Former Bush Treasury Official Agrees with Sanders on Breaking Up the Big Banks
NO ADVERTISING, GOVERNMENT OR CORPORATE FUNDING
DONATE TODAY


  March 1, 2016

Former Bush Treasury Official Agrees with Sanders on Breaking Up the Big Banks


Economist Gerald Epstein says President of Minneapolis Federal Reserve Neel KashKari's Support of Bernie's Banking Policy is Both Surprising and Welcome
Members don't see ads. If you are a member, and you're seeing this appeal, click here
   



audio

Share to Facebook Share to Twitter



Thank you, The Real News does an excellent job - FedupwithR
Log in and tell us why you support TRNN


biography

Gerald Epstein is codirector of the Political Economy Research Institute (PERI) and Professor of Economics. He received his Ph.D. in economics from Princeton University. He has published widely on a variety of progressive economic policy issues, especially in the areas of central banking and international finance, and is the editor or co-editor of six volumes.


transcript

Former Bush Treasury Official Agrees with Sanders on Breaking Up the 
Big BanksSHARMINI PERIES, EXEC. PRODUCER, TRNN: It's the Real News Network. I'm Sharmini Peries coming to you from Baltimore.

Dodd-Frank, the 2010 financial reform law, has been the subject of much debate, particularly this election season, with many arguing that it does not go far enough to reign in the big banks. In a speech at the Brookings Institute, Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, who served in the Bush administration, gave ammunition to the legislation's critics, pointing to the disproportionate size of the largest banks. Kashkari argued that more radical moves might be necessary, including breaking up the big banks. Let's have a look at what he said.

NEEL KASHKARI: I believe we must begin this work now, and give serious consideration to a range of options, including breaking up the large banks into smaller, less connected, less important entities; turning large banks into public utilities by forcing them to hold so much capital they virtually can't fail; with regulation akin to that of a nuclear power plant; taxing leverage throughout the financial system to reduce systemic risks wherever they lie.

PERIES: Joining us now from Amherst, Massachusetts to talk about the story is Gerald Epstein. Gerald is co-director of the Political Economy Research Institute and professor of economics at the University of Massachusetts Amherst. Thank you so much for joining us, Gerald.

GERALD EPSTEIN: Thank you very much for having me.

PERIES: Gerry, Kashkari is a Republican and served in the George W. Bush administration. Certainly he's no progressive. Does this comment reflect a changing sentiment among some in the financial community?

EPSTEIN: Well, it certainly might reflect the changing sentiment of some, certainly him. But this is not, is not widely accepted. In fact, he was roundly criticized for this speech.

Kashkari's an interesting character. He used to work for Goldman Sachs. And then in the Bush administration he's actually the guy who headed up the TARP program, which was the main Treasury Department program that bailed out the big banks. He just took over as head of the Minneapolis Federal Reserve, and this was his first speech, his maiden speech. And he really came out swinging against the big banks, as you could see in that clip.

He said the too big to fail problem was not solved by the Dodd-Frank legislation, that it is, he used the term, a nuclear threat to, a potential nuclear threat to the U.S. economy. And his solution is pretty radical for a former banker. He's saying what we may need to do is break up the big banks. And he launched a whole year-long project at the Minneapolis Federal Reserve to study the causes of this problem and what might be the solutions.

So this is a pretty strong move coming from part of the Federal Reserve system, and I'm sure it's going to be very strongly resisted by most of the rest of the financial community.

PERIES: Gerry, reining in the big banks is a hot debated topic between Bernie Sanders and Hillary Clinton. What is the difference in their two positions on the Dodd-Frank bill and reining in the banks?

EPSTEIN: Well, I think they both agree that the Dodd-Frank bill has not gone far enough. Bernie's position is, like Neel Kashkari, saying we should break up the big banks and we should implement a modern Glass-Steagall act to separate investment, speculative banking, from productive banking.

Hillary Clinton, on the other hand, doesn't want to break up the big banks, doesn't want to implement a new Glass-Steagall. She says the problem is we have to rein in the shadow banking system, private equity and hedge funds. She's right about that, but her policy does not have any real teeth, no real plan on how to do that. Bernie's policy I think is more hard-hitting, more necessary, though he probably should say a bit more about shadow banking, because he could easily add to his reform bills about that. His reform policies about that.

