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Wed Dec 30, 2015, 07:57 PM

Why Hillary Clinton Won’t Prevent the Next Economic Recession

http://observer.com/2015/12/why-hillary-clinton-wont-prevent-the-next-economic-recession/

Ms. Clinton refuses to support reinstating Glass Steagall, as she feels it will not be a cure-all for Wall Street’s problems, and while she did cite economists who agree Glass Steagall didn’t directly cause the 2008 economic recession, she neglected to mention it had already lost much of its power due Wall Street deregulation under Mr. Clinton’s administration. The law was enacted to prevent history from repeating itself after the Great Depression, and shortly after its repeal history did just that with the 2008 economic recession. A failure to reinstate a contemporary form of Glass Steagall invites future recessions to occur.



Ms. Warren and many other politicians support reinstating Glass Steagall to help rebuild the wall between investment banking and commercial banking, while taking into account contemporary issues in the financial sector that were non-existent or irrelevant when Glass Steagall was first introduced in 1933. “By itself, the 21st century Glass Steagall Act will not end too big to fail and implicit government subsidies, but it will make financial institutions smarter and safer, and move us in the right direction,” she added.

Ms. Clinton’s comprehensive Wall Street Reform plan has a lot of positive attributes—many of which Ms. Warren and Mr. Sanders agree with—but the dismissal of reinstating Glass Steagall weakens her plan significantly. In her Times op-ed she argued that “we need to tackle excessive risk wherever it lurks, not just the banks.” Ms. Clinton attempts to debunk the reinstatement of the Glass Steagall Act as ineffective, but given the political power of big banks—with the five largest on Wall Street currently holding 45 percent of the nation’s banking assets compared to just 25 percent in 2000—her cautious reforms are insufficient.

Supporting Ms. Warren and Mr. McCain’s 21st century Glass Steagall Act should be a staple of both Ms. Clinton and Mr. Sanders’ Wall Street reforms, but Ms. Clinton is opting for a less aggressive approach, which doesn’t help distance her from Wall Street. Some of the biggest donations to the Clinton Foundation came from Bank of America, CitiGroup and Goldman Sachs. In the second Democratic debate, she fumbled an explanation of her Wall Street ties, going off on a rant about 9/11. Ms. Clinton’s disregard for Glass Steagall is indicative of her unwillingness to actually usher in change on Wall Street by holding banks accountable for their actions. Her vague talking points are just business as usual; political rhetoric from a well-seasoned lawyer who knows what to say to garner as much support as possible.


Senator Sanders believes reinstating Glass Steagall is a very important part of WallStreet Reform.

https://berniesanders.com/yes-glass-steagall-matters-here-are-5-reasons-why/

1. Too-big-to-fail banks are bigger, riskier, and more ungovernable than ever

America’s largest banking institutions are even larger now than they were before the 2008 financial crisis. The nation’s six largest banks issue more than two thirds of all credit cards and more than a third of all mortgages. They control 95 percent of all derivatives and hold more than 40 percent of all US bank deposits.

2. The argument that Glass-Steagall didn’t cause the 2008 financial crisis is wrong.

Hillary Clinton told the Des Moines Register that “a lot of what caused the risk that led to the collapse came from institutions that were not big banks.” This is part of a longstanding pattern, in which she largely absolves the big banks from culpability for the 2008 crisis while emphasizing “shadow banking” in her own Wall Street plan.

Secretary Clinton returned to that theme during Saturday’s debate, pointing an accusing finger at non-bank entities like AIG and Lehman Brothers while giving a pass to Wall Street’s biggest banks for their role in the crisis.

3. Repeal of the Act has not worked as promised.

Given the risks associated with the repeal of Glass-Steagall, what about the benefits? Turns out there aren’t many.

We were told that repealing Glass-Steagall would lead to more efficiency and lower costs, but neither of these promises has come true. No less an expert than John Reed, former CEO of Citigroup, now says those claims were wrong. Reed wrote in a recent op-ed (behind a firewall) that “there are very few cost efficiencies that come from the merger of functions – indeed, there may be none at all.”


4. The repeal of Glass-Steagall is further corrupting the culture of banking – if such a thing is possible.

Sanders was right when he said on Saturday night that “the business model of Wall Street is fraud.” The traditional practice of what Sen. Elizabeth Warren calls “boring” banking – opening savings accounts, reviewing loans, and providing other customer services – has largely been supplanted by high-risk gambling and the aggressive hustling of dubious investments to unwary clients.

The level of fraud unearthed since the 2008 crisis is nothing short of breathtaking. (The fact that no senior banking executive has gone to prison for that fraud is, if anything, even more breathtaking.) How did that happen?


Much more at the link.


