Bank Profits are in freefall today, thanks to Obama-Appointed regulators. In the aftermath of the Libor crisis caused by shockingly criminal behavior on the part of the 16 largest banks on the planet, one Banker is in prison, 21 are under indictment, and bank profits are in near freefall. This story leads back to Clinton, but I need to explain what’s been happening before I get there.
To start, I need to tell the story of one of the unsung heroes of the past few years. His name is Gary Gensler. Gensler was appointed by Obama to the CFTC, the Commodities Futures Trade Commission. The CFTC supervises credit default swaps and all of the other dangerous stuff that crashed our economy. The CFTC seems to have been designed from the beginning to be totally ineffective. It was a toothless regulatory body with a maximum fine of $150,000. That’s totally impotent when it comes to regulating Wall Street Firms. They’ll consider such tiny fines nothing more than the cost of doing business. But Gensler also knew that the United States isn’t the world. And that while these banks operated in the US, they also operated globally. That meant that something illegal done in the US had potential consequences everywhere else.
No country on this planet is as big as every country on this planet. When Gensler blew the doors off of the Libor Scandal, every regulatory agency on earth took a bite out of the thieves. The EU handed down billions in fines. Watchdogs from Tomsk to Timbuktu sank their teeth into every one of the 16 largest international banks for fixing inter-bank interest rates. And they deserved it. The Libor theft hurt all of us. It hurt every single person with a mortgage, student loan, or credit card. Even conservative governments were forced by Gensler’s revelations to re-establish national sovereignty, and tamp down on the thieving actions of the big banks. If you want to read more, read Taibbi.
The Banksters got caught with their hands in the cookie jar, and Gensler slammed the lid down so hard that they lost fingers. Deutsche Bank announced today that it has lost 6.8 Billion dollars in the last year alone, most of it in fines, the rest in restructuring caused by fines. None of their board members will be receiving bonuses for 2105, and they’re all having a good cry. I know that you, reader, will find their tears as delicious as I do. Deutsche Bank is in such a sharp contraction after paying fines on their criminal behavior that they’re being forced to pull out of ten countries. After Deutsche Bank’s announcements, a whole raft of banks have declared their own losses. Credit Suisse, HSBC, Royal Bank of Scotland, Lloyds, and I expect many more to join the list of banks who’ve had net losses because of what Gensler did with a toothless agency.
Gensler cost the thieves and reavers on wall street Five Trillion Dollars and counting, reports Time. That number seems a little high to me, but I know for a fact that they’ve paid out many, many billions of dollars, to the point that they’re contracting sharply, and badly hurting. And the Libor scandal led to the Forex scandal, led to fine, after fine, after fine. The parade of hurt raining down on these banks appears to be unending.
Gensler has not only cost these guys their profits, big time, but has probably cost more than one of them their freedom. One London banker has already gone to jail. That particular investigation came despite David Cameron’s reluctance to take action against his billionaire buddies. (Those buddies took revenge, by the way. Just google Pig-Gate.) There are a further 21 bankers currently under indictment according to the Council on Foreign Relations.
And that’s what’s so delicious about this. At Occupy, I wanted countries to enforce their sovereignty. I wanted the nation states to stand up and tell these international operators, “We are the sovereign entity, and our laws shall be obeyed.” Conservative governments which did not want to hurt their banking buddies were forced by Gensler’s revelations to take action, forced to jail and fine their friends, forced to act in the interests of their citizens and the world, or be faced with losing elections. Angela Merkel, David Cameron, all of them were forced to act in the interests of their own people, even though they really didn’t want to. And that’s all thanks to Gensler.
As someone who occupied Wall Street, who was out at Zuccotti park, and who worked very hard to keep the nation informed of what was going on, Gensler is one of my heroes. He went into a fight with the international banking sector completely unarmed as the head of a toothless agency which seemed intentionally designed to fail, and he still managed to cost the reavers untold billions, possibly trillions if Time is to be believed. If you want someone who knows how to jail the bastards, even when the laws aren’t designed to do that, Gensler is your guy.
