investment bank, not also a FDIC-insured commercial bank. It was the Lehman bankruptcy of September 15, 2008 that set off the crash. Pointing to Lehman, however, ignores the fact that “some of the greatest threats in 2008 were posed by banks – such as Citigroup – built on the premise that integrating commercial and investment banking would bring stability and better service,” notes Simon Johnson, an MIT professor. Moreover, the absence of Glass-Steagall did affect Lehman. Repeal of Glass-Steagall enabled commercial banks, with their funding advantage from federal deposit insurance, to threaten Lehman’s business. Lehman attempted to grow rapidly to protect its market share. The size of its liabilities swelled from $400 billion in 2006 to more than $600 billion in 2007 because of the investment bank’s urgent rapid-growth imperative. “Lehman Brothers was an old line investment bank … [that] now had to compete in the investment banking arena with federally insured commercial banks,” observed Robert Downey, a former partner with Goldman Sachs who once led the Securities Industry Association.
Reproduced by Representative John Kowalko
“Everyone bears some responsibility, including the banks.”
Especially the banks. It wasn’t Countrywide dumping millions onto lobbyists to deregulate banking in 1999 and thereby allow them to speculate with depositor’s funds. It was the traditional banks.
Sure, once the door was kicked down by the banks, nontraditional lenders made a mess – but it was the banks. I know it soothes your delicate centrists sensibilities to point the finger at as many as possible, but facts are facts.
“Especially the banks.”
Sure! You bet, especially the banks. My sensibilities aren’t all that delicate, it’s just that I resist singular root causes because there is no such thing and we continue to suffer from the laws of unintended consequences when we act as if there are.
Jason330,
Absolutely correct and reinstating Glass-Steagall (as my recently filed HCR61 urges Congress to do) would be the first, necessary step in reigning in the bankers’ exuberance for greed. I attended the debate last night and do not think anyone on that stage had or wished to have an inkling of knowledge re Glass-Steagall, hence I posted it here. I felt like getting up on that podium and making it a more detailed conversation. Hell, when”s the filing deadline.
Rep. Kowalko
“Everyone is to blame” is the same as “no one is to blame”
Somehow The Glass-Steagall Act worked fine for 83 years, until the banks had it tossed out. Facts are facts.
JK, that would shake things up a bit.
Jason,
Sadly enough, aside from what the initials TPP (Trans Pacific Partnership) stood for no one on that stage had any idea that China has refused to join leaving the good old USA with 11 partners who (because nothing in the agreement forbids or punishes it) can have China manufacture all of their products (with no regard to wages, safety, health or environmental concerns) and sell them to the American consumers at an inflated price. No one seemed to be aware that DuPont built and recently opened a $200 million factory in China (employing thousands of Chinese workers) to manufacture solar panels under the DuPont name and sell here with no tariff or trade agreement restrictions since it’s an American company. All were oblivious that Johnson Controls had also constructed and opened a multi-million facility employing hundreds/thousands of Chinese workers in China to manufacture its batteries, just like we distribute here but do not manufacture here. Also no trade agreements or tariffs necessary and no jobs for Delaware. The list goes on and on and platitudes without any semblance of intimate knowledge will not benefit Delaware or America.
