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Re: Glass steagall

From:ntanden@gmail.com To: jsullivan@hillaryclinton.com, gbsperling@gmail.com CC: mshapiro@hillaryclinton.com, ggensler@hillaryclinton.com, pyle_michael@yahoo.com, davidckamin@gmail.com, john.podesta@gmail.com, mschmidt@hillaryclinton.com Date: 2015-09-12 17:40 Subject: Re: Glass steagall

I don't think liberals will believe Hillary. They will believe anything warren is for is better than what Hillary is for. So i think she remains more vulnerable than I think she would be if she was just more open to glass Steagall as a possibility. But I definitely prefer this option to previous articulations. On Sat, Sep 12, 2015 at 3:29 PM Jake Sullivan <jsullivan@hillaryclinton.com> wrote: > I for one like it. > > > > On Sep 12, 2015, at 2:10 PM, Gene Sperling <gbsperling@gmail.com> wrote: > > Thought: > > Why don't we do our own break up too big and risky to fail proposal? > > We lean more to left on giving regulators more explicit power to break up > banks or force them to divest when justified. > > The conditions are a combo or size, risk and lack of accountability. We no > longer are in a "no" world but a "we have a better proposal world." When he > question is are you for reinstating G-S or break up bank bill, we say we > have a better proposal: one designed to deal with realities today. We > acknowledge when pressed that simple one size fits all rules don't work > need to always look at size, risk and accountability. So we target where > real dangers are. > > When asked why not put back Glass Steagall -- we say because it is not > good enough. It would not have prevented Countrywide, Bear Stearns, Lehman > brothers. But she explains that HRC bill would! > > They beauty of this is we stay true to the truth: but we make the case not > by explaining why we are against Glass Steagall but why we need something > stronger and more likely to prevent another crisis in 2030 and not 1930. It > is all the same arguments but it is all on offense as opposed to defense. > > What do you think? > > Sent from my iPhone > > On 12 Sep 2015, at 10:40, Neera Tanden <ntanden@gmail.com> wrote: > > First I would expect Biden to endorse glass steagall if he gets in. What > do we think he and warren were discussing for the hour? But we will know > something Ike that hopefully before the debate. But it would be my bet that > he ends up in favor. > > To answer Gary's email, we have an essential conundrum. Glass Steagall has > become shorthand for tough on the banks with the left. Again, I'm not > saying it's fair or unfair. It just seems very hard to undo in the time we > have. So we can say all these things you'd like her to say but when she > says she's against reinstating on that debate stage I am worried that will > be shorthanded as she's pro-bank. > > We all have different discussions about policy with different people and > different assessments. But a lot of people see an ftt as a criticism of > Wall Street simply by being a tax on stocks. Though I'm all for making > brokers pay it. It's not like people are super distinguishing the banks, > hedge funds and Wall Street. > > But hey, if she had been for reinstating glass steagall, that would create > a different calculus for an ftt. Given we are not for reinstating, I think > that makes an ftt even more of an imperative. And at least it gives her > something to say about taking a tough stand in this realm. > > Now I think I've at least properly beaten this dead horse for my part. > On Sat, Sep 12, 2015 at 12:34 PM Michael Shapiro < > mshapiro@hillaryclinton.com> wrote: > >> This is not my area at all. So people should weight Schmidt and Pyles and >> Gary's views much, much more strongly. >> >> But my understanding is that Biden is somewhat weaker with liberals on >> financial reform issues. If we are worried about