Martin O'Malley also has an extensive plan to rein in the corruption AND it includes the reinstatement of Glass Steagel.

https://martinomalley.com/policy/financial-reform/

FINANCIAL REFORM
PROTECTING THE AMERICAN DREAM FROM ANOTHER WALL STREET CRASH
Governor O’Malley knows that the American Dream today remains out of reach for too many families. To attack this problem, it will take a multi-pronged and fearlessly progressive approach to addressing economic inequality. But the results of any steps we take as a nation to raise wages, ensure retirement security, and make the dream of homeownership a reality can be wiped out in an instant by another Wall Street crash.

We need to protect America’s economy. And we can only do it by implementing strong accountability and structural reforms that build upon the Dodd-Frank Act and put an end to too-big-to-fail, too-big-to-manage, and too-big-to-jail financial firms.



PROPOSAL: BREAK UP THE BIGGEST BANKS
Separate Risky Investment Banking from Ordinary Commercial Banking

For 70 years, the 1933 Glass-Steagall Act kept the U.S. economy safe from major financial crises by requiring commercial banks to be separate from investment banks to prevent them from putting everyday Americans’ deposits at risk. If Glass-Steagall hadn’t been repealed in 1999, the financial crisis will likely have been far less severe.



PROPOSAL: LIMIT RISKY, SPECULATIVE TRADING ON WALL STREET
Implement a Financial Transaction Tax to Limit High-Frequency Trading

High-frequency trading creates volatility and unnecessary risk in financial markets, while serving no productive purpose in the real economy. A small tax should be applied to each sale and purchase of a financial instrument to limit this activity—one that would be nearly imperceptible to longer-term investors, but could dramatically cut down on highrisk, speculative activity on Wall Street.


More at the link.



JMHO. It makes zero sense that ANY Democratic candidate would not do everything within his or her power to prevent another catastrophic collapse. I just don't see a middle ground here. The 99% are the ones that suffer the consequences. It's always privatize the profits while socializing the risks with these greedy capitalists. Enough already!

Why aren't all our candidates all on the same page? Why is Hillary Clinton the only Democratic candidate not on the same page as O'Malley and Sanders?

Someone explain it to me.




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Arrow 19 replies Author Time Post
Reply Why Hillary Clinton Won’t Prevent the Next Economic Recession (Original post)
nc4bo Dec 2015 OP
ViseGrip Dec 2015 #1
nc4bo Dec 2015 #7
lewebley3 Dec 2015 #9
MisterP Dec 2015 #2
peacebird Dec 2015 #4
MisterP Dec 2015 #5
peacebird Dec 2015 #6
nc4bo Dec 2015 #10
Broward Dec 2015 #3
jwirr Dec 2015 #8
Yallow Dec 2015 #11
KansDem Dec 2015 #12
nc4bo Dec 2015 #13
Enthusiast Dec 2015 #14
BlueCheese Dec 2015 #15
nc4bo Dec 2015 #16
99Forever Dec 2015 #17
mmonk Dec 2015 #18
liberalnarb Jan 2016 #19

Response to nc4bo (Original post)

Wed Dec 30, 2015, 08:01 PM

1. Hillary HAS to say she is against Glass Steagall. Her hubby got rid of it, and to support is admits

 

a terrible stain of what happened to this country when he ended the ACT.

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Response to ViseGrip (Reply #1)

Wed Dec 30, 2015, 08:23 PM

7. She can disagree with Bill's policy decisions

And be the hero of the 99%, easily.

Why won't she?

I'm late cooking dinner but will be back later.



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Response to ViseGrip (Reply #1)

Wed Dec 30, 2015, 09:14 PM

9. Glass Steagall is left wing non se: If we have recession is best that we are

 



in the Clinton's hands: they have fixed the economy before:
they raised taxes on the rich.

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Response to nc4bo (Original post)

Wed Dec 30, 2015, 08:06 PM

2. the DLC wasn't just there to boost the Dixiecrats and the Reagan Dems who wanted boots on the

ground in Nicaragua: they wanted a steady source of funding for the party/DNC, and they wanted a new, smart, corporate diversity-friendly constituency--Hollywood, IT, Wall Street, software, retail (not like those uncouth blue-collars)

that also meant no more talk about how the money was distributed within the economy--just "make the pie higher" like Tsongas said

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Response to MisterP (Reply #2)

Wed Dec 30, 2015, 08:07 PM

4. Bingo!

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Response to peacebird (Reply #4)

Wed Dec 30, 2015, 08:12 PM

5. "Repeal of the Act has not worked as promised"

170,000 NAFTA jobs? where ever did they go?!
it was just good-sounding, well-massaged untruth to get it passed, and then it's too late: Stockman admitted Reaganomics was a fraud not even a year into Reagan's figureheadship

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Response to MisterP (Reply #5)

Wed Dec 30, 2015, 08:14 PM

6. She is feeding the corporations who fund her ambitions.

And hoping no one will notice the actual results of policies...