PERIES: And if you were advising him, what would you be saying to him?

EPSTEIN: I would be saying to him that the shadow banking also needs to be brought under the regulatory regime, and we have to have really strict oversight of this shadow banking, period.

PERIES: Now, Gerry, one of the attacks Bernie Sanders has had on Hillary is that one cannot take money into a campaign from Wall Street and then expect to regulate that very industry. Do you think that's a fair critique, and is there any evidence or proof for his claim?

EPSTEIN: There's a lot of evidence for truth to his claim. She has gotten big speaking fees and money from Wall Street. Her husband, former president Bill Clinton, has gotten an enormous amount, as well. Yes, there's very strong evidence for his claim that she's taken a lot of money from Wall Street. And I do think that her policy, this idea of talking about shadow banking but refusing to talk about breaking up the big banks, and then her policies on shadow banking not having any real teeth to it, could well reflect this financial dependence that she, and for years many big Democrats, have had on Wall Street. So I think Bernie is absolutely right about, in that critique.

PERIES: All right. Gerry, I thank you so much for joining us today.

EPSTEIN: Thanks a lot for having me.

PERIES: And thank you for joining us on the Real News Network.

End

DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.



Comments

Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at contact@therealnews.com

latest stories

Ecuador Proposes Worldwide Elimination of Tax Havens
Why the Federal Reserve Needs To Go Beyond Interest Rate Policy
Anti-BDS Campaign Aims to Undermine Academic Freedom and Free Speech on Palestine
'Hands Dripping with the Blood of the Afghan People': US Agrees to Pardon and Reward Warlord
Recall Referendum on Maduro Moves to Next Phase in spite of "Irregularities"
Gary Johnson Supporters: Privatize Everything, But Not the Commission on Presidential Debates
TPP Will Effectively Kill Climate Treaties
US National Security Policy for Climate Change Seeks Security for Corporate-Controlled Assets
U.S. Policy in Syria: Regime Change or Regime 'Facelift'?
Berlin Election Outcome Signals Merkel's Tenuous Grip on Chancellorship
Charlotte Protests Escalate as Police Refuse to Release Video
Dangers of the Proposed Bayer-Monsanto Merger
Police Killings from Charlotte to Tulsa Spark Calls for Boycotts and Justice
SEC Accusations Against US Billionaire Highlights Centrality of Insider Trading to Hedge Fund Profits
MST Occupies Government Building in Salvador, Bahia
Baltimore City Council Candidate: Neighbors Need to Organize to Change the City
Israeli Arms Industry Faces Existential Threat in New US Aid Agreement
Trudeau's Liberals Adopt Harper Government's Carbon Targets
Corbyn and the Roots of Labour's Discontent
With Most of Dakota Access Pipeline Approved, Final Battle Remains Over Critical Portion
Does a Golden Parachute Await Wells Fargo CEO John Stumpf?
US Indifference to Congolese Repression Ensures Its Access to Nation's Mineral Resources
Chris Hedges: To Stop Terrorism, End U.S. Occupation of the Middle East
Can a Lebanon-Style Solution End the Syrian War?
Yale to Face Protests for Whitewashing Paul Kagame's Human Rights Record
Record US Aid to Israel Reflects Growing Influence of Military-Industrial Complex
Work Stoppage Prison Strike Continues in 11 US States
The Democratic Party Fatigue of Black Lives Matter Millennials
The MOMENTUM Behind Jeremy Corbyn
Green Party VP Ajamu Baraka on Human Rights Violations in the United States

TheRealNewsNetwork.com, RealNewsNetwork.com, The Real News Network, Real News Network, The Real News, Real News, Real News For Real People, IWT are trademarks and service marks of Independent World Television inc. "The Real News" is the flagship show of IWT and The Real News Network.

All original content on this site is copyright of The Real News Network. Click here for more

Problems with this site? Please let us know

Linux VPS Hosting by Star Dot Hosting