This article outlines how one might break up a big bank, either legislatively or via Dodd-Frank. Neither is as easy (or likely) as Bernie seems to think it is.
God, I finally got around to reading this Bernie Sanders interview with the New York Daily News and it’s just as I’ve been saying for months now (here, here, here, to name a few): he just doesn’t seem to understand the fundamentals of the issues he’s most passionate about. Bernie’s most passionate supporters should really be concerned about this, but near as I can tell, they’re just writing off every negative story by attacking the messenger.
Look, it’s not enough to just say, this thing is bad. You’re running for president because supposedly you’re the guy to fix it. And to fix the stuff that’s broken, you need more than just a wagging finger and a pissed off message. You need to know how stuff works.
I don’t think Bernie Sanders understands the difference between being an activist and being a president. An activist can get away with speaking truth to power and calling for needed change, but a president actually needs to know how to do it. For example: I’m a good enough liberal to nod my head in agreement when Bernie says,
I believe that we can and should move to what Pope Francis calls a moral economy.
But how are you going to do that? What does that look like? How do we make that happen? What is the mechanism?
As his interview with the NYDN shows, he has no clue how Wall Street even works, let alone what needs to be done to reform it. For example, on his pledge to break up the big banks his first year in office:
Daily News: Okay. Well, let’s assume that you’re correct on that point. How do you go about doing it?
Sanders: How you go about doing it is having legislation passed, or giving the authority to the secretary of treasury to determine, under Dodd-Frank, that these banks are a danger to the economy over the problem of too-big-to-fail.
Daily News: But do you think that the Fed, now, has that authority?
Sanders: Well, I don’t know if the Fed has it. But I think the administration can have it.
Daily News: How? How does a President turn to JPMorgan Chase, or have the Treasury turn to any of those banks and say, “Now you must do X, Y and Z?”
Sanders: Well, you do have authority under the Dodd-Frank legislation to do that, make that determination.
Daily News: You do, just by Federal Reserve fiat, you do?
Sanders: Yeah. Well, I believe you do.
Okay, got that? Sanders seems very clear on his assertion that Dodd-Frank gives a president — and that means his administration — the authority to order a “too big to fail” bank to be broken up. But as to how you unpack that in the real world, beyond the grandiose platitudes about a stronger national economy … well, he’s a little muddy.
Daily News: So if you look forward, a year, maybe two years, right now you have…JPMorgan has 241,000 employees. About 20,000 of them in New York. $192 billion in net assets. What happens? What do you foresee? What is JPMorgan in year two of…
Sanders: What I foresee is a stronger national economy. And, in fact, a stronger economy in New York State, as well. What I foresee is a financial system which actually makes affordable loans to small and medium-size businesses. Does not live as an island onto themselves concerned about their own profits. And, in fact, creating incredibly complicated financial tools, which have led us into the worst economic recession in the modern history of the United States.
Daily News: I get that point. I’m just looking at the method because, actions have reactions, right? There are pluses and minuses. So, if you push here, you may get an unintended consequence that you don’t understand. So, what I’m asking is, how can we understand? If you look at JPMorgan just as an example, or you can do Citibank, or Bank of America. What would it be? What would that institution be? Would there be a consumer bank? Where would the investing go?
Sanders: I’m not running JPMorgan Chase or Citibank.
Daily News: No. But you’d be breaking it up.
Sanders: That’s right. And that is their decision as to what they want to do and how they want to reconfigure themselves. That’s not my decision. All I am saying is that I do not want to see this country be in a position where it was in 2008, where we have to bail them out. And, in addition, I oppose that kind of concentration of ownership entirely.
Daily News: Well, it does depend on how you do it, I believe. And, I’m a little bit confused because just a few minutes ago you said the U.S. President would have authority to order…
Sanders: No, I did not say we would order. I did not say that we would order. The President is not a dictator.
Umm, actually he kinda did. He says it at every campaign stop, too.
Daily News: Okay. You would then leave it to JPMorgan Chase or the others to figure out how to break it, themselves up. I’m not quite…
Sanders: You would determine is that, if a bank is too big to fail, it is too big to exist. And then you have the secretary of treasury and some people who know a lot about this, making that determination. If the determination is that Goldman Sachs or JPMorgan Chase is too big to fail, yes, they will be broken up.
And he just said it again. Okay, so moving forward:
Daily News: Okay. You saw, I guess, what happened with Metropolitan Life. There was an attempt to bring them under the financial regulatory scheme, and the court said no. And what does that presage for your program?
Sanders: It’s something I have not studied, honestly, the legal implications of that.
He hasn’t studied the legal implications? That’s troubling, to say the least. Even Obama, a professor of constitutional law, had to deal with legal challenges to Obamacare … and he didn’t always get it right.
Sanders does the same thing when asked about Israel, saying all the right things about Israel having a right to exist but recognizing the suffering of the Palestinian people, and saying,
[…] Israel is not, cannot, just simply expand when it wants to expand with new settlements.
But how that manifests in a real Bernie Sanders administration? We get more waffling.
Daily News: I was talking about something different, though. Expanding settlements is one thing; coming into office as a President who said as a baseline that you want Israel to pull back settlements, that changes the dynamic in the negotiations, and I’m wondering how far and what you want Israel to do in terms of pulling back.
Sanders: Well, again, you’re asking me a very fair question, and if I had some paper in front of me, I would give you a better answer. But I think if the expansion was illegal, moving into territory that was not their territory, I think withdrawal from those territories is appropriate.
Daily News: And who makes the call about illegality, in your mind?
Sanders: Well, I think that’s based on previous treaties and ideas. I happen to think that those expansions were illegal.
Daily News: Okay, so if we were to find Israeli settlements, so-called settlements, in places that has been designated to be illegal, you would expect Israel to be pulling them back?
Sanders: Israel will make their own decisions. They are a government, an independent nation. But to the degree that they want us to have a positive relationship, I think they’re going to have to improve their relationship with the Palestinians.
So what are we talking about here?
Bernie Sanders is a liberal Trump. It’s not enough to just talk about how you want to make America great again. You need to have a plan. So, what’s the plan for breaking up the banks? What’s the plan for Israel? What’s the plan for trade deals and taking on ISIS? When asked about what he’d do with a captured ISIS commander, Sanders said he’d imprison him. But where?
Daily News: Where?
Sanders: And try to get as much information out of him. If the question leads us to Guantanamo…
Daily News: Well, no, separate and apart from Guantanamo, it could be there, it could be anywhere. Where would a President Sanders imprison, interrogate? What would you do?
Sanders: Actually I haven’t thought about it a whole lot. I suppose, somewhere near the locale where that person was captured. The best location where that individual would be safely secured in a way that we can get information out of him.
Daily News: Would it be in the United States?
Sanders: Would it be in the United States? It could be, yeah.
Daily News: Yeah. I mean, some of these places are lawless lands. You’ve got Libya, you’ve got Yemen. If Special Forces…
Sanders: If the question is do I believe that terrorists could be safely imprisoned in the United States, the answer is yes.
Okay, but Obama tried that and failed. Imprisoning someone in a foreign country implies a whole level of global influence that seems at odds with Sanders’ more Libertarian streak where foreign affairs is concerned. Shouldn’t he have thought this stuff through? And why aren’t the Bernie babies more concerned about this stuff? Doesn’t substance matter to liberals anymore? Are we so enamored of someone who says the right things that we don’t care if it’s just empty rhetoric? That doesn’t make us any better than than the Trump people.