Neel Kashkari, the new president of the Minneapolis branch of the Federal Reserve, just complained yesterday that the big banks are still “too big to fail.” He urged policy makers to give “serious consideration” to breaking them up “into smaller, less connected, less important entities.” He also argued that Dodd-Frank “did not go far enough.” This is remarkable because Kashkari is an alumnus of Goldman Sachs, oversaw the TARP program under Hank Paulson and was the Republican nominee for governor of California in 2014.
In a speech at the Brookings Institution, Kashkari explained: “The financial sector has lobbied hard to preserve its current structure and thrown up endless objections to fundamental change. And in the immediate aftermath of the crisis, when the Dodd-Frank Act was passed, the economic outlook was perhaps too uncertain to take truly bold action. But the economy is stronger now, and the time has come to move past parochial interests.” (Read the full text here.)
Last week, when Hillary Clinton defended her coziness and cash from Wall Street during the Democratic debate, she said that the campaign money Obama took from the financial services industry had no impact on the President, citing the Dodd-Frank law as proof. Sanders should have pointed out that Dodd-Frank was incredibly watered down by industry lobbyists and did not go nearly as far as it might have, especially considering the size of the Democratic majorities in the Senate and House back in 2010. (Although, in a previous debate, Martin O'Malley did just that.)
The fact that someone like Kashkari is saying Dodd-Frank “did not go far enough” gives Bernie Sanders a good peg to launch a fresh salvo against Hillary Clinton. Bernie seized on Kashkari’s announcement last night: "If a bank is too big to fail, it is too big to exist,” he said. “When it comes to Wall Street reform that must be our bottom line. The risk of another bailout is too great, and the economic and political power of a handful of huge financial institutions is simply too large.”
But Bernie Sanders has not (yet) made the explicit Clinton connection. But I have, in this short video that I created below, which connects the dots very easily. Simply put, in 2009 Obama nominated Eric Holder to be our U.S. Attorney General, but he refused prosecute any of the bankers that destroyed the economy. After Holder retired in 2014 from government service, he went back to work for the Covington law firm in 2016 — and just recently endorsed Hillary Clinton for President 2016.
In 2013 Eric Holder had said: "When we are hit with indications that if you do prosecute, if you do charge, it will have a negative effect on the national economy, perhaps even the world economy" — because he said some of the banks became too large. But while campaigning, Hillary Clinton said "No bank is too big too fail and no executive too powerful to jail."
Hillary Clinton wouldn't break up the big banks. She laughed off a reporter's question about releasing the transcripts for her Goldman Sachs speeches. When asked why she took $675,000 from Goldman for three speeches, she said: "That's what they offered."