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Re: Glass steagall

From:gbsperling@gmail.com To: ggensler@hillaryclinton.com CC: ntanden@gmail.com, jsullivan@hillaryclinton.com, john.podesta@gmail.com, mschmidt@hillaryclinton.com, mshapiro@hillaryclinton.com, davidckamin@gmail.com Date: 2015-09-11 19:02 Subject: Re: Glass steagall

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. >>>> >>> >>> >> >