19 May 2015

Reich: Restore Balance, Break Up the Big Banks, Financial Transaction Tax

Hillary Clinton and her husband Bill are charter founders of the Wall St Wing of the Democratic Party. They removed one of the great counterbalances to the corporatists, and have organized political corruption into a cottage industry like Lansky and Luciano organized crime into a business.

The problem is that neither most Republicans nor many Democrats make any bones about serving Big Money first anymore. It is understood that this is how things are. Soft corruption and the revolving door is the fashion.

Mitch McConnell's new chief is a former lobbyist for Koch, for example. And the Republican presidential field is devoted to Big Money while confounding their constituents with emotional sideshows and manipulative pandering to their worst impulses and scapegoating.

Reich's ideas of reinstating Glass Steagall and a nominal Financial Transactions tax have potential. It was a mistake to repeal Glass-Steagall in the first place. I wonder who presided over that? Oh yes, Bill and Hill. And NAFTA. Everything had a price tag including the Lincoln bedroom and Presidential pardons. Very entrepreneurial.

The emphasis on the Transaction Tax should be very 'nominal' and without exemptions on professionals and institutions and 'market makers' so that the HFT crowd and raw speculation from the Banks' trading desks are the targets, and not the average investor.

I also think the Fed itself, in particular the NY Fed, should be banned from making trades in anything but the official and quasi-official bond markets. And all their public markets activity should be transparent with no more than a quarter lag.

The Congress and their staffers cannot be exempt from 'insider trading' and selling information for favors to the funds and trading desks. I mean, come on. Management of companies and the media get plenty of access to insider information as well, and they are not above the law because 'it is too hard' not to use it.

Given the regulatory capture we have today I am not optimistic about reform until there is another crisis. There are only a handful of genuine reformers, but many flavors of opportunists in sheep's clothing.

So Robert, how can you be so gung ho for reform, but so unqualifiedly endorsing the unreformed Hillary Clinton?

Why don't more Beltway and media progressives and liberals come out for Liz Warren or Bernie Sanders? Because they want reform, but cannot offer their supporters the biggest Washington payoff, which is money and power, which are the mother's milk of the politically corrupt.