Rep. John Kowalko
Additional info:
New York State Assembly Introduces Glass Steagall Resolution, KO1192
Description
Glass Steagall Act: a resolution memorializing congress to support efforts to reinstate the separation of commercial and investment banking functions in effect under the Glass-Steagall Act and supporting H.R. No . 381
Authors:
Abinanti, Arroyo, Brennan, Cahill, Colton, Farrell, Glick, Gottfried, Jaffee, Johns, Kearns, Lavine, Lopez, Lupardo, Magee, Markey, Miller, Montesano, Mosley, O’Donnell, Ortiz, Russell, Sepulveda, Skartados, Solages, Thiele
Assembly Resolution No. 1192
BY: M. of A. Steck
URGING the New York State Congressional delegation
to support efforts in the US House and US Senate to
reinstate the Glass-Steagall Act, including the
separation of commercial and investment banking
functions in effect under the 1933 Glass-Steagall
Act
WHEREAS, An effective money and banking system is essential to the
functioning of the economy; and
WHEREAS, Under the American System policies of Alexander Hamilton,
such a healthy banking system should provide credit to multiply the
productive manufacturing, agricultural, and scientific ventures and
activities of the nation; and
WHEREAS, Such a system must function in the public interest, without
bias; and
WHEREAS, The Federal Banking Act of 1933, commonly referred to as
the Glass-Steagall Act, was written, as stated in its introduction: to
provide for the safer and more effective use of the assets of banks, to
regulate interbank control, to prevent the undue diversion of funds into
speculative operations, and for other purposes; and
WHEREAS, Since 1933, and for 66 years, the Glass-Steagall Act
protected the public interest in matters dealing with the regulation of
commercial and investment banking, in addition to insurance companies
and securities; and
WHEREAS, Under the Glass Steagall law, financial institutions were
considered “banks”, and their depositors were protected, only if said
banks met certain criteria, and could not be involved in securities and
speculative instruments; thus protecting insured-deposit banks from the
risk-taking of Wall Street trading firms; and
WHEREAS, The Glass-Steagall Act was repealed in 1999, allowing banks
to use personal investment to speculate in the market, contributing to
the greatest speculative bubble and worldwide recession since the Great
Depression of 1933; and
WHEREAS, The worldwide recession of 2007-08 left millions of homes
in foreclosure; millions of jobs were lost nationwide; and has put
severe financial strains on states, counties and cities, exacerbating
unemployment and stressing the social services systems; and
WHEREAS, Many of the financial industry entities were “bailed out”
by the United States Treasury at a cost of hundreds of billions of
dollars to US taxpayers, and were also granted “equity infusions”,
“asset guarantees”, and “below-market rate loans from the Federal
Reserve”; and
WHEREAS, Despite the cost of these bailouts, and the transfer of
savings from American citizens, and despite implementation of other
policies, financial instability has grown, such that the five major Wall
Street banks are now, in 2016, larger than in 2008; and
WHEREAS, The American taxpayers continue to be at risk for the next
round of bank failures; and
WHEREAS, The call to reinstate Glass-Steagall, has received
widespread national support from prominent economic, banking, farm,
labor, academic, legislative and business leaders from all parties, and
many of the major and respected national newspapers; and
WHEREAS, The United States Senate and House of Representatives have
been making efforts to restore the protections of the Glass-Steagall
Act, and currently in the 114th Congress, Representatives Marcy Kaptur
(D-OH) and Walter Jones (R-NC) have co-sponsored H.R. 381, the current
bill calling for the reinstatement of FDR’s Glass-Steagall, and in the
Senate, Senators Elizabeth Warren (D-MA), John McCain (R-AZ), Maria
Cantwell (D-WA) and Angus King (I-ME) have introduced S.1709, the “21st
Century Glass-Steagall Act of 2015.”; now, therefore, be it
RESOLVED, That this Legislative Body pause in its deliberations to
urge the entire New York State Congressional delegation to support and
enact in Congress the legislation that would reinstate the
Glass-Steagall Act, including the separation of commercial and
investment banking functions that were in effect under Glass-Steagall,
thus securing a safe American banking system, which can protect
deposits, and supply needed credit for a productive economy, protect
state finances and the well-being of our citizens, and remove any
national protection of investment in stocks, underwriting of securities
or investing in or acting as guarantors to derivative transactions or
other activities deemed “non-bank” activities under the Glass-Steagall
law; and be it further
RESOLVED, That copies of this Resolution, suitably engrossed, be
transmitted to each member of the New York State Congressional
delegation.
Press Advisory: Contact: John Kowalko, 302 547 9351
For immediate release Monday April 11, 2016
Delaware Legislator Files Resolution to Reinstate Glass-Steagall
State Representative John Kowalko (25thDistrict announced he has prefiled a House Concurrent Resolution (HCR 61) which will urge congress to reinstate Glass-Steagall.
