The Cement Life Raft - Prof. Elizabeth Warren briefs First Lady Clinton on Bankruptcy Bill

[Octafish]

7. Not exactly: She was against it, before she was for it, before she didn't vote on it.

Hillary Clinton's Shadowy History With Shadow Banking

She was against it, before she was for it, before she didn't vote on it.

by Zach Carter
Huffington Post, Jan. 14, 2016

WASHINGTON -- With Sen. Bernie Sanders (I-Vt.) showing renewed strength in both Iowa and New Hampshire, Democratic presidential front-runner Hillary Clinton has spent much of January attempting to make inroads with progressive voters enamored with her rival's Wall Street policies. Sure, Sanders talks tough on big banks, Clinton and her allies have alleged, but he's soft on "shadow banking" -- a complex, risky sector of the economy.

Like the Clinton campaign's recent broadside against Sanders' Medicare-for-all health care plan, the attack is misleading and dishonest. It also sidesteps her complicated record on shadow banking as a senator, which includes a vote in favor of a bill that eventually fueled shadow banking in the mortgage market and exacerbated the financial crisis. Clinton's team, moreover, continues to criticize legislation supported by both Sanders and Sen. Elizabeth Warren (D-Mass.) that would ameliorate the problems created by that bill.

The saga surrounding that vote mirrors Clinton's mixed record on financial reform issues. In the waning years of Bill Clinton's presidency, then-first lady Hillary Clinton arranged a meeting with then-Harvard University Law School professor Elizabeth Warren. Warren quickly convinced Clinton to oppose a nasty bankruptcy bill then brewing Congress, which would have helped credit card companies at the expense of families in financial distress. The White House, which had been leaning toward supporting the bill, quickly reversed course, and vetoed it.

But after joining the Senate in 2001, Clinton voted for a very similar bill, which became law after a few other tweaks in 2005. Clinton sat out the 2005 vote, and has said she would have opposed it.

The law's effect on consumers are well documented. Bankruptcy is a court-supervised financial do-over. If you accept having your credit score ruined and being denied access to credit cards and other consumer loans for several years, a judge can slash your credit card balances and other debts. Warren's research had shown that most people file for bankruptcy because they have been through a divorce, lost a job, or been hit with heavy medical bills -- not because they purchased too many gold-plated TVs with a credit card. Making it harder to file for bankruptcy was simply helping banks kick people while they were down. It proved especially painful during the Great Recession.

But other important aspects of the bill had nothing to do with consumers. They focused on corporate lending, and allowed those pushing various shadow banking products the opportunity to skirt key rules. In particular, they made it easier to provide funding to subprime mortgage houses packing together securities that they intended to sell to other investors.

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http://www.huffingtonpost.com/entry/hillary-clinton-shadow-banking_us_5696d0fae4b0b4eb759d2606