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Response to MisterP (Reply #2)

Wed Dec 30, 2015, 09:45 PM

10. Just make the pie higher...

That's it in nutshell.

Regular old Joe and Jane aren't even an afterthought.

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Response to nc4bo (Original post)

Wed Dec 30, 2015, 08:06 PM

3. She doesn't want to bite the hand that feeds her.

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Response to nc4bo (Original post)

Wed Dec 30, 2015, 08:34 PM

8. Glass-Steagall is important to the individual depositor because it protects our money.

But there is more that needs to be done to keep us from another world-wide Great Depression. When they say the banks are too big to fail they do not mean they are incapable of failing.

What they mean is that the 6 banks we now have are so big that if one fails they will take the entire world economy down with them. This happened on a smaller scale in 2008 and we were forced to bail them out to stop the total collapse. In order to stop them for forcing us to bail them out again they need to be broken up into smaller banks that if they collapse will not threaten the world and will not require us to bail them out again. Glass-Steagall is just the first step.

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Response to jwirr (Reply #8)

Wed Dec 30, 2015, 09:48 PM

11. None Of This Crap Matters

 

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Response to Yallow (Reply #11)

Wed Dec 30, 2015, 10:07 PM

12. "Banksters just violate the law, and then laugh at us ..."

Yeah, laughing all the way to the bank we just bailed out...

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Response to Yallow (Reply #11)

Wed Dec 30, 2015, 10:55 PM

13. To his credit, MO'M has some policies on his website that addresses some of these concerns.

Elevate Focus on Economic Crimes at the Department of Justice

After the financial meltdown, the DOJ fell down on the job of prosecuting financial institutions for breaking the law. Rather than focusing on more time-consuming investigations and criminal prosecutions, they resorted to a fines-only approach of cracking down on law-breaking.

To date, not one single Wall Street CEO has faced criminal prosecution. Compare this stat to the aftermath of the 1980’s savings-and-loan scandal when hundreds of individuals were criminally prosecuted. Changing the culture at the DOJ will start at the top, but it should also be given the resources to investigate and prosecute financial crimes in-house.

Governor O’Malley will:

Create a Standalone Economic Crimes Division Within DOJ. To increase the focus on investigating and prosecuting financial crimes, Governor O’Malley will create a Division of Economic Crimes within DOJ that is separate and co-equal to the criminal division. The economic crimes unit should have an independent budget and be staffed with top prosecutors and FBI agents.
PROPOSAL: ENFORCE REAL PENALTIES FOR FINANCIAL CRIMES
Since the financial crash, the federal government’s key enforcement agencies have sent a message to the largest financial institutions that they are “too big to jail” and somehow above the laws that apply to every other entity and individual in America.

Rather than enforcing penalties that would have real deterrent effects, enforcement agencies have relied almost exclusively on settlements as a punitive measure. As a result, banks like JP Morgan Chase, Citigroup, Barclays, UBS, and the Royal Bank of Scotland have continued to break the law, because they know that they will face nothing more than a slap on the wrist—a fine paid with shareholder money that can often be deducted from their taxes as a business expense.

Require Law-Breaking Banks and their Executives to Admit Guilt, Face Real Consequences

While the DOJ and SEC have touted the large fines they’ve imposed on law-breaking financial institutions, they have failed to implement any policies that will serve as real deterrents against continued law-breaking.


Sen. Sanders hasn't filled out his plan (I wish he would though). Sanders has always spoken up against Wallstreet and I do trust him to protect us from their greed....

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Response to nc4bo (Original post)

Wed Dec 30, 2015, 10:56 PM

14. Kicked and recommended!

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Response to nc4bo (Original post)

Thu Dec 31, 2015, 12:50 AM

15. Glass Steagall Glass Steagall Glass Steagall

It's become a mantra, but its repeal wasn't responsible for the 2008 crash, so it's a red herring and a simplistic distraction from what really happened.

What did cause the 2008 crash was the failure of institutions like AIG (an insurance company) and Lehman Brothers (an investment bank). Clinton's plan goes after regulating those. It's why Paul Krugman, the pre-eminent liberal economist, says her plan is stronger than Sanders'.

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Response to BlueCheese (Reply #15)

Thu Dec 31, 2015, 07:58 AM

16. Bother to read the first article before listing those TPs? nt

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Response to nc4bo (Original post)

Thu Dec 31, 2015, 08:20 AM

17. K&R

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Response to nc4bo (Original post)

Thu Dec 31, 2015, 08:52 AM

18. 30-40 years of my hard work wiped out. I'm

living proof. But people rather believe politicians and some of their allies despite that reality.

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Response to nc4bo (Original post)

Sat Jan 9, 2016, 12:28 AM

19. Whats with the fly thing in your sig line? what does it represent?

 

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