Delamaide: Clintons still have blind spot on deregulation

[portlander23]

Delamaide: Clintons still have blind spot on deregulation

Hillary Clinton has rejected the policy advanced by other Democratic hopefuls to break up the big banks by reinstating the separation of commercial and investment banking in the Glass-Steagall Act that her husband repealed in 1999. The issue of too big to fail is "more complicated" than that, she has said.

In fact, while Clinton has defended the Dodd-Frank financial reform act, she has yet to propose any new measures that would change the way banks do business and in economic policy has focused instead on capital gains taxes and other ways of encouraging a longer term view in investments.

In an interview in the September issue of Inc. magazine, Bill Clinton said that "there's not a single, solitary example that it had anything to do with the financial crash."

The former president was responding to a question from the magazine's editor, James Ledbetter, about why politicians paying lip service to small businesses don't act to ease the regulations that hit them relatively hard.

Bill Clinton's interview provoked Wallace Turbeville, a former lawyer and investment banker turned financial reform advocate, to contradict him.

"His statement is flat wrong," Turbeville wrote in a blog post for the liberal think tank Demos. "The Graham-Leach-Bliley Act that President Clinton signed had everything to do with the crisis."

"Of course, as Clinton said, the 'unified' banks were slightly less likely to fail because they were connected to the U.S. Treasury indirectly through FDIC insurance," Turbeville commented. "However, the real question was whether failure of any individual banks of certain significance could potentially trigger a systemic failure, dragging down all banks."

And that, he says, is exactly what happened. "It was a direct result of the massive increase in the size, concentration and interconnectedness of financial institutions as a consequence of the Graham-Leach-Bliley Act," this expert concluded.

PolitiFact, a self-appointed monitor of politicians' statements that has lost some of its credibility in recent years for dubious calls, comes to another questionable conclusion regarding Clinton's denial of responsibility.

PolitiFact, in short, went from evaluating Clinton's statement that there was no proof the demise of Glass-Steagall had "anything" to do with the financial crisis to concluding that "we couldn't find any economists who argue that the regulation was the sole linchpin keeping the financial system stable."

Senator Elizabeth Warren - Reinstating Glass-Steagall:

The Hill: Clinton: Cooperation, not speeches, is needed to regulate Wall Street

Wallace Turbeville: Owning the Consequences: Clinton and the Repeal of Glass-Steagall

[el_bryanto]

1. This will be written off by HRC supporters as a rich person issue

the truth is that public investments and retirement funds lost a lot of value during the crash. While the Dodd Frank act was a good step, the fact is that we have only started to grapple with the problems caused by this period. And the Clintons are not likely to do much more than has already been done.

Bryant