him entering, and drawing >> liberals either from us or Sanders because he's in theory more electable, >> I'd lean toward going stronger on financial accountability to the extent we >> can in a way that does not seem like a lurch but an evolution of the >> principles we've put out and the lessons of the crisis. >> >> Sent from my iPhone >> >> On Sep 12, 2015, at 12:26 PM, Gary Gensler <ggensler@hillaryclinton.com> >> wrote: >> >> + Pyle >> >> On Sat, Sep 12, 2015 at 12:20 PM, Gary Gensler < >> ggensler@hillaryclinton.com> wrote: >> >>> I think that what HRC is confronting on the rope lines when folks ask >>> about Glass Steagall is less about the specifics of that actual law and far >>> more that a broad part of the public think that we have a) not yet solved >>> for the risks that Banks pose to their daily lives & b) that the banks and >>> their executives are entitled or not held accountable as they should be. >>> It's a mixture of not solving both a) Too Big to Fail and b) Too Big to >>> Jail. >>> >>> And I have heard too often from progressive advocates some mixture of >>> concern our positions given some mixture of a) Hillary having been a NY >>> Senator thus close to Wall Street, b) the perceived deregulation of WJC >>> years & c) many of Hillary donor/adviser base coming from Finance. >>> >>> For me, if we wish to address these more head on, we should consider >>> dialing up the substance of both our risk agenda and our accountability >>> agenda. >>> >>> On risk, our current liability risk fee does tip the scales directly >>> regarding size and risk, but it does not set any absolute limit to size, >>> risk or complexity. It's also pretty technical rather than a clear rule. >>> Dialing up, I think that we could say that Hillary is calling for >>> strengthening the Dodd Frank provision which already allows for regulators >>> (the FDIC and Fed) to downsize or restructure banks. The authority is >>> already there but by calling for a broadening of that authority we can >>> associate ourselves more directly wish a call to downsize banks. We could >>> say that the law needs to make it explicit that the regulators can downsize >>> for risk to the economy, complexity to manage or overall size relative to >>> the markets. Or if we wished to dial this knob further, we could suggest >>> a specific number saying that given that it is almost certain that some >>> large systemic bank will fail we should limit their scale. >>> >>> I don't, however, think that we should stress Glass Steagall or lines of >>> business other than our call for closing some loopholes in Volcker. >>> >>> For the public it's would be clear and somewhat like rules that >>> over-sized vehicles are banned from the highways in part to protect the >>> rest of the public from when they crash. We could say why not protect the >>> public from inevitable future crashes of Too big to Fail Banks. >>> >>> On accountability, we could dial up the current provisions of senior >>> executives' bonuses being on the line when large fines are paid by tweaking >>> some of the language (making it clearer and with less defenses) and upping >>> the rhetoric. We could also add that regulators have clear authority to >>> force senior executives to lose their job for misdeeds that happened under >>> their supervision even if they didn't participate in the misdeed. >>> >>> Lastly, though the FTT has been well litigated, I wanted to comment that >>> one of the reasons I don't think that it will get us much credit is that >>> it does not go to either of the public's deeply held concerns. An FTT >>> effects markets by putting a tax on every trade. It does not address Bank >>> risk, Too Big to Fail, accountability or Too Big to Jail. My view is that >>> the debate will still focus on these items and that Hillary would still get >>> the rope line questions. >>> >>> Gary >>> >>> On Sat, Sep 12, 2015 at 10:09 AM, Neera Tanden <ntanden@gmail.com> >>> wrote: >>> >>>> Yes. And the broad test is too complex to manage. But I'm obviously >>>> happy to work with others on other triggers if you don't like that one. >>>> On Sat, Sep 12, 2015 at 9:58 AM Jake Sullivan < >>>> jsullivan@hillaryclinton.com> wrote: >>>> >>>>> I'm trying to get same answer. What I'm trying to figure out is if >>>>> you are saying, I need a glass steagall tool I can use if a bank can't meet >>>>> my tests? >>>>> >>>>> >>>>> >>>>> On Sep 12, 2015, at 9:53 AM, Neera Tanden <ntanden@gmail.com> wrote: >>>>> >>>>> I would say that if there's a bank that needs to be broken up she >>>>> needs a glass steagall tool to break them up. She can't really do that now. >>>>> >>>>> However, I'm open to saying a pattern of too much complexity. So it's >>>>> finding several banks. But I'm trying to find a debate answer not a policy >>>>> rollout. Happy to think longer for that kind of answer. >>>>> >>>>> Obviously she can't break up any bank on her own. The higher cap >>>>> requirements are designed to assure much less likelihood of failure. We >>>>> have pushed for higher ones. But we live in a quandary which is no one >>>>> knows what any of this means and glass steagall has the most resonance with >>>>> reporters and the like. >>>>> >>>>> I get Jamie Damon's argument that having both sides of the business >>>>> helped him weather the storm. They took profits and losses at different >>>>> times. But I think there are some reasonable people on Wall Street who >>>>> think the complexity is a problem. >>>>> >>>>> On Sat, Sep 12, 2015 at 9:38 AM Jake Sullivan < >>>>> jsullivan@hillaryclinton.com> wrote: >>>>> >>>>>> So if there is one of those we reinstate glass steagall for all banks? >>>>>> >>>>>> Just trying to understand. >>>>>> >>>>>> >>>>>> On Sep 12, 2015, at 9:36 AM, Neera Tanden <ntanden@gmail.com> wrote: >>>>>> >>>>>> A bank too complex to manage that therefore is too risky. >>>>>> >>>>>> On Sat, Sep 12, 2015 at 9:33 AM Jake Sullivan < >>>>>> jsullivan@hillaryclinton.com> wrote: >>>>>> >>>>>>> To summarize, your position would be that she would be open to >>>>>>> reinstating glass steagall if it came to that? What's the answer to >>>>>>> "what's it gonna take"? >>>>>>> >>>>>>> >>>>>>> >>>>>>> On Sep 12, 2015, at 9:09 AM, Neera Tanden <ntanden@gmail.com> wrote: >>>>>>> >>>>>>> Look, I wasn't there in the 90s. But I don't think she will win a >>>>>>> battle on glass steagall's role in the crisis. And I think it is problem. >>>>>>> Fair or unfair it's pretty ingrained. So I'm trying to think of a third way >>>>>>> between support and opposition. I think O'Malley will push her to be >>>>>>> opposed and it could be really deadly. >>>>>>> >>>>>>> But I'm happy to register my dissent from your views and move on. >>>>>>> >>>>>>> On Fri, Sep 11, 2015 at 9:54 PM Gary Gensler < >>>>>>> ggensler@hillaryclinton.com> wrote: >>>>>>> >>>>>>>> I would say no and say that this 1930's policy solution doesn't >>>>>>>> work in this century. And it wouldn't have done anything about AIG, Lehman >>>>>>>> or many other too big to fail failures. >>>>>>>> >>>>>>>> Sent from my iPhone >>>>>>>> >>>>>>>> On Sep 11, 2015, at 9:42 PM, Neera Tanden <ntanden@gmail.com> >>>>>>>> wrote: >>>>>>>> >>>>>>>> someone follows up with >>>>>>>> "Are you for reinstating glass steagall or not?" >>>>>>>> >>>>>>>> Gene's artful version still gets us to no. >>>>>>>> >>>>>>>> I am saying she says some version of I will fix the problem w out >>>>>>>> it. But if it makes sense to do bc of issues that arise - e g too much >>>>>>>> complexity to manage - then she will do it. She's not saying she will do it >>>>>>>> now. She's not saying it was responsible for the crisis. But she will >>>>>>>> reinstate if future need arises. >>>>>>>> >>>>>>>> I guess I worry about everyone