Hillary Defends Bill's Record on Wall Street

Her fake promises to reign in Wall Street — her phony platitudes and outright lies. She claimed they were broke when they left the White House, but how have they earned their millions since then? And the entire Democratic Party machine is no better by giving the Clintons a pass and endorsing her for the presidential nomination. Is every Democrat also in the pockets of the big banks? And if so, then why in the Hell should they be any better than the Republicans? Because they aren't as bad?

* Excerpted from Wall Street on Parade (December 8, 2015) What Hillary Clinton Didn’t Tell You in Her New York Times OpEd — by Pam Martens and Russ Martens

The New York Times gave Presidential candidate Hillary Clinton a free infomercial (a/k/a OpEd) to spin her toothless plan How I'd Rein in Wall Street and begins by telling us this:

“Seven years ago, the financial crisis sent our economy into a tailspin. Over five million people lost their homes. Nearly nine million lost their jobs. Nearly $13 trillion in household wealth was wiped out.”

But that’s not what her husband, former President Bill Clinton told us was going to happen when he repealed the 66-year old Glass-Steagall Act on November 12, 1999. Here’s what Bill Clinton promised us from this massive deregulation of Wall Street:

President Bill Clinton:

“You heard Senator Gramm characterize this bill as a victory for freedom and free markets. And Congressman LaFalce characterized this bill as a victory for consumer protection. And both of them are right ... It is true that the Glass-Steagall law is no longer appropriate for the economy in which we live…And today what we are doing is modernizing the financial services industry, tearing down these antiquated laws and granting banks significant new authority. This will, first of all, save consumers billions of dollars a year through enhanced competition. It will also protect the rights of consumers. It will guarantee that our financial system will continue to meet the needs of underserved communities … This is a very good day for the United States. Again, I thank all of you for making sure that we have done right by the American people and that we have increased the chances of making the next century an American century…the future of our children will be very bright, indeed.” [See video of his full remarks at the end of this post.]

President Bill Clinton was wrong on every single point and every single promise he made to the American people on November 12, 1999 when he signed the legislation that would once again set up the conditions of the 1929 crash, allowing deposit-taking banks to merge with securities trading firms. And because Hillary Clinton comes from that same Wall Street mindset and echo chamber that repealed the Glass-Steagall Act, she cannot be trusted to repair the epic damage her husband and his Wall Street high roller pals have caused our nation.

Hillary attempts to bolster her detail-lite plan to rein in Wall Street with this assertion in her Times OpEd:

“My plan also goes beyond the biggest banks to include the whole financial sector. Some have urged the return of a Depression-era rule called Glass-Steagall, which separated traditional banking from investment banking. But many of the firms that contributed to the crash in 2008, like A.I.G. and Lehman Brothers, weren’t traditional banks, so Glass-Steagall wouldn’t have limited their reckless behavior.”

First, Glass-Steagall was not a “rule.” It was the most powerful financial legislation ever passed by the U.S. Congress in 1933 and it protected the nation from another 1929 style crash for almost seven decades. Just nine years after its repeal, Wall Street crashed and caused the greatest economic upheaval since the Great Depression.

What Hillary isn’t telling you about AIG, the giant insurance company which blew up in 2008 from selling credit derivatives to Wall Street firms and received a massive taxpayer bailout, is that it was also Bill Clinton’s administration that allowed AIG to become a derivatives powder keg by also passing and signing into law the Commodity Futures Modernization Act in the waning days of his administration. This act removed these dangerous derivatives from regulatory oversight. Additionally, the legislation that Bill Clinton signed into law that repealed the Glass-Steagall Act, the Gramm-Leach-Bliley Act, also repealed the sections of the Bank Holding Company Act of 1956 that had separated commercial banking from insurance.

At the time AIG blew up in 2008, it was a global insurance company peddling billions in insurance annuities to moms and pops around the globe; it owned the FDIC insured AIG Federal Savings Bank. AIG also owned 71 U.S.-based insurance entities and 176 other financial services companies throughout the world, including AIG Financial Products which blew up the company. None of this could have happened without the deregulation that occurred in the Bill Clinton administration.

As for Lehman Brothers, Hillary doesn’t mention that at the time it blew up, Lehman Brothers owned two FDIC insured banks, Lehman Brothers Bank, FSB and Lehman Brothers Commercial Bank. Together, they held $17.2 billion in assets as of June 30, 2008. Lehman Brothers Bank FSB is where Lehman handled its mortgage loan originations. When the FDIC approved the Lehman Brothers Commercial Bank application in 2005, it specifically noted that the FDIC insured bank “anticipates acting as a derivatives intermediary, engaged in matched trading of interest rate products, primarily interest rate swaps, as well as forward purchase agreements and options contracts.” None of this would have been possible without Bill Clinton’s deregulation of Wall Street.

Have Americans, who are supporting Hillary’s run, given any serious thought as to how her administration would function with Bill Clinton, the former deregulator-in-chief of Wall Street, residing in the White House and having her ear on a daily basis?

Massive amounts of Wall Street money bought the repeal of the Glass-Steagall Act and that money is now gushing into Hillary’s campaign to make sure that Glass-Steagall remains gutted ... We’re still in the primary season and Hillary’s campaign committee has raised $76 million from individual contributors with 81 percent of that coming from large donors ... When it comes to hollow promises to rein in Wall Street, Americans have had voter’s remorse for far too long. Isn’t it time for a meaningful change?

[Editor's note: Here's Bernie Sanders' plan for reforming Wall Street. Also see the video of Sanders vs. Clinton on Wall Street reform in the 2nd debate.]

RELATED POSTS: 

• Wall Street on Parade (December 10, 2015) Regulators: Banks Are Now Making Riskier Loans, Just Like Before the Crash — by Pam Martens and Russ Martens
• Washington Post (November 11, 2015) Hillary Clinton invoked 9/11 to defend her ties to Wall Street — by Janell Ross
• Center for Economic and Policy Research (December 12, 2015) Hillary Clinton, Bernie Sanders, and Cracking Down on Wall Street — by Dean Baker