Gensler is also two things that aren’t particularly popular on the internet right now. He’s a former Goldman Sachs employee, and he’s Hillary Clinton’s top advisor on fiscal policy. He helped write Hillary’s Wall Street Reform policy. Just like the FBI relied on networks of informants to take down the mafia, we now rely on former industry workers to tell us where the bodies are buried. That doesn’t mean that we should be uncritical or unwary of Goldman Sachs employees. Taibbi was right when he called the GS machine a vampire squid. Except that I think the comparison is an insult to Squids. The worst Squid in the ocean may be a dangerously intelligent, cannibalistic death beast, but it’s never crashed our economy and stolen our homes for slightly higher profits. Squids don’t have the malicious capacity for that kind of evil. I digress. The point is that the people who know how the game is rigged, who intimately understand it, and who are disgusted with it and want to help us fix it are exactly the people we need. We need more people like Gensler.
Which is why a plank of Hillary’s platform is increasing payouts to whistleblowers. Whistleblowers may find themselves in positions where they can never find work again in the field in which they’re an expert. Making sure that a whistleblower doesn’t have to worry about starving is an important step.
The one, big, overarching reason why I settled on Hillary as my choice for the Democratic Primary is because she clearly understands the problems on wall street, and knows how to fix them.
Her plan is massive, ambitious, and a triumph of progressive thought. It’s the single biggest regulation plan since the great depression. Her plan tackles shadow banking, it regulates the big boys as well as tamps down on those micro hedge-funds who can do fantastic amounts of damage. It deals with every single predatory practice we’ve been complaining about. It considers too-big-to-fail banks to be too-fat-to-survive, and will break those banks up and force them to reorganize. It brings complex financial instruments back under regulation. It is coherent and comprehensive. It is the next layer of bricks we ought to lay in our regulatory system, and it sets itself up to be built on in the future as needed.
While I agree that more than this needs to be done, Bernie Sanders isn’t even offering this much. His plan falls well short of Hillary’s. His plan is actually only three paragraphs long. His entire website is shorter and less comprehensive than Hillary’s Wall Street plan alone. Hillary’s plan includes everything Bernie’s does, and more, including a punitive tax on High Frequency Trading, instead of a Tobin Tax. That’s important. HFT is a current method used by some banks to rig the system, and even to hide insider trading by conducting trades faster and with greater frequency than anyone could possibly regulate. Even here, Clinton’s plan is far harsher. With the exception of Tobin Tax/HFT tax difference, everything Bernie supports on wall street reform is in Hillary’s plan, but with a broader scope, and with a wider net to make sure that no irresponsible firm has any wiggle room to squeak through.
And that’s another reason why I support Hillary. I know what she’s going to do. Bernie has a lot of great ideas. He hits all of my talking point buttons. But he also attacks Gary Gensler simply because of the fact that he used to work for Goldman Sachs. If you don’t support the guy who literally just kicked the banks to the earth so hard that Deutsche Bank is pulling out of ten countries, then who do you support? Nobody else has been anywhere near this successful since Franklin Delano Roosevelt was alive. And Gensler did it without all of the tools Clinton wants to give regulators!
The biggest thing for me, for all of this, is that even before the election, Hillary got people on Wall Street to agree that her reform package is needed. She’s already done that hard work. That is so stunning to me. She’s raising money from Wall Street and giving speeches to them about this very plan. And being applauded by them for it. They are saying, yes, this is fair. This is something we can support.
As an occupier, I can’t tell you how excited I am about this. The biggest potential roadblock to Wall Street reform has always been Wall Street itself. Wall Street is on board with this. It seems enough of them are also tired of the lawbreaking. We have an opportunity to get something comprehensive done. Enough of them are tired of losing money and being the bad guy that they are willing to support Clinton’s attempt to make banking boring again.
And as much as I like what Bernie Sanders has to say about these issues, it’s clear to me that his wall street reform policies do not go nearly far enough. Mike Konzcal has an excellent piece in Nation, and he says this better than I can, so I’m just going to quote him. Talking about Bernie’s core plan to reinstate Glass-Steagall, he says
the financial crisis started with the failure of Bear Stearns and Lehman Brothers. Neither of these were traditional banks, so Glass–Steagall wouldn’t have changed them. The panic created by those two failures spread through many other financial institutions, creating, for example, runs on money-market mutual funds. These, too, exist outside the traditional banking sector and would not be addressed by Sanders’s plan.
