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Wall Street is an important part of our economy, but there is no question that it needs to be better regulated, that it needs to be reigned in. Democrats are keen on limiting Wall Street, while Republicans want to see regulations on Wall Street loosened and, in the case of Trump, completely taken away, and that is a major point of difference between the two parties and presumed nominees.
Why Wall Street is going to be in rough waters after the Nov. election
1. Hillary is eager to regulate and reign in Wall Street
Wall Street reform Wall Street must work for Main Street.
Hillary will:
Veto Republican efforts to repeal or weaken Dodd-Frank.
Tackle dangerous risks in the big banks and elsewhere in the financial system.
Hold both individuals and corporations accountable when they break the law.
“Our banking system is still too complex and too risky … While institutions have paid large fines and in some cases admitted guilt, too often it has seemed that the human beings responsible get off with limited consequences – or none at all, even when they’ve already pocketed the gains. This is wrong, and on my watch, it will change.”
HILLARY CLINTON, JULY 13, 2015
The financial crisis showed how irresponsible behavior in the financial sector can devastate the lives of everyday Americans—costing 9 million workers their jobs, driving 5 million families out of their homes, and wiping out more than $13 trillion in household wealth. Hillary has a plan to reduce the risk of future crises and make our financial system fairer and more accountable.
Hillary’s plan will tackle dangerous risks in the financial system:
Impose a risk fee on the largest financial institutions. Banks and financial companies would be required to pay a fee based on their size and their risk of contributing to another financial crisis.
Close the Volcker Rule’s hedge fund loophole. The Volcker Rule prohibits banks from making risky trading bets with taxpayer-backed money—one of the core protections of the post-financial crisis Wall Street reforms. However, under current law these banks can still invest billions through hedge funds, which are exempt from this rule. Hillary would close that loophole and strengthen the law.
Discourage excessive risk-taking by making senior bankers accountable. Senior managers should lose some or all of their bonus compensation when a large bank suffers losses that threaten its overall financial health.
Make sure no firm is ever too big and too risky to be managed effectively.Hillary’s plan would give regulators more authority to force overly complex or risky firms to reorganize, downsize, or break apart.
Tackle financial dangers of the “shadow banking” system. Hillary’s plan will enhance transparency and reduce volatility in the “shadow banking system,” which includes certain activities of hedge funds, investment banks, and other non-bank financial companies.
Impose a tax on high-frequency trading. The growth of high-frequency trading has unnecessarily placed stress on our markets, created instability, and enabled unfair and abusive trading strategies. Hillary would impose a tax on harmful high-frequency trading and reform rules to make our stock markets fairer, more open, and transparent.
Hillary would also hold both corporations and individuals on Wall Street accountable by:
Prosecuting individuals when they break the law. Hillary would extend the statute of limitations for prosecuting major financial frauds, enhance whistleblower rewards, and provide the Department of Justice and the Securities and Exchange Commission more resources to prosecute wrongdoing.
Holding executives accountable when they are responsible for their subordinates’ misconduct. Hillary believes that when corporations pay large fines to the government for violating the law, those fines should cut into the bonuses of the executives who were responsible for or should have caught the problem. And when egregious misconduct happens on an executive’s watch, that executive should lose his or her job.
Holding corporations accountable when they break the law. As she enhances individual accountability, Hillary will make sure that corporations don’t treat penalties for breaking the law as merely a cost of doing business, so that we can put an end to the patterns of corporate wrongdoing that we see too often today.
Hillary Oped in New York Times:
Hillary Clinton: How I’d Rein In Wall Street
Bankers should not be on regional Fed boards, Hillary Clinton says
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2. Likely Democratic Senate majority
The Senate is likely going to be Democratic. Democrats who are currently “ranking members” in the minority will be chairs in the majority, with much increased powers.
The chairs of the majority will be able to call for hearings on Wall Street regulations and the subcommittee’s will have subpoena power. If the Senate is back in Democratic hands the Democratic majority holds the reigns.
The current makeup of the
Senate Committee on Banking, Housing and Urban Affairs
The subcommittees chairs and ranking members:
3. Elizabeth Warren
Elizabeth Warren’s strong praise of Hillary’s Wall Street plan suggests that the plan is strong and “for real”. Also, it appears clear that Warren will have green light from Hillary for moving strongly towards Wall Street reform. From the Senate (not the VP position) where Elizabeth has the most effect, given her position on the Committee on Banking, Housing, and Urban Affairs.
