|Illustration by DonkeyHotey.|
By Steve Weissman
Hillary Clinton has a stronger, more detailed plan to regulate Wall Street than does Bernie Sanders, says the Nobel Prize-winning economist Paul Krugman. But, adds journalist Ezra Klein, many are skeptical that she will do what she says.
“She has spoken out of both sides of her mouth on a number of issues,” agrees public banking campaigner Ellen Brown. “So it doesn’t seem like we can trust her.”
Between savants and skeptics, policy wonks and the politically wary, how can ordinary voters decide for themselves? It isn’t easy.
“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,” Krugman wrote. “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.”
Krugman also finds that Wall Street prefers any Republican over either of the Democrats. Yet Wall Streeters are giving Hillary significant contributions, and their financial media does not view her as a major threat to their interests.
“As long as Hillary Clinton is in charge, they know that the Clintons historically have been enormously helpful to the banking industry,” explains former federal regulator William K. Black. “And in return the banking industry – not simply the banking industry, others as well – have made the Clintons very wealthy.”
No surprise, Hillary has little to say about her husband’s dealings with Wall Street, which will arguably define his place in history. I in no way hold Hillary accountable for the Big Dog’s transgressions, and certainly not for his carnal sins, which right-wingers delight in accusing her of enabling. But what does she think of his enabling Wall Street to bring the global economy to a thudding crash? How does she respond to Bill’s role in helping Wall Street gain such power and promote such glaring inequality?
Ask her. We need to know, and so far, her silence speaks volumes.
Remember that Bill Clinton ran for president in 1992 as an economic populist on a platform created largely by Robert Reich, who became his Secretary of Labor. But Bill brought in Robert Rubin, co-chair of Goldman Sachs, to serve first as his chief economic advisor and then as Secretary of the Treasury. The soft-spoken Rubin persuaded Clinton to pay off the budget deficit left to him by George H.W. Bush, a move that won Wall Street’s blessing and helped fuel the boom-and-bust prosperity of the 1990s. The alternative, as many people now understand, would have been to rebuild our already failing bridges, transportation systems, waterworks, and electrical grids.
Rubin also convinced Clinton to push Wall Street’s neo-liberal economics and its Washington Consensus worldwide, while making the North American Free Trade Agreement a top priority, without providing any safety net for American workers whose jobs went abroad.
But, most telling, Rubin and his understudy Larry Summers prevailed on Clinton to restrain financial regulators within the administration from doing their job, regulators like Bill Black and Brooksley Born, chair of the Commodities Futures Trading Commission. (See her story at PBS Frontline.)
Clinton then went along with Texas senator Phil Gramm and the Republican-led Congress to massively deregulate financial markets, just as Rubin and his Wall Street friends wanted. Clinton fought for and signed the repeal of most of Glass-Steagall, the New Deal’s already porous wall between commercial and investment banking. Even worse, he fought for and signed the Commodities Future Modernization Act, which removed most federal regulation of credit default swaps and other over-the-counter-derivatives, the “financial weapons of mass destruction” that shadow banks like Lehman Brothers misused to bring down the global economy in 2008.
Enabling Wall Street in this way was Bill Clinton’s mortal sin, making him an accomplice to the economic crime of the century. He was a well-paid accomplice at that, “earning” some $250 million from going to work for the Wall Street mob after he left the Oval Office. Having shared royally in the pay-off, Hillary has never confronted either the economic crime or Bill’s complicity in it. Since she’s too smart – and too experienced – not to have seen them both, she’s telling us that she would be likely to do much the same.
Krugman misses this. The choice in the Democratic primaries, as he sees it, is between Bernie Sanders’ whole-loaf idealism, which Krugman calls self-indulgent, and Hillary’s half-a-loaf pragmatism, which he prefers. In reality, choosing Hillary comes down to giving the whole loaf to Wall Street while barely leaving crumbs for the rest of us. Except for the self-serving, where’s the pragmatism in that?
A veteran of the Berkeley Free Speech Movement and the New Left monthly Ramparts, Steve Weissman lived for many years in London, working as a magazine writer and television producer. He now lives and works in France, where he is researching a new book, "Big Money and the Corporate State: How Global Banks, Corporations, and Speculators Rule and How to Nonviolently Break Their Hold."