Robrt Reich: Sanders bank proposals better than Clinton's caution

[Armstead]

http://robertreich.org/post/130820178090

Hillary, Bernie, and the Banks -- ROBERT B. REICH,
Excerpt:

Giant Wall Street banks continue to threaten the wellbeing of millions of Americans, but what to do? Bernie Sanders says break them up and resurrect the Glass-Steagall Act that once separated investment from commercial banking.
Hillary Clinton says charge them a bit more and oversee them more carefully. Most Republicans say don’t worry.

Clearly, there’s reason to worry. Back in 2000, before they almost ruined the economy and had to be bailed out, the five biggest banks on Wall Street held 25 percent of the nation’s banking assets. Now they hold more than 45 percent. Their huge size fuels further growth because they’ll be bailed out if they get into trouble again. This hidden federal guarantee against failure is estimated be worth over $80 billion a year to the big banks. In effect, it’s a subsidy from the rest of us to the bankers. And they’ll almost certainly get into trouble again if nothing dramatic is done to stop them. Consider their behavior since they were bailed out.......

But rather than prevent this by breaking up the big banks and resurrecting Glass-Steagall, Hillary Clinton is taking a more cautious approach. She wants to impose extra fees on the banks, with the amounts turning not on the bank’s size but how much it depends on short-term funding (such as fast-moving capital markets), which is a way of assessing riskiness. So a giant bank that relies mainly on bank deposits wouldn’t be charged.

All this makes sense. And in a world where the giant Wall Street banks didn’t have huge political power, these measures might be enough. But, if you hadn’t noticed, Wall Street’s investment bankers, key traders, top executives, and hedge-fund and private-equity managers wield extraordinary power. They’re major sources of campaign contributions to both parties. In addition, a lucrative revolving door connects the Street to Washington. Treasury secretaries and their staffs move nimbly from and to the Street, regardless of who’s in the Oval Office.....

...Given all this, Hillary Clinton’s proposals would only invite more dilution and finagle. The only way to contain the Street’s excesses is with reforms so big, bold, and public they can’t be watered down – busting up the biggest banks and resurrecting Glass-Steagall.

[upaloopa]

1. I don't think many of us understands Wall Street

banks enough to determine what the outcome would be with either plan.
What we want is a redistribution of wealth away from the 1% and a guarantee that Wall Street will not cause a recession and need bailouts again like in 2007-8.
I also think you can look at this in a couple of ways. One is to understand how things work then design a plan to bring about the outcome you desire based on that understanding. Another is to hate Wall Street and Billionaires and come up with something to break them up and hope the outcome is what you would want.

[senz]

3. I think Robert Reich understands Wall Street.

From the website cited in the OP, Reich is:

Chancellor’s Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written fourteen books, including the best sellers “Aftershock, “The Work of Nations," and"Beyond Outrage." He is also a founding editor of the American Prospect magazine and chairman of Common Cause. His film, INEQUALITY FOR ALL is available on Netflix, iTunes, Amazon. His new book, "SAVING CAPITALISM: For the Many, Not the Few" is out 9/29.

[upaloopa]

5. Reich is carrying water for Sanders. I get his facebook blog things you could see when he turned

into a Bernie supporter

check out this OP

http://www.democraticunderground.com/110720746

[dreamnightwind]

8. You mean he is carrying water for all of us

(which makes him a Bernie supporter) whereas Hillary is carrying water for the banks and other mega corporations.

Reich didn't just change his views to carry water for Sanders. To the contrary, he supports Sanders because they are fighting for the same things.

Come on over to our side, you can still support Hillary in the general election if she wins the primary, and you'll feel better for having fought for the right things in the primary. Bernie will run well against Republicans, but needs all the help we can give him to win the primary, he's up against long odds.

[JaneyVee]

9. Where is Bernie's Wall Street policy proposal?

You can't say Hillary is carrying water for corps when she is the only one with policy proposal to reign in Wall St.

http://www.politifact.com/truth-o-meter/statements/2015/jul/15/hillary-clinton/hillary-clinton-says-she-called-wall-street-regula/

And I understand Wall Street. Not only am I a NY'er, I'm an economist.