The tactic would also change the financial landscape less than many hope. The main policy tool proposed has been to cap the banks’ risky debt at 3 percent of the economy, or about $522 billion. That cap is larger than that of Bear Stearns, and not much smaller than Lehman’s $613 billion when it went bankrupt. A firm like Goldman Sachs would only have to downsize by about a third in order to make the cap—which would hardly change its power over markets and politics.
Because he views their primary sins as political—big banks wield big influence—Sanders focuses on making the banks smaller. But the left can and should change the way that modern finance shapes the economy directly.
And he’s right.
We need to change the way that finance shapes the economy. What Hillary’s plan does in the 21st century is what Glass-Steagall did in the 20th. Our needs are slightly different today, with online banking, and the information age. The purpose of the Depression-era regulatory package was to wall off the gamblers so that if they crash, they can’t take the rest of the economy with them. That is basically what Clinton’s plan does. Certainly I would like to see more, and I would like more. But what Clinton offers is orders of magnitude greater than what Bernie Sanders offers.
That surprised me. I am completely honest, this surprises me. But it’s true. And if you don’t believe me, then please go read Hillary’s plan for yourself.
I also know that many Sanders supporters will not be shifted an inch by what I’ve said here.
Let me say that there is an angry minority of brogressive Sanders supporters who say a lot of horrible, sexist things, who re-tweet republican memes, and who are really problematic. But they’re jerks, and they’re a minority. Just like there’s a minority of Clinton supporters who think that Bernie Sanders isn’t a serious candidate. He is. Both of these groups of people are accusing genuine, established Kossacks of being trolls, or schills, or some other horrible thing. But let’s take those two groups of really tiresome people out of the equation, and pretend for one shining moment that they don’t exist, because they don’t actually matter.
There are two other groups of sanders supporters who are far larger, and far more important. The larger group is the one that I’m addressing here. That would be the group who believes in his ideas. Please, read Hillary’s plan. Put it side by side with Bernie’s and just read it. If that doesn’t convince you, that’s fine, but please read it.
There’s a second group whom I cannot convince no matter what I say. And those are folks who for reasons of principal cannot support Hillary Clinton, and therefor support Bernie by default. My best friend is one of them. He’s a republican socialist. Small-r. The reason he can’t support Clinton is because a Clinton has already served in the White House, and he opposes dynastic politics. His small-r republican ideals, all that cincinatus stuff, mean that he can’t support Clinton in the primary. I can quip all I like about John Quincy-Adams, but to no avail. And besides that, he wants to see if an avowed socialist can win an election. There are also those who will never forgive her for her Iraq war vote. And I understand their position too. I can’t argue with it, except to say that I’m willing to forgive her. I understand if you are not.
For myself, I can’t let the past undermine the future. I think that missing this opportunity to enact the most broad-ranging financial reform package since the great depression because of my own intransigence would be cutting off my nose to spite my face. And I don’t do this with any lack of enthusiasm. I am very not some party apparatchik, who is holding my nose. After reading Clinton’s policies, after seeing the people she chooses to advise her, I am extremely happy.
And I’m only slightly less excited about Sanders. Whoever our candidate ends up being, we’re going to kick some serious ass in November. I think Clinton is the best candidate to lead us on the question of Wall Street Reform, and so she has my support in the primary, but whoever our candidate ends up being will have my full-throated support. Let’s please be kind to each other in the process. We have a ton of new blood flowing into DailyKos right now. Be gentle with the Newbies. They don’t know what our community is like on a normal day, when it’s not pie fights all the time.
Bring on the Republicans. I’m tired of the internecine slugging match. I’m spoiling for a fight, but not with the people here who I have nothing but the deepest respect for. At the end of the day, I want to stick it to the republicans. I’m ready for a fight. And I’m grateful that all of our candidates are, too.
Please be excellent to each other. We are the Democratic party. We are the progressive base. Let’s set an example right now of how we ought to treat each other, and when the decisions are made, and the primary is concluded, let’s break the back of the Republican party. They’ve been spewing vile, hateful garbage about our friends, neighbors, and allies for too long. Let’s make them choke on their own bile.