How Clin­ton, Trump stand on Wall Street reg­u­la­tion

Daily Local News (West Chester, PA) - - BUSINESS - By Marcy Gordon

THE IS­SUE: The fi­nan­cial cri­sis that struck in 2008 touched off the worst re­ces­sion since the 1930s Great De­pres­sion, wip­ing out $11 tril­lion in U.S. house­hold wealth and leav­ing about 8 mil­lion Amer­i­cans job­less. More than 5 mil­lion fam­i­lies lost their homes to fore­clo­sure. Reck­less trad­ing and ag­gres­sive prac­tices on Wall Street in the prior boom years were pinned with much of the blame.

In the af­ter­math, Congress en­acted an over­haul of fi­nan­cial rules aimed at pre­vent­ing an­other melt­down and multi­bil­lion­dol­lar tax­payer bailout of banks. The 2010 Dod­dFrank law gave reg­u­la­tors new over­sight pow­ers and tools to shut banks with­out re­sort­ing to bailouts. Risky lend­ing was re­stricted and a new fed­eral agency was charged with pro­tect­ing con­sumers from de­cep­tive mar­ket­ing of fi­nan­cial prod­ucts.

Repub­li­cans and many in the busi­ness com­mu­nity com­plain that the re­stric­tions have raised costs for banks, es­pe­cially smaller ones, and other busi­nesses, sti­fling economic growth. They want the over­haul law re­pealed. melt­down. The Dodd-Frank law set up the Con­sumer Fi­nan­cial Pro­tec­tion Bureau, which ex­panded reg­u­la­tors’ over­sight of mort­gage firms, credit card is­suers, pay­day lenders, stu­dent loan providers and oth­ers.

De­bate rages over whether Wall Street banks still are “too big to fail” — with gov­ern­ment bailouts in­evitable. Crit­ics of Wall Street say big­ger banks can mean re­duced com­pe­ti­tion and higher fees for con­sumers. Sev­eral of the banks did get big­ger as they ab­sorbed fail­ing in­sti­tu­tions dur­ing the cri­sis.

On the other side, de­fend­ers say big banks such as Cit­i­group, Bank of Amer­ica, JPMor­gan Chase and Goldman Sachs are get­ting smaller and sim­pler on their own, mainly by sell­ing off big-chunk as­sets and busi­nesses. Gen­er­ally, though, the shrink­ing that’s oc­curred isn’t enough to over­come the bulk­ing-up dur­ing the cri­sis.

Reach­ing fur­ther for a solution, lib­eral Demo­cratic crit­ics of Wall Street like San­ders and Sen. El­iz­a­beth War­ren have pushed for Congress to re­store the De­pres­sion-era fire­wall be­tween the more staid com­mer­cial side of bank­ing and its risk-tak­ing in­vest­ment side. Clin­ton has not. Bring­ing back the so-called Glass-Stea­gall law prob­a­bly would lead to the breakup of ma­jor banks.

In a sur­prise, the Repub­li­can Party ad­vo­cated re­viv­ing that law in its plat­form. For a party that tra­di­tion­ally fa­vors dereg­u­la­tion and hands-off gover­nance, fold­ing the pro­vi­sion into a sharply con­ser­va­tive plat­form brought dou­ble-takes among the po­lit­i­cal crowd. The move may have been de­signed to ap­peal to San­ders sup­port­ers who don’t want to vote for Clin­ton. At any rate, party plat­forms carry only sym­bolic weight; they’re not bind­ing on their party’s elected of­fi­cials.

Demo­cratic pres­i­den­tial can­di­date Hillary Clin­ton

Repub­li­can pres­i­den­tial can­di­date Don­ald Trump

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