Are you ready for a replay of the bank meltdown of 2008?
If not, then you’d better get ready, because if things remain as they are, that is precisely where we are headed.
In December of 2014, Congress enacted, and President Obama signed into law, a partial repeal of section 716 of the 2010 Dodd-Frank Act, which originally took taxpayers off the hook from having to bail out big banks that were conducting unregulated derivative transactions.
Before you go faulting President Obama for signing, consider the situation at that time. The repeal was inserted into the Appropriations bill at the last minute. There was no debate, the country was unfunded, and to avert another government shutdown, Obama had no choice; he was doing all he could to keep other provisions of the law intact.
At the time the Washington Post wrote:
But perhaps even more outrageous to Democrats was that the language in the bill appeared to come directly from the pens of lobbyists at the nation’s biggest banks, aides said. The provision was so important to the profits at those companies that J.P. Morgan’s chief executive Jamie Dimon himself telephoned individual lawmakers to urge them to vote for it, according to a person familiar with the effort.”
Senator Elizabeth Warren (D-MA) and Rep Elijah Cummings (D-MD) were extremely alarmed and contacted the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) and exhorted them to enact strong rules to protect taxpayers and shield the economy from a repeat of the Great Recession. They also contacted the Government Accountability Office (GAO) and urged them to investigate the ramifications of the repeal.
The results of that investigation are unsettling at best:
Their investigation reveals that this repeal now allows banks to keep nearly $10 trillion in swaps trades on the books that—were it not for the Dodd-Frank rollback—would be “pushed out” to entities that are not insured with taxpayer funds. It also finds that regulators have not conducted an analysis of the financial and taxpayer risks posed by the repeal, despite the fact that it allows banks to trade billions of dollars in risky derivatives.”
This past July, President Obama told Republicans he will not compromise on Wall Street reform again, saying “Wall Street Reform turned the page on the era of ‘too big to fail.’ Now, in America, we welcome the pursuit of profit. But if your business fails, we shouldn’t have to bail you out. And under the new rules, we won’t—the days of taxpayer-funded bailouts are over.”
Except they’re not–and the banks know it. The repeal of that section of Dodd-Frank insures that should things go south, we will be the ones to bail out the fat cats again. They will continue to get richer, and it will be on our backs.
Which brings me to Hillary Clinton and what she said at the first Democratic debate and, more recently, at the Democratic Forum in South Carolina last week. On both occasions, she said she had been to Wall Street and told them to stop their behavior. In the Forum on Friday, she was more specific:
Take Wall Street, for example—I went to Wall Street; I went to the NASDAQ in December of 2007 and basically said, you guys have got to stop it. What you are doing is not only a disaster for homeowners because of the mortgage foreclosures and the way that they had manipulated the mortgage market, but it’s going to have dire consequences for our country.
Did the bankers take heed? No. They kept on making those risky loans; then they packaged them up and put pretty bows on them and sold them as investments. As a result, some states, a lot of pension funds and plenty of people across the country lost everything. So much for asking them to cut it out; and in my mind, a pretty lame talking point.
When Maddow asked about the money she has received from Wall Street, both as Super PAC contributions and in speaking fees, Mrs. Clinton responded, “But anybody who thinks that they can influence what I will do doesn’t know me very well. And they can actually look and see what I have said and done throughout my career.”
Pretty words, but since the former Secretary of State is unwilling to reinstate Glass Steagall, which worked so well for over half a century, I find them hard to swallow.
There is no doubt that Hillary Clinton is an accomplished woman. Her resume is impressive. I will not take any of her achievements away from her. She’s tough, she’s capable, and she could be unconscious and be a better president than any of the Republicans candidates on their best day. But I’m sorry, she is in the pocket of Wall Street. You can’t take huge amounts of money from donors like that without the expectation that favors will be done. Refusing to reinstate Glass Steagall is a huge favor.
We have already seen that Wall Street has no morals. Business is in the business of making money, and the only way to curb a rapacious appetite for even more money is to put rock solid rules in place.
Only one candidate will do that. Only one candidate has never changed his stance on Wall Street, on trade, on marriage equality, on civil rights. Only one candidate has pointed out that the countries in the Middle East have much at stake with ISIS and also have large standing armies–and they should be the countries to put boots on the ground, not the United States. That candidate is Bernie Sanders.
In 2008, we voted for change we could believe in. Bernie Sanders is our last, best hope to achieve that change.
We are living in perilous times. It is time to take back this country from the bankers, from the oil companies, big pharma, big agriculture. In short, it is time we tell business we like it just fine, but on terms that serve the interests of all of us and not just a few at the top.
Bernie Sanders represents the embodiment of a new bottom line. I fear Hillary Clinton won’t be able to stand up to her Wall Street masters. And make no mistake, that’s what they are.
Ann Werner is the author of thrillers and other things. Visit her at Ann Werner on the Web
A quick hat tip to Michael Kiely. Michael Kiely is a civil war history buff and DUI defense attorney in Richmond.
Learn more about Michael here.