else up on the stage saying >>>>>>>> reinstate glass steagall and not giving her more. >>>>>>>> >>>>>>>> I recognize I'm in a different place than others. You may not want >>>>>>>> to go this far, but given her anxiety on Glass Steagall I did want to offer >>>>>>>> up an alternative. >>>>>>>> On Fri, Sep 11, 2015 at 6:00 PM Gary Gensler < >>>>>>>> ggensler@hillaryclinton.com> wrote: >>>>>>>> >>>>>>>>> I think Gene is onto a possible path forward - buying into the >>>>>>>>> values of Glass Steagall - while not the actual specifics for our times. >>>>>>>>> Glass Steagall was another generations solution for a similar problem - >>>>>>>>> risk - but a problem that has taken on new forms nearly 80 years later. >>>>>>>>> Obama focused and succeeded on much with Dodd Frank, but can and need to do >>>>>>>>> more. That's why I am for Risk fee, strengthening Volcker, etc. and if >>>>>>>>> needed would in a heartbeat .... >>>>>>>>> >>>>>>>>> On Fri, Sep 11, 2015 at 5:02 PM, Gene Sperling < >>>>>>>>> gbsperling@gmail.com> wrote: >>>>>>>>> >>>>>>>>>> I want to come back to my comment that was somewhat between Neera >>>>>>>>>> and Gary. >>>>>>>>>> >>>>>>>>>> I agree with Gary that we should not flip flop on Glass Steagall >>>>>>>>>> because one, it is make-believe to think it caused the crisis in any way; >>>>>>>>>> 2) because it is make believe, it is crazy for her to buy into the idea >>>>>>>>>> that it was her husband as opposed to a Republican Administration bore the >>>>>>>>>> regulatory responsibility for the worst financial crisis in our life time. >>>>>>>>>> >>>>>>>>>> But where we could think more, is how without buying into the >>>>>>>>>> Glass-Steagall as cause and cure line -- we could find ways to blur a >>>>>>>>>> little more going forward, that could use the two words. >>>>>>>>>> >>>>>>>>>> Such as: "I do want to strengthen some of the key protections >>>>>>>>>> against risky behavior that Glass Steagall was designed to prevent -- which >>>>>>>>>> is why I want to strengthen Volker Rule etc. And I want to make sure we >>>>>>>>>> never see the type of let Wall Street do whatever they want like took place >>>>>>>>>> under George Bush.....[and then hit a litany] >>>>>>>>>> >>>>>>>>>> That structure has us not focusing on being against Glass >>>>>>>>>> Steagall, but quickly buys into some of the values going forward and then >>>>>>>>>> pivots to an all out hit on Bush and reckless practices under Bush watch >>>>>>>>>> that led to crisis......" >>>>>>>>>> >>>>>>>>>> Thoughts? >>>>>>>>>> >>>>>>>>>> On Fri, Sep 11, 2015 at 1:42 PM, Gary Gensler < >>>>>>>>>> ggensler@hillaryclinton.com> wrote: >>>>>>>>>> >>>>>>>>>>> I understand what Neera is saying that Glass Steagall is not >>>>>>>>>>> well understood by the public, but I would still have HRC keep to that her >>>>>>>>>>> focus is on risk. That's why we have the risk fee, strengthening Volcker >>>>>>>>>>> and Shadow Banking and if desired add that she would not hesitate to hold >>>>>>>>>>> banks accountable and not hesitate if need be to downsize or even break >>>>>>>>>>> some of them up. On Glass Steagall, it's far more than just not conceding >>>>>>>>>>> it. I think that particularly given what HRC has said and that Lehman, AIG >>>>>>>>>>> and so many others would have failed even with Glass Steagall that HRC is >>>>>>>>>>> on safer grounds talking about risk and even size than what lines of >>>>>>>>>>> business banks are in. It appears a bit flip floppy whereas the risk and >>>>>>>>>>> size are far less so. >>>>>>>>>>> >>>>>>>>>>> On Fri, Sep 11, 2015 at 3:47 PM, Neera Tanden <ntanden@gmail.com >>>>>>>>>>> > wrote: >>>>>>>>>>> >>>>>>>>>>>> Where I'm disagreeing with this group is precisely on the words >>>>>>>>>>>> Glass Steagall. No one knows what it is, but being on the wrong side of it >>>>>>>>>>>> is dangerous. So I'm not committing her to reinstate it, but