OMG! Shut Barney Frank up! Anybody see him vs Reich today?

[Meldread]

32. Then you must have literally never seen Frank give an interview before--ever.

He is literally one of the most curmudgeonly people I have ever seen in Congress. He regularly interrupts people, other panelists, the interviewer, insults them, and in general just doesn't give a fuck. If he thinks he is right about something, he'll shout down the other person to get his point across. This interview was tame by Barney Frank standards.

I normally can't stand his behavior, but in the interview here they were actually talking over and interrupting each other. Robert was the first one to interrupt, in fact. The problem was that Barney is so much better at it, and if you try and fight Barney he isn't afraid to cut you down to size.

Temperament aside, I actually found the discussion intense and enlightening. I actually think Barney made some strong points, and won the debate. His main point was this:

- If you are saying the Big Banks should be broken up, then how big is too big? Obviously, for legislation you are going to need some way of measuring it. Is it 500 billion, 50 billion, 5 billion, 5 million, 5 dollars--what is the number?

- The reason he was asking the question, was because Dodd-Frank already has an answer. Rather than trying to create an arbitrary number, Dodd-Frank measures debt and leverage. If a bank that could pose a systemic risk to the economy is over leveraged, Dodd-Frank forces the government to take certain actions to basically shut that bank down.

- Now, the obvious rebuttal here is that Dodd-Frank doesn't go far enough, because what happens if we have some really huge banking institutions that pose huge systemic risks to the system--a bank so large that the government cannot properly mitigate the risk? We may or may not have banks already in that territory, but as the banks continue to grow larger we will approach that point in the future. There is also the issue of morally leaving tax payers on the hook financially for a failing institution.

- Instead of going with that point, Robert Reich makes a completely counter intuitive argument that it isn't really about risk at all. it is about political power and influence. Whether or not you agree with this line of reasoning, the problem arises with how do you regulate that, and why just target the banks? It is unclear that such a regulation would even be constitutional.

- Barney didn't make this argument though, instead he spoke about his experience with fighting to get Dodd-Frank passed. He said the difficulty in getting it passed was not really from the Big Banks, as Robert Reich would have people believe, but it was instead from smaller banks and credit unions. The reason they posed a larger threat to the regulation, he argued, was because they all were community based and located in individual congress members districts. This intuitively makes sense, because this would mean that those individuals would likely have intimate ties with people in congress, and would likely do some personal lobbying against the bill.

There were some other points made, but this was the core meat of the debate. It centered around how to determine what too big to fail is, and whether the Dodd-Frank approach was correct or the Sanders approach is correct. Barney ended up coming out making a lot of sense, and Reich appeared to be a bit baffled--as if he wasn't expecting this line of attack, so he really didn't have real answers to the challenges.

I came away with the feeling that the best path forward is to stick with Dodd-Frank, but strengthen it in certain ways. For example, rather than leaving tax payers on the hook, setup a system where banks have to purchase "insurance", the "insurance" policies would help mitigate the growth of banks. If you grow too large what you'll have to pay will be through the roof. We can do risk assessments. This takes tax payers off the hook, and makes the industry responsible for itself. In addition to that there could also be some additional regulations to help mitigate and lower risk, something like a modern version of Glass-Steagall could be part of that plan. Some of Hillary Clinton's proposals, in particular those involving shadow banking, could also be part of that plan.

The problem, ultimately, is that Bernie Sanders has a clear goal but not a clear plan on how he intends to accomplish that goal. This is true on a lot of issues. This was how the debate ended up getting started.