- Subcommittee on Economic Policy (Ranking Member)
- Subcommittee on Financial Institutions and Consumer Protection
- Subcommittee on Securities, Insurance, and Investment
Elizabeth Warren is the ranking member of the Subcommittee on Economic Policy, a position that will become very powerful should Democrats win back the Senate, with Elizabeth Warren then serving as the chair. Warren will have the power to subpoena and to schedule hearings. With Hillary’s strong backing she will exercise her power fully, IMHO.
About the Subcommittee on Economic Policy Elizabeth Warren will most likely be chairing after January 20, 2017:
The Subcommittee on Economic Policy oversees economic growth, employment and price stability, federal monetary policy, including the policy functions of theFederal Reserve System; the Council of Economic Advisers; money and credit, including currency, coinage, and notes; control of prices of commodities, rents and services; economic stabilization and defense production; the Defense Production Act; financial aid to commerce and industry; loan guarantees; flood insurance; and disaster assistance carried out by the Federal Emergency Management Agency within the Department of Homeland Security.
Elizabeth Warren strong praise on Hillary’s Wall Street plan:
WaPo:
Elizabeth Warren praises Hillary Clinton’s Wall Street plan
NYTimes:
Elizabeth Warren Shows Support for Hillary Clinton’s Wall Street Plan
4. Sherrod Brown
Sherrod Brown is a strong Hillary backer and Wall Street/Banker reformer. He is the ranking member and will become chairman of the Committee on Banking, Housing, and Urban Affairs. He will have the power to subpoena and call for hearings on Wall Street and Bank regulation.
Sherrod Brown was, by his own admission, strongly involved in Hillary’s team’s writing of the Wall Street and Bank agenda and plans, and it shows. Hillary’s Wall Street plan is outstanding, partly due to Sherrod Brown’s input.
I think that Hillary will know how to get things done. I trust Hillary Clinton on what she is discussing in her plans, in her proposals on trade and on Wall Street reform. As the senior Democrat on the Banking Committee, I take a backseat to nobody in applauding the regulators when they are doing the right things, as they recently did with FDIC and the Fed, and in criticizing those regulators when they’re not tough enough. I think that Secretary Clinton’s proposals, which I had input on with her staff, I think that her proposals will make Wall Street way more accountable than they have been in the past.”
Sherrod Brown’s TBTF legislation:
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5. Gary Gensler
Gary Gensler was hired by Hillary to be her CFO, and it is widely believed that Gary Gensler is being groomed to become Treasury Secretary in a potential Hillary Clinton administration.
Gary Gensler is considered part of Elizabeth Warren’s inner circle of Wall Street reformers. When he was chair of the CFTC she met with him numerous times in private to talk about how to reign in Wall Street and was also engaged in numerous back and forths in hearings:
Gary Gensler is considered one of the most outspoken critics of Wall Street.
Meet Wall Street’s Archenemy: Gary Gensler
6. Jeff Merkley
Jeff Merkley is in line to become chair of the subcommittee on Financial Institutions and Consumer Protection when Democrats win the Senate. He had backed Bernie Sanders (he was the only Senate member to do so) and is now firmly in Hillary’s camp.
- Subcommittee on Economic Policy
- Subcommittee on Financial Institutions and Consumer Protection (Ranking Member)
- Subcommittee on Securities, Insurance, and Investment
About the Subcommittee on Financial Institutions and Consumer Protection Jeff Merkley will most likely be chairing after January 20, 2017:
The Subcommittee on Financial Institutions oversees banks, savings associations, credit unions and other financial institutions, including deposit insurance, and e-commerce. It also oversees the Federal Home Loan Bank System, regulatory activities of the Federal Reserve System, the Office of the Comptroller of the Currencyand the Office of Thrift Supervision within the Treasury Department, the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration
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7. Conclusion
Between Hillary’s strong Wall Street and bank regulating plans, an upcoming Democratic Senate majority, strong Wall Street critic and reformer Gary Gensler as Treasure Secretary, and strong Progressives Sherrod Brown, Elizabeth Warren and Jeff Merkley chairing the majority in the Senate Committee on Banking, Housing and Urban Affairs and the subcommittee on economic policy and the subcommittee on Financial Institutions and Consumer Protection, Wall Street is not going to be in a strong position next year. In fact, Wall Street is on notice that Progressive changes are coming their way. Only President Trump and/or the GOP keeping the Senate majority would prevent it from happening.