The resolution will reinstate some necessary regulations on the banking industry in order to stabilize the industry and prevent future economic failures that costs billions of dollars to shareholders and consumers alike.
Representative Kowalko stated that “I hope to have Delaware join over a dozen state legislatures this year in passing a resolution urging the Congress of the United States to pass two bills, HR 381 and S. 1709, which will reinstate the Glass Steagall Act. Over the past three years, more than thirty state legislatures have filed such resolutions. Four legislatures have adopted the resolutions. Congress is now in the process of discussing this solution to the onrushing financial dislocation confronting the nation”.
“In addition, two regional Presidents of Federal Reserve Banks, Neel Kashkari of Minneapolis and James Bullard of St. Louis, have recently called for breaking up the Wall Street banks deemed “too big to fail”, which is the essence of the Glass Steagall Act”, Kowalko said.
Additionally, Glass Steagall restoration has become a “debating point” in the presidential primaries.
Candidates including Sen. Bernard Sanders and Gov. Martin O’Malley and Gov. Rick Perry and Dr. Ben Carson, have supported this measure.
Glass Steagall was implemented after the stock market crash and banking collapse of the 1930s and it worked to prevent another crash for sixty six years.
After it was repealed in 1999, another crash occurred in 2007-08. That crisis has yet to be resolved; the restoration of Glass Steagall, with its proven track record, is the necessary first step toward addressing this situation.
Kowalko stated “I hope all of my General assembly colleagues will join me in passing this important and necessary resolution to inspire Congress to take immediate action on this important issue”
NYC Public Radio Promotes FDR’s Glass Steagall
April 12, 2016 (EIRNS)–Topic No. 1 of WNYC radio Brian Lehrer’s
“30 Issues in 30 Weeks” pre-election series, which started on Monday, just a week before the New York primary, was one “at the heart” of the Democratic Party campaign, host Lehrer announced: breaking up the “To Big to Fail” (TBTF) Banks. Enter the voice of Franklin Roosevelt, telling Americans that his bank holiday proclamation “was the first step in the government’s reconstruction of our financial and economic fabric.”
So, this issue is not new to 2016, Lehrer interjects; that was FDR speaking to the nation on March 12, 1933. He asks: does this not sound familiar? And FDR continues: “We have had a bad banking situation. Some of our bankers
That opening frames a half-hour program dedicated to making a solid case for FDR’s Glass Steagall as the needed remedy for today’s Too Big to Fail banks, which Dodd-Frank does not do.
Audio clips of Bill Clinton and Obama defending the revocation of Glass-Steagall on the grounds that it was needed for the industrialized, centralized, and more nationalist economy which no longer exists; Sen. Byron Dorgan’s outraged warning in
1999 that eliminating Glass Steagall would create TBTF banks whose collapse we would rue within 10 years; and short clips from Bernie and Hillary, completed the setting for the interview with New York Times Business section writer Gretchen Morgenson which followed.
Morgenson spelled out how Wall Street was responsible for the Great Depression; argued that if Glass-Steagall had been in effect the whole economy would not have been brought down by the mortgage crisis of 2007-2008; insisted that the FDIC is not enough to protect deposits, Glass-Steagall is still needed; and dismissed Dodd-Frank as a too-long bill which didn’t end TBTF and mandated regulations which still haven’t been written, six years later.
(http://www.wnyc.org/story/30-issues-breaking-banks/#commentlist)
Somehow The Glass-Steagall Act worked fine for 83 years, until the banks had it tossed out. Facts are facts.
And it is a shame that you don’t have many.
