Just a month before he left the White House, Bill Clinton signed the Commodity Futures Modernization Act of 2000, which had been pushed by his pro-Wall Street economic team. Six weeks later, the Wall Street banks began paying Clinton exorbitant fees for speeches, beginning with Morgan, Stanley at $125,000 – just two weeks after he left office. Since then, he’s collected $19 million from his pals in the financial industry. They truly appreciate all he did for them. As well they should.
Nobel Prize laureate Joseph Stieglitz, Clinton’s former Chairman of the Council of Economic Advisers has emphatically stated that if the Clinton Administration had regulated derivatives, some of the major problems leading to the economic meltdown would have been avoided, including the tax payer bailout of AIG and other payouts.
It was Bill Clinton’s Wall Street Treasury Secretary Bob Rubin, the former CEO of Goldman, Sachs, who led the fight against any regulation. And recently released notes from the Clinton Library showcase a meeting with Rubin, then Deputy Secretary of the Treasury Larry Summers, SEC Chairman Arthur Levitt, Federal Reserve Chairman Alan Greenspan, and Brooksley Born, Clinton’s head of the Commodity Futures Trading Commission, (CFTC) make it very clear that the men at the table were not going to buck their friends on Wall Street. When Born persisted in hew view that CFTC had the authority and the obligation to police derivatives, the men carried Wall Street’s water and pushed legislation to tie Born’s hands. Later, after the crash of 2008, everyone but Larry Summers admitted that they should have listened to Born. Summers is never wrong.
And neither is Bill Clinton. He blamed it all on his advisers: They gave him bad information. It wasn’t his fault. And, according to Clinton, even if he had received good advice, the Republicans would have stopped him from regulating derivatives. And, anyway, it was George Bush’s fault. He did nothing to strengthen government oversight once he took office. So it was everybody else’s fault – not the President of the United States who appointed those very advisers and signed the bills that led to disaster.
And there were direct consequences. According to National Journal, “[Born’s] defeat that day left regulators not only powerless but clueless about the explosive growth in credit default swaps during the decade that followed, which allowed speculators to bet on an ever-rising housing market. The subsequent bust in 2008 caused the most devastating economic downturn since the Depression.”
And, off course, Clinton also repealed the Glass-Steagel Act, (after a $300 million lobbying effort by the banks) which opened the door for commercial banks to make risky investments and is widely considered to be the other cause of the 2008 crash
Now Hillary claims she’s been pushing for Wall Street reforms that Franken needs to continue, telling a Minnesota audience:
“Even before the big meltdown, a lot of us were calling for regulating derivatives and other complex financial products, closing the carried interest loophole, getting control of skyrocketing CEO pay, addressing other excesses,” Clinton said.
“And we’ve made progress.”
Made progress? Really? Has anyone told Hillary that there has been no closing of the carried interest loophole that lets her cronies in hedge funds pay only capital gains tax and not ordinary income taxes? That’s the loophole that she said separates her and Bill from the”truly rich.” You see, the Clintons have to pay regular income taxes, so they’re a different kind of rich.Very different.
And has Hillary noticed that Congress does not regulate CEO salaries – her favorite bankers are still cleaning up. Lloyd Blankfein, CEO of Goldman and long-time benefactor of the Clintons, made $23 million last year. CBS President Leslie Moonves made over $65 million.
And, finally, Clinton’s tepid comments on derivatives in 2007 hardly called for regulation: “We need to start addressing the risks posed by derivatives and other complex financial products.”
Yes, Hillary, seven years later its about time.
Progress? There’s been none. And Hillary has been nowhere on banking reform. She still is. No matter what she says.