It Depends on What the Definition of “If” is: a Clintonesque Parsing of Hillary’s, “I am willing to break up the big banks, if they need to be broken up”

Dubious Campaign Promises — Exhibit A;
How Many Loopholes Can YOU Spot?

“If they’re too big to fail, make ’em smaller.”

–George Shultz, Ronald Reagan’s Secretary of State (and a former Treasury Secretary).

At least in some parts of the country, Hillary Clinton’s thread-the-needle comment about big banks last week would be met with a chorus of, “them’s weasel words!”

loopholeWanna guess how many “out’s” are baked into her sentence?

I count at least three:

One.  Define, “need.”

If Hillary gets elected and declines to break up the big banks, her most plausible excuse will be . . . they didn’t need to broken up (of course).

Ms. Clinton is sure to render that verdict notwithstanding that the five biggest banks are now 50% bigger than in 2008, when they were already deemed “too big to fail.”

Perhaps Hillary will even argue that it would be a good thing if the big banks were bigger — the better to compete with European and Asian behemoths.

Don’t laugh!

That’s exactly what Wall Street proponents — starting with Mrs. Clinton’s lesser half — argued the last time.

Two.  “I’m willing [to break up the banks] . . . but others are not.”

I call this the, “I can’t do it by myself” loophole.

Translation:  “How’m I supposed to get anything through a hostile Congress?” (likely to remain in Republican hands no matter who’s elected President).

ThreeDefine, “bank.”  In the post-Glass-Steagall world of multi-trillion global finance, Wall Street’s biggest firms aren’t just into banking.

They’ve morphed into market-making, risk-hedging, security-underwriting, proprietary trading vehicles (on that last one, never mind about duties to clients).

Clinton has already suggested that it’s these other functions that are problematic, not banking.

Fine, regulate them, too.

Meanwhile, don’t act like Wall Street — with crucial help from Congress and past Administrations of both political stripes, including her husband’s — didn’t successfully ring-fence gargantuan new markets like derivatives from regulators’ purview.

P.S.:  Unfortunately if not surprisingly, no Republican candidate has committed to breaking up the big banks, either.

Whataya say, Donald??

See also, “Goldman Sachs:  It’s Not My Dog“; “Wall Street Plunders Henhouse, Blames Chickens“; “Number of the Week: $600 TRILLION“; and  “The Wall Street Journal Whiffs on Warren.”

And also:  “Drug Dealers vs. Bankers:  “Top 10 Differences“; “Firing Wall Street“; and “Out-of-Control Mega-Banks?  I’ve Got Your Problem Right Here (and Here, and Here . . .”).

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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