I’m for re-instating Glass-Stegall — but *all* that does is make commercial banking separate from investment banking. Commercial banking was highly regulated, while investment banks were not. So when Glass-Steagall went away, that meant that the investment arms of banks could start expanding their activities into “shadow banking” activities. That is how so very many of them ended up toxic mortgages via off-balance sheet securitizations and hedged with CDOs. They couldn’t have done nearly as much as they did if they were still operating within the commercial banking regs that they started with. Releasing banks from the obligations of Glass-Steagall, released banks from some of the regulatory requirements that included clear balance sheet reporting and (massive) over-leveraging. So re-instate Glass-Steagall and you isolate commercial banking from the kind of systemic risk that almost brought the house down. But you do not address the incredible risks still being amassed by shadow banking activity. That will not just disappear because Glass Steagall is back in effect. So before Glass-Stegall, shadow banking activities were conducted by investment banks (not subject to commercial bank regs), private equity funds, hedge funds, structured investment vehicles and so on. After Glass-Steagall, regulated commercial banks could also conduct shadow banking activities and be subject to the same lax regulatory oversight. Re-instate Glass-Steagall and the thing that *doesn’t* happen is any regulation of the shadow banking activity. Which is now worth more than it did before it broke the economy.
And this is Clinton’s point — that it is the shadow banking system that needs regulation, oversight and more transparency. Even if that regulation is just for Congress and the Fed to make it impossible for it to bail out these shadow entities when they collapse because of excessive leverage or risk.
Which is no where near as emotionally satisfying as breaking up the banks. But you can’t do that and leave the essential risk problem still out there operating with impunity AND with a demonstrated pathway to Fed bailout facilities via reorganization as a bank holding company.
“I’m for re-instating Glass-Stegall — but *all* that does is make commercial banking separate from investment banking.” …. “Commercial banking was highly regulated, while investment banks were not. So when Glass-Steagall went away, that meant that the investment arms of banks could start expanding their activities into “shadow banking” activities. That is how so very many of them ended up toxic mortgages via off-balance sheet securitizations and hedged with CDOs.” … “They couldn’t have done nearly as much as they did if they were still operating within the commercial banking regs that they started with. ” … “After Glass-Steagall, regulated commercial banks could also conduct shadow banking activities and be subject to the same lax regulatory oversight. Re-instate Glass-Steagall and the thing that *doesn’t* happen is any regulation of the shadow banking activity. Which is now worth more than it did before it broke the economy.”
You probably made the best argument for bringing Glass-Steagall back but also revamping it to address modern-day changes. Its repeal enabled banks to escalate and broaden their shady dealings. There is no reason to just focus on shadow banking. There’s no reason to just focus on Glass-Steagall. We can do both. I think Glass-Steagall first gets you a foundation to stand upon while going after shadow banking.
All of a sudden Hillary doesn’t know the law anymore.
I shouldn’t be surprised that you won’t even read what she said. She is looking into the issues she spoke about, right? Lack of regulatory and enforcement resources as well as what were the constraints prosecutors felt they had in bringing cases. You won’t know how to beef up a law or laws until you know how they aren’t working for the enforcement people.
“That will not just disappear because Glass Steagall is back in effect. ”
Why do you presume that Glass-Steagall would be implemented just as it was, without any improvements based on lessons learned?
Sure, once the door was kicked down by the banks, nontraditional lenders made a mess – but it was the banks.
Shame you won’t even educate yourself about shadow banking. Countrywide was a part of the shadow banking problem. And was founded in the late 60’s. They were always a subprime lender. Banks kicked down the door because they wanted in on the party clearly happening on the shadow banking side — a party that wasn’t subject to regulatory (or even shareholder) scrutiny. This was always bigger than depositor assets.
Why do you presume that Glass-Steagall would be implemented just as it was
Have you read the bills that would re-instate Glass Steagall?
Have you read Kowalko’s thing above?
Seriously?
With all due respect, first things first. Reinstate Glass-Steagall as a redoubt that will dampen/arrest the ability to overextend investor money into risky businesses than rework the investment industry”s regulation portfolio. Sitting on the Affordable Care Act “dike” without a public option or a premium regulation authority will guarantee only that the inevitable economic pressure will erode and collapse that “dike” sweeping away the American economy with it. So we should beware of waiting for the inevitable house of cards collapse while the architects are drawing up schematics to support it. We don’t have to necessarily dismantle a shaky structure but it would be foolish to camp under it while we wait for the leaking roof and unstable walls to collapse as they surely will.
Representative John Kowalko