September 19, 2013

First 2016 Attack? Warren Takes A Shot At Clintons Over Financial Regulations

In a Boston Globe op-ed today, Sen. Elizabeth Warren (D-MA), who is receiving increasing attention as a possible presidential candidate, took a veiled shot at the Clintons’ record on financial regulation, pointing to the 1999 repeal of the Glass-Steagall Act creating “too big to fail” banks, which was signed into law by President Clinton. From her op-ed:

After the 2008 crisis, there was widespread recognition that “too big to fail’’ had distorted the marketplace, creating lower borrowing costs for the largest institutions and competitive disadvantages for smaller ones. The risks posed by moral hazard and the dangers of big banks getting a free, unwritten, government-guaranteed insurance policy were widely acknowledged. … 

By separating traditional depository banks from riskier financial institutions, the 1933 version of Glass-Steagall laid the groundwork for half a century of financial stability that helped create a robust and thriving middle class. But regulators and Congress began chipping away at Glass-Steagall in the 1980s, and its core provisions were repealed in 1999.

Of course, President Clinton refutes such criticism and says if given the opportunity, he would sign legislation to repeal Glass-Steagall again:

Clinton was asked if, in the aftermath of the financial crisis, he would once again sign the legislation undoing the Glass-Steagall Act, which limited the activities of commercial banks. “Yeah, I think so,” Clinton said. He said the “general assumption that Glass-Steagall had something to do with this is wrong” …