Hillary Clinton on Tuesday dismissed the idea of reinstating a Depression-era banking law that has found champions in two of her Democratic opponents, setting up what will likely be a flashpoint in next week’s Democratic primary debate.
Asked by a voter in Iowa about reinstating the Glass-Steagall Act, a law that separated commercial and investment banks until its repeal under President Bill Clinton, Hillary Clinton said that her Wall Street plan — which will be unveiled next week — would be “more comprehensive” than reinstating the law.
“The big banks are not the only thing we have to worry about,” Clinton said at the RiverCenter here. “I’ve studied this real closely and what I am proposing is we go after the risk, and if they are too big to manage, that is a risk and they should not continue. If they are so big that they are causing disruptions on the marketplace, that’s a risk.”
She added, “I have what I consider to be a more comprehensive approach to what we need to do to rein in these institutions, including the big banks.”
Both Vermont Sen. Bernie Sanders, Clinton’s most formidable Democratic opponent, and former Maryland Gov. Martin O’Malley, have pledged to reinstate Glass-Steagall if elected president. And Sanders, who is surging lately and leading Clinton in New Hampshire, has made taking on “billionaires” and Wall Street the key issue of his campaign.
“My proposals go a lot further than Secretary Clinton’s,” O’Malley said in an interview in July. “Her closeness with big banks on Wall Street is sincere, it’s heartfelt, long-established and well known.”
Sanders, too, has faulted Clinton for her close ties to Wall Street.
On Tuesday, Clinton subtly hit proponents of the law’s reinstatement, including Sanders and O’Malley.
“I’m going to go after what I think are the real problems, not the problems on the past, the problems of today because what I’m interested in is stopping something like this from happening again,” Clinton said.
O’Malley’s campaign called Clinton’s comments “disappointing” and said she was “embracing arguments pushed by the architects of deregulation that big banks did not play a major role in the financial crisis.”
“They, in fact — along with the institutions they aided and abetted, like AIG — were the cause of the collapse,” deputy campaign manager Lis Smith said in a statement. “We need a modernized Glass-Steagall to help reduce risk, the size of too-big-to-fail banks, and the chance of another financial collapse — that’s exactly what Governor O’Malley is pushing for. Democrats are the party of the middle class — it’s time more of our leaders start acting like it.”
Emails to Sanders’ campaign went unanswered.
The reinstatement of Glass-Steagall has become something liberal — and some conservative — leaders have championed since its repeal and the market crash of 2008.
Massachusetts Democratic Sen. Elizabeth Warren pushed for the reinstatement of the law earlier this year, emailing her large list of supporters to push for the measure two days after an economic adviser to Clinton’s campaign said the presidential candidate wouldn’t reinstate the Glass-Steagall Act if elected.
Tuesday was not the first time Clinton has mentioned the Depression-era law, but was the most outspoken she has been about its failings.
During a July trip to South Carolina, Clinton said economic issues are “much more complicated … than pointing to any one piece of legislation and saying well if we just pass that everything would be fine.”
On Tuesday, she reiterated this claim, arguing that because the 2008 financial collapse included big insurance companies, Glass-Steagall would only do so much.
“If you only reinstate Glass-Steagall, you don’t go after all these other institutions in what is called the shadow banking system, hedge funds and other financial entities that have too much power in our economy,” she said.
Clinton spent the summer rolling out her economic plans, but has yet to roll out how she will take on Wall Street.
Progressives, some of whom are skeptical of Clinton’s candidacy and feel she is too close to big banks because of her time representing New York in the Senate, are hungry to hear Clinton’s plans on taking on financial institutions.