Hillary, the friend of Wall Street

Dear Friends,

Bernie Sanders went to Wall Street on Tuesday to give a speech making his policies very clear.  He will break up the big banks, he will prosecute individuals not just fine the companies, he will reinstate Glass-Steagall, and he will raise taxes on Wall Street.  You can read the text of his speech here.  Hillary Clinton tries to sound tough on Wall Street, but she isn't and really can't be because she takes so much money from them for her campaign, for the Clinton Foundation and for speaking engagements for Bill and her.

ThinkProgress had a great piece on the differences between Senator Sanders and Secretary Clinton with respect to Wall Street (here).  The piece points out three differences.

First, Senator Sanders would reinstate Glass-Stegall and breakup the big banks that are already too big to fail.  Hillary Clinton refuses to work to reinstate Glass-Steagall or commit to breaking up the banks.  In fact she argues that Glass-Steagall would not have prevented the Great Recession.  The ThinkProgress piece summarized the arguments as follows:

Clinton has questioned the value of Glass-Steagall and said the law repealed while her husband was in the White House could not have helped prevent the 2008 housing collapse. Sanders disagrees, saying the so-called “shadow banks” whose failure triggered the recession, such as AIG and Lehman Brothers, got their money from federally-insured bank deposits of big commercial banks, which would be illegal under such a rule. Regardless of whether the law could have prevented the Great Recession, Sanders argues it could curtail risky behavior in the future.

Second, Secretary Clinton says that she will increase the taxes on Wall Street's risky trading but her proposed taxes are small compared to Senator Sanders' proposal.  Here from the ThinkProgress piece:

“Hillary’s is kind of a half-plan, which doesn’t raise as much revenue,” Mike Konczal with the Roosevelt Institute told ThinkProgress. “The more people have looked at it, the weaker it seems. It’s not sufficient to tackle the problem, because it exempts a huge amount of trades.”

Third, the piece acknowledges that the changes proposed by Senator Sanders would require significant participation by Congress.  It also indicates that the people that are appointed to important financial positions in the government can make a huge difference.  As I indicated in an early blog post, Senator Clinton's chief financial advisor is a Wall Street insider (here).  Here is how the ThinkProgress article ends:

Though Clinton has similarly not revealed who she would appoint to lead the Federal Reserve and other agencies, Konczal says the two candidates would likely show stark differences in their nominations.

“Hillary would appoint people who think Dodd-Frank is mostly successful and just needs a little more work,” he said. “Bernie would appoint people who think our financial system is a massive problem and needs a major overhaul.”

Clearly Secretary Clinton leans in the right direction.  Unfortunately, she does not understand or is not willing to push for the "major overhaul" that is needed both with respect to financial matters and in many other respects.  Senator Sanders will fight for the massive changes that we need.

Thanks for reading and please comment,
The Unabashed Liberal

Hillary Clinton's Economic Policies

Dear Friends,

I am surprised at how often a President is given credit for good economic times during his presidency or blame for bad economic times during his presidency.  In fact, the President has little impact on the economy during his time in office.  President Obama was certainly not responsible for the large number of job losses during the first part of his first term, nor was he responsible for the increase in employment, as anemic and slow as it was.  The recovery and job growth could have been much faster if we had aggressively increased government spending, but President Obama was still talking about preventing larger deficits and the Republicans would certainly have blocked any more aggressive stimulus measures.

George W. Bush bears much of the blame for Great Recession, but Bill Clinton is certainly responsible as well.  Bill Clinton is given great credit for the economic boom that occurred during his presidency, but in fact it was policies that he supported that led directly to the Great Recession. It was under his presidency that banks were deregulated with the repeal of  Glass-Steagall and that the outsourcing of many manufacturing jobs was encouraged as a result of NAFTA.

Hillary Clinton has suggested that she would use Bill as an advisor particularly on economic issues, pointing to the prosperous economic times during his administration.  She also has chosen Alan Blinder as one of her top economics advisors.  Last October the Daily Kos ran a piece entitled "Meet Alan Blinder, Hillary Clinton's Economic Advisor (and Wall St. One-Percenter)" (here).  After reading the piece, it is easy to understand why Hillary Clinton is against re-instating Glass-Steagall and is against breaking up the biggest banks.

Alan Blinder is described in the first two sentences of the piece as follows:

Hillary Clinton's economic advisor, Alan Blinder, co-founded and is Vice Chair of a super-elite Wall St financial firm, Promontory Interfinancial Network. He is a former Vice Chairman of the US Federal Reserve Bank and chair of Princeton University economics department. 

The piece goes on to discuss what Promontory Interfinancial Network does.  It quotes Reuters

Promontory is proof positive, then, of just how lucrative the revolving-door business can be. The company is full of lavishly-paid former regulators, hiring themselves out at $1,500 an hour to banks desperate for advice on how to navigate Washington’s regulatory thicket. 'the firm acts as an advocate for banks, helping draft letters that challenge crucial rules and discussing reforms with regulators'. Regulators are more likely to trust their former colleagues than they are the banks they’re trying to regulate, and by hiring Promontory, banks can co-opt those former regulators and use them to to effectively work the refs.

Among other things, Promontory provides a mechanism that permits wealthy individuals to get government insurance on deposits in excess of the FDIC limit.  In October, 2008, some in Congress wanted to insure all deposits without limit which would have destroyed this very lucrative part of Promontory's business.  Insuring all deposits would have helped to stabilize the banking industry by protecting individual deposits.  The article describes Alan Blinder's actions

Can one financial firm affect US macro-economic policy, to our detriment? You betcha, if it includes someone like Alan Blinder. In October 2008, the depths of the financial crisis, some in Congress wanted to insure all deposits (as did Germany and Ireland) to stabilize the system -- which would have undermined Promontory Interfinancial Network's business. Alan Blinder and Glenn Hubbard opined in the WSJ against this -- without mentioning their financial self-interest for opposing it. That's right, in the midst of the worst financial crisis since the Great Depression, they co-authored a WSJ op-ed advocating a public policy that would benefit them at the expense of the American (and entire world's) financial system, and they failed to disclose their conflict of interest. You can read their op-ed, on the WSJ website.

