Five Ways Sanders Could Democratize the Financial Sector That Clinton Won't Touch

[marmar]

Five Ways Sanders Could Democratize the Financial Sector That Clinton Won't Touch

Friday, 27 November 2015 00:00
By Geoff Gilbert, Truthout | Op-Ed


Politics is about power. Every presidential candidate in both primaries, with the lone exception of Bernie Sanders, relies primarily on powerful, wealthy interests to fund her or his campaign. This campaign finance structure compromises the intellectual integrity of politicians backed by big money, limiting both the goals of their policies and the means available to achieve them. These politicians often find themselves incapable of differentiating between the public interest and the interests of their wealthy constituents. This corrupting influence of power lies at the core of the disagreement between Hillary Clinton and Bernie Sanders on their plans for the financial sector.

Throughout her career, Clinton has received huge amounts of money from the giant banks and funds that dominate the financial sector. Perhaps because she cannot imagine a financial sector without giant banks and funds at its core, Clinton focuses on regulating rather than abolishing them. Sanders, too, seeks to regulate the power of these giant entities, but he also plans to weaken their power by reinstating the Glass-Steagall Act, which would break up the big banks. He has also signaled that he would seek eventually to replace big banks with more democratic structures - the credit unions and community banks that he called, in the last Democratic debate, the future of US banking.

Their disagreement is essentially about the distribution of economic power within the financial industry. Clinton effectively argues that consolidation within the industry is not connected to the industry's recent high-profile mistakes. The best way for the industry to achieve better results, Clinton says, is for the government to regulate bad practices. Sanders contends industry concentration is the root of the problem. A more decentralized financial sector, Sanders frequently argues on the stump, is the key to getting the financial sector to fuel a strong US economy rather than profit at its expense. By shifting capital to credit unions and community banks, Sanders hopes to spur financial investment in creating jobs, goods and services in the United States. Such a shift in power, especially toward credit unions, can significantly deepen democratic control of the financial industry.

To understand the two candidates' disagreement, it's best to take a step back to think about financial sector basics: capital formation for productive investment. What that means is banks and other investment vehicles are supposed to pool together our savings and then lend some of the savings out to fund the businesses that employ the people who make the products and provide the services that we need and desire. Today's financial sector is no longer concerned with the second part of its mission: productive investment. It invests its money, the basis for which is our savings, to achieve the highest rate of return found anywhere in the world. Gone is the emphasis on creating jobs and funding small businesses in the United States. Accordingly, real US unemployment is unable to fall below 10 percent nearly eight years after the start of the Great Recession and multinational corporations dominate our economy at the expense of small businesses. Our financial sector no longer provides its promised social return. ................(more)

http://www.truth-out.org/opinion/item/33799-five-ways-sanders-could-democratize-the-financial-sector-that-clinton-won-t-touch

[BlueStateLib]

1. Banks dont use deposits for loans, if they did, loans would be very expensive

Basics of Banking: Loans Create a Lot More Than Deposits
http://www.cnbc.com/id/100497710

[jwirr]

4. If you are talking about Glass-Steagal - the issue was not

how much deposits create. The issue in Glass-Steagal was IF I wanted to invest in risky loans or not. Before Clinton repealed Glass-Steagal. I could deposit MY money in a bank that only invested in local loans. Now everything is in the investment bank and I have no choice.

[AgingAmerican]

7. Banks like to take big risks with deposits because

...they are federally insured and if they lose their gamble, the taxpayer is on the hook paying for it. Hence the need for bailouts. With Glass-Steagall in place, if a bank makes bad investments, the bank must absorb the loss.

[Crystalite]

2. My cousin says that Truth Out is a Commie Pinko Soros piece of poo.

Me, I like truth-out.org mostly, but not my cousin, nope.

"Randy" says that his candidate of choice knows better than that "Pinko Socialist" Sanders, knows that regulation stifles growth, and that the TPP will stimulate the economy and other stuff like that there.

"Randy" also says that his candidate HAS to use Super PAC money in order to defeat the use of Super PAC money, and when his candidate is president they will just tell everyone to "cut it out".

Oh, and "Randy" says that fracking is no big deal, and he was happy to see the US pave the way for Big Oil to frack the f**k out of other countries around the world.

"Randy" agrees with his candidate that capitol punishment is just fine and all this talk about minimum wage is, well, we should just talk about it for a while.

I don't ordinarily communicate much with my cousin except that on holidays we might end up in the same zip code.

[Cheese Sandwich]

3. rec. He should go there.

[Uncle Joe]

5. Kicked and recommended.

Thanks for the thread, marmar.

[antigop]

6. k&r nt