Krugman: On financial reform, Clinton has "the better case"

[RandySF]

Hillary Clinton and Bernie Sanders had an argument about financial regulation during Tuesday’s debate — but it wasn’t about whether to crack down on banks. Instead, it was about whose plan was tougher. The contrast with Republicans like Jeb Bush or Marco Rubio, who have pledged to reverse even the moderate financial reforms enacted in 2010, couldn’t be stronger.

For what it’s worth, Mrs. Clinton had the better case. Mr. Sanders has been focused on restoring Glass-Steagall, the rule that separated deposit-taking banks from riskier wheeling and dealing. And repealing Glass-Steagall was indeed a mistake. But it’s not what caused the financial crisis, which arose instead from “shadow banks” like Lehman Brothers, which don’t take deposits but can nonetheless wreak havoc when they fail. Mrs. Clinton has laid out a plan to rein in shadow banks; so far, Mr. Sanders hasn’t.

But is Mrs. Clinton’s promise to take a tough line on the financial industry credible? Or would she, once in the White House, return to the finance-friendly, deregulatory policies of the 1990s?

Well, if Wall Street’s attitude and its political giving are any indication, financiers themselves believe that any Democrat, Mrs. Clinton very much included, would be serious about policing their industry’s excesses. And that’s why they’re doing all they can to elect a Republican.


http://www.nytimes.com/2015/10/16/opinion/democrats-republicans-and-wall-street-tycoons.html?_r=0

[djean111]

1. The crux of this article:

But is Mrs. Clinton’s promise to take a tough line on the financial industry credible? Or would she, once in the White House, return to the finance-friendly, deregulatory policies of the 1990s?

I do not believe any of Hillary's promises for one second. She would say anything in order to get elected, and then - Third Way. All the way.

[Dawgs]

2. ^^THIS^^

I'm staying far away from anyone that still trusts her.

[DanTex]

5. And the answer...

Well, if Wall Street’s attitude and its political giving are any indication, financiers themselves believe that any Democrat, Mrs. Clinton very much included, would be serious about policing their industry’s excesses. And that’s why they’re doing all they can to elect a Republican.

...

If a Democrat does win, does it matter much which one it is? Probably not. Any Democrat is likely to retain the financial reforms of 2010, and seek to stiffen them where possible. But major new reforms will be blocked until and unless Democrats regain control of both houses of Congress, which isn’t likely to happen for a long time.

In other words, while there are some differences in financial policy between Mrs. Clinton and Mr. Sanders, as a practical matter they’re trivial compared with the yawning gulf with Republicans.

[CharlotteVale]

6. I don't trust a word she says.

[JaneyVee]

3. Krugman's right. Especially considering...

Bernie doesn't have a Wall Street plan. And it showed.

[mhatrw]

9. He has a plan. Reverse what Bill Clinton did.

And break up any banks that are too big to fail.

[JaneyVee]

10. Lose 25 Million jobs?

That would be a reverse.

[mhatrw]

13. What? Smaller businesses = more jobs

Merger mania is all about increasing "valuation" by reducing competition and employee "redundancies".

[workinclasszero]

4. Repeating for emphasis...

But it’s not what caused the financial crisis, which arose instead from “shadow banks” like Lehman Brothers, which don’t take deposits but can nonetheless wreak havoc when they fail. Mrs. Clinton has laid out a plan to rein in shadow banks; so far, Mr. Sanders hasn’t.

[Matariki]

7. "But is Mrs. Clinton’s promise to take a tough line on the financial industry credible?"

"Or would she, once in the White House, return to the finance-friendly, deregulatory policies of the 1990s? "

And that's the million dollar question as far as I'm concerned.

[mhatrw]

8. The article is missing any analysis about WHY Clinton's plan is better.

For what it’s worth, Mrs. Clinton had the better case.

Why, Paul?

Mr. Sanders has been focused on restoring Glass-Steagall, the rule that separated deposit-taking banks from riskier wheeling and dealing. And repealing Glass-Steagall was indeed a mistake.

OK, so this makes Sanders' plan better by Krugman's own analysis because Clinton does not want to correct this mistake.

But it’s not what caused the financial crisis, which arose instead from “shadow banks” like Lehman Brothers, which don’t take deposits but can nonetheless wreak havoc when they fail. Mrs. Clinton has laid out a plan to rein in shadow banks; so far, Mr. Sanders hasn’t.

So why does a plan to rein in shadow banks beat a the plan to reinstate Glass-Steagall? And exactly what is the plan to rein in shadow banks? Is it a plan to break up Goldman Sachs or to make things harder for Goldman Sach's competitors? Krugman never tells why Clinton's plan is superior to reinstating Glass-Steagall and breaking up all too big to fail banks, just that it is.

The rest of the article just draws a contrast between Democrats and Republicans. Yes, Democrats are marginally better.

[markpkessinger]

11. The notion that capitalism can be "reined in" is largely a fiction in any case

As economist Richard Wolff has pointed out, so long as the current system of campaign financing remains in place, and so long as the Supreme Court's Citizens United ruling stands, regulatory success in reining in the excesses of capitalism will be marginal and temporary, at best.

[Broward]

12. Bernie wants to blunt the power both financially and politically

of the big banks. That alone gives Bernie the edge.