I also think >>>>>>>>>>>> shutting it down is ill advised; I fear that in the black and white world >>>>>>>>>>>> we're living in, that is shorthanded as pro-bank. So that is why I would >>>>>>>>>>>> remain open to it as a policy option in the future. >>>>>>>>>>>> >>>>>>>>>>>> >>>>>>>>>>>> >>>>>>>>>>>> On Fri, Sep 11, 2015 at 2:58 PM, Gene Sperling < >>>>>>>>>>>> gbsperling@gmail.com> wrote: >>>>>>>>>>>> >>>>>>>>>>>>> Very much agree >>>>>>>>>>>>> >>>>>>>>>>>>> Sent from my iPhone >>>>>>>>>>>>> >>>>>>>>>>>>> On 11 Sep 2015, at 11:53, Gary Gensler < >>>>>>>>>>>>> ggensler@hillaryclinton.com> wrote: >>>>>>>>>>>>> >>>>>>>>>>>>> If we need words I would go with " I will work to reduce the >>>>>>>>>>>>> size of the banks in a heartbeat" or if more is needed to go with "I will >>>>>>>>>>>>> work to reduce the size or even breakup the banks in a heartbeat ..." >>>>>>>>>>>>> rather than a reference to reinstating Glass Steagall. >>>>>>>>>>>>> >>>>>>>>>>>>> I say this as we've already said that crisis wasn't about >>>>>>>>>>>>> Glass Steagall restrictions but about risk. Also I believe that as a >>>>>>>>>>>>> policy matter that the issue about too big or too risky to fail is about >>>>>>>>>>>>> size and risk not Glass Steagall. I would prefer not to concede that point. >>>>>>>>>>>>> >>>>>>>>>>>>> Further, Dodd Frank gave the FDIC and Fed to restructure or >>>>>>>>>>>>> even downsize banks if the living will process leads to a conclusion that >>>>>>>>>>>>> the risk of resolution is too great. >>>>>>>>>>>>> >>>>>>>>>>>>> On Fri, Sep 11, 2015 at 2:37 PM, Jake Sullivan < >>>>>>>>>>>>> jsullivan@hillaryclinton.com> wrote: >>>>>>>>>>>>> >>>>>>>>>>>>>> That’s close to what we have minus the words Glass Steagall. >>>>>>>>>>>>>> Are those magic words for you? >>>>>>>>>>>>>> >>>>>>>>>>>>>> >>>>>>>>>>>>>> >>>>>>>>>>>>>> *From:* Neera Tanden [mailto:ntanden@gmail.com] >>>>>>>>>>>>>> *Sent:* Friday, September 11, 2015 2:17 PM >>>>>>>>>>>>>> *To:* Jake Sullivan <jsullivan@hillaryclinton.com>; John >>>>>>>>>>>>>> Podesta <john.podesta@gmail.com>; Gene Sperling < >>>>>>>>>>>>>> gbsperling@gmail.com>; Gary Gensler < >>>>>>>>>>>>>> ggensler@hillaryclinton.com>; Mike Schmidt < >>>>>>>>>>>>>> mschmidt@hillaryclinton.com>; Michael Shapiro < >>>>>>>>>>>>>> mshapiro@hillaryclinton.com>; David Kamin < >>>>>>>>>>>>>> davidckamin@gmail.com> >>>>>>>>>>>>>> *Subject:* Glass steagall >>>>>>>>>>>>>> >>>>>>>>>>>>>> >>>>>>>>>>>>>> >>>>>>>>>>>>>> i think most people know I worry that this is the closest >>>>>>>>>>>>>> thing to an Iraq vote we have to face us. And a big potential problem in >>>>>>>>>>>>>> the debate. >>>>>>>>>>>>>> >>>>>>>>>>>>>> >>>>>>>>>>>>>> >>>>>>>>>>>>>> Why can't she say the following: >>>>>>>>>>>>>> >>>>>>>>>>>>>> Too big to fail are problems. Should never happen again etc. >>>>>>>>>>>>>> I will take steps - higher cap requirements, whatever you have on list -to >>>>>>>>>>>>>> ensure we protect Americans. I think those will work better. >>>>>>>>>>>>>> >>>>>>>>>>>>>> >>>>>>>>>>>>>> >>>>>>>>>>>>>> I will work every day to make sure we protect Americans so >>>>>>>>>>>>>> they never suffer for the excesses on Wall Street. But if banks are >>>>>>>>>>>>>> growing too big to manage and we need to take these steps tetc etc, >>>>>>>>>>>>>> believe me I will work to reinstate glass steagall in a heartbeat bc this >>>>>>>>>>>>>> Americans losing so much for the banks can never happen again. >>>>>>>>>>>>>> >>>>>>>>>>>>>> >>>>>>>>>>>>>> >>>>>>>>>>>>>> She's not conceding it was responsible for the financial >>>>>>>>>>>>>> crisis. But her openness will be better than a hard and fast position that >>>>>>>>>>>>>> puts her on the bank side of the ledger. >>>>>>>>>>>>>> >>>>>>>>>>>>>> >>>>>>>>>>>>>> >>>>>>>>>>>>>> Anyway I just offer it as a thought. >>>>>>>>>>>>>> >>>>>>>>>>>>> >>>>>>>>>>>>> >>>>>>>>>>>> >>>>>>>>>>> >>>>>>>>>> >>>>>>>>> >>> >>