The piece continues

It would be hard to find someone more embedded in Wall Street's revolving doors with regulators/government and legalized corruption than Alan Blinder.  ...
How deeply in bed with 1% Wall St can the Clintons be? And how blind, ignorant or uncaring can some 'Democrats' be, to tolerate this?

There will be no real change in our economic system that is rigged in favor of the One-Percenters under a Hillary Clinton administration.  It took a strong challenge from Bernie Sanders to get her to tentatively reject TPP and to support an increase in the minimum wage although not to a livable level.  While she has skillfully adopted the language of fighting against income and wealth inequality, she refuses to endorse any changes that will actually address the problem.  She is an establishment candidate who will do the bidding of the One-Percenters who have funded her campaign as well as the Clinton Foundation and her lifestyle with huge speaking fees.

Thanks for reading and please comment,
The Unabashed Liberal

P.S.  After I initially published this post, I read Paul Krugman's blog post in The New York Times (here) entitled "Presidents and the Economy".  The blog post started out with this paragraph.

After I put up my post comparing private-sector jobs under Obama and Bush, a number of people asked me whether I believe that presidents have a large effect on economic performance. My answer is no — but conservatives believe that they do, which is why this kind of comparison is useful.

So you see a Nobel Prize winning economist agrees with me.

The Questions that Hillary Clinton should answer

Dear Friends,

Hillary Clinton endured 11 hours of questioning on Benghazi yesterday, and absolutely nothing new was learned.  The salient facts have not changed.  The attack was a terrible tragedy.  We have made significant changes to reduce the risks of such a thing happening again.  It was not Hillary Clinton's fault.  In the immediate aftermath of the attack, Hillary Clinton and the United States government made statements about the cause of the attack that they knew to be false. Hillary Clinton and the Obama Administration have never given a reasonable explanation for that lie.  It certainly does not disqualify Hillary Clinton from being President, but it does raise some concerns.

For me there are far more important concerns and more important questions for Secretary Clinton to answer.  Here are some.

We all know that in 2007 and 2008, the biggest banks were too big to fail and had to be bailed out.  Those banks are even bigger now and control even more of the assets of the industry.  Thus they are even more too big to fail.  Given those facts, why do you not support breaking them up now, before another financial crisis ruins regular Americans lives, jobs and finances?

Given the facts above about too big to fail, why do you continue to refuse to support reinstating the Glass-Steagall Act?  Why do you say that instead we should focus on shadow banking?  The two are not mutually exclusive.  You can reinstate Glass-Steagall and regulate shadow banking at the same time.

Why did you call the pharmaceutical and insurance industries your enemies when you have taken millions of dollars from them in contributions?  If you have time read this article in US News (here) entitled, "Hillary Takes Millions in Campaign Cash From 'Enemies'".

Medicare is the most efficient and well liked healthcare plan in the country.  The United States spends  more and has worse results than other countries.  Here is the first paragraph from The Commonwealth  Fund's 2014 update on its healthcare study (here).

The United States health care system is the most expensive in the world, but this report and prior editions consistently show the U.S. underperforms relative to other countries on most dimensions of performance. Among the 11 nations studied in this report—Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, and the United States—the U.S. ranks last, as it did in the 2010, 2007, 2006, and 2004 editions of Mirror, Mirror. Most troubling, the U.S. fails to achieve better health outcomes than the other countries, and as shown in the earlier editions, the U.S. is last or near last on dimensions of access, efficiency, and equity.

Given all this why do you refuse to support universal single payer healthcare (Medicare for all)?

The United States middle class was built in part on an educated population as a result of free universal public school education through high school.  We all know that a high school diploma is not sufficient today; that a college education is required to succeed.  Why do you refuse to support free public college education?

In 1960 the maximum United States tax bracket carried with it a 91% marginal rate.  We can afford to pay for universal single payer healthcare, free public education through college, rebuilding our infrastructure, providing for those among us in need of help and many more things if the richest among us pay their fair share.  How high are you willing to raise the federal income tax rates in order to make America great and rebuild the middle class?

There are more questions that Hillary Clinton should give clear answers to but they will have to wait for another day.

Thanks for reading and please comment,
The Unabashed Liberal

Bernie, Hillary and Big Banks

Dear Friends,

I cannot believe that the media has not spent any time on the big difference between Hillary Clinton and Bernie Sanders on breaking up the big banks.  Since the great recession starting in 2008, the five largest banks in the United States have increased their share of the total industry assets to almost 45%.  So the too big to fail banks are getting even bigger.  

Bernie Sanders is clearly for reinstating Glass-Steagall and immediately breaking up the big banks that are too big to let fail.  Hillary Clinton is for closer regulation but not for taking any action now.  Amazingly enough she actually said this during the debate:

I represented Wall Street as a senator from New York, and I went to Wall Street in December of 2007 before the big crash that we had, and I basically said, "Cut it out." 

She spoke the truth; she represented Wall Street, and she has done a good job of that.  She continues to be on their payroll in the form of political contributions.  Her approach was to tell them to "cut it out".  Well we all know how that worked, the banks ignored her and millions of Americans lost their jobs and homes and retirement plans.   Wall Street never has and never will be self regulating.  We need to break up the big banks, and we need to deal with shadow banking as well.  Bernie will do that and Hillary will not.

Thanks for reading and please comment,
The Unabashed Liberal