[dreamnightwind]

11. you think Hillary, not Bernie, is the Wall St.reformer?

[JaneyVee]

12. And you believe a non-existent policy proposal will pass the senate??

[dreamnightwind]

13. Straw-man.

Robert Reich prefers Bernie, I think I'll listen to him, not you. Love me some Robert Reich!

[JaneyVee]

14. Robert Reich was the one that passed NAFTA, right?

Wasn't he Bill's labor secretary?

[dreamnightwind]

17. Reich under the bus?

I'm well aaware of Reich's history, thanks. I've read and listened to him extensively. He's on of the most right-on thinkers we have. I'm sure if he could go back he would do some things differently. I don't like flip-floppers for political expediency. Reich is the opposite of that, someone who rather than doubling down on failed policies, actually changed direction even though it excluded him from the "serious people" club (those whose policies are corporate-approved). He walks the walk at every opportunity.

Let's see, you've tried to present Hillay, not Bernie, as the candidate for Wall St. reform, and to throw Robert Reich under the bus. I can't believe you are serious in those beliefs, or if you are, I don't share your goals in any way, so I will end this discussion and put you on ignore. You can try to convince someone else, I have better things to do.

[Uncle Joe]

16. Nobel Prize in Economic Sciences winner Joseph Stiglitz does and he also thinks that repealing

Glass Stegall along with a host of other actions and in-actions was foolish.

Capitalist Fools

Behind the debate over remaking U.S. financial policy will be a debate over who’s to blame. It’s crucial to get the history right, writes a Nobel-laureate economist, identifying five key mistakes—under Reagan, Clinton, and Bush II—and one national delusion.
BY JOSEPH E. STIGLITZ

There will come a moment when the most urgent threats posed by the credit crisis have eased and the larger task before us will be to chart a direction for the economic steps ahead. This will be a dangerous moment. Behind the debates over future policy is a debate over history—a debate over the causes of our current situation. The battle for the past will determine the battle for the present. So it’s crucial to get the history straight.

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.

(snip)

No. 2: Tearing Down the Walls

The deregulation philosophy would pay unwelcome dividends for years to come. In November 1999, Congress repealed the Glass-Steagall Act—the culmination of a $300 million lobbying effort by the banking and financial-services industries, and spearheaded in Congress by Senator Phil Gramm. Glass-Steagall had long separated commercial banks (which lend money) and investment banks (which organize the sale of bonds and equities); it had been enacted in the aftermath of the Great Depression and was meant to curb the excesses of that era, including grave conflicts of interest. For instance, without separation, if a company whose shares had been issued by an investment bank, with its strong endorsement, got into trouble, wouldn’t its commercial arm, if it had one, feel pressure to lend it money, perhaps unwisely? An ensuing spiral of bad judgment is not hard to foresee. I had opposed repeal of Glass-Steagall. The proponents said, in effect, Trust us: we will create Chinese walls to make sure that the problems of the past do not recur. As an economist, I certainly possessed a healthy degree of trust, trust in the power of economic incentives to bend human behavior toward self-interest—toward short-term self-interest, at any rate, rather than Tocqueville’s “self interest rightly understood.”

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.

(snip)

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

[senz]

2. Robert Reich is from the Democratic wing of the Democratic party and speaks the truth.

Not only do we need to re-institute Glass-Steagall but also the Sherman Antitrust Act. We can't achieve stability and a modicum of fairness without restoring sound practices and integrity in banking as well as other major businesses and the U. S. government.

Bernie knows this, and he's not afraid to say so because he's not beholden to big banks and other corrupt institutions.

Which is one more excellent reason to vote for him.

[upaloopa]

6. http://www.democraticunderground.com/110720746

[Fearless]

4. Also, this just in... Water... wet.

[hifiguy]

7. Can anyone doubt that HRH would outsource

writing the regs to Goldman and Citi? Not anyone with a lick of sense.

[Uncle Joe]

10. Kicked and recommended.

Thanks for the thread, Armstead.

[pinebox]

15. Right from Robert Reich's facebook

[Armstead]

18. Mergermania in Banking Illustrated

A little out of date but shows how banks have consolidated over the last 25 years.
http://www.motherjones.com/politics/2010/01/bank-merger-history