Clinton admits she failed to do her homework, and therefore misunderstood, when she stated at the February debate that Dodd-Frank already authorizes the Treasury Dept. to force too-big-to-fail banks to pare down and that therefore no further legislation authorizing it is necessary. That’s quite an admission by her, and the New York Daily News editorial board (and the Washington Post’s Chris Cillizza) should take note.
A notion is rapidly crystallizing among the national media that Bernie Sanders majorly bungled an interview with the editorial board of the New York Daily News.His rival, Hillary Clinton, has even sent a transcript of the interview to supporters as part of a fundraising push. A close look at that transcript, though, suggests the media may be getting worked up over nothing.
In fact, in several instances, it’s the Daily News editors who are bungling the facts in an interview designed to show that Sanders doesn’t understand the fine points of policy. In questions about breaking up big banks, the powers of the Treasury Department and drone strikes, the editors were simply wrong on details.
Take the exchange getting the most attention: Sanders’ supposed inability to describe exactly how he would break up the biggest banks. Sanders said that if the Treasury Department deemed it necessary to do so, the bank would go about unwinding itself as it best saw fit to get to a size that the administration considered no longer a systemic risk to the economy. Sanders said this could be done with new legislation, or through administrative authority under Dodd-Frank.
This is true, as economist Dean Baker, Peter Eavis at The New York Times, and HuffPost’s Zach Carter in a Twitter rant have all pointed out. It’s also the position of Clinton herself. “We now have power under the Dodd-Frank legislation to break up banks. And I’ve said I will use that power if they pose a systemic risk,” Clinton said at a February debate. No media outcry followed her assertion, because it was true.
As the interview went on, though, it began to appear that the Daily News editors didn’t understand the difference between the Treasury Department and the Federal Reserve. Follow in the transcript how Sanders kept referring to the authority of the administration and the Treasury Department through Dodd-Frank, known as Wall Street reform, while the Daily News editors shifted to the Fed.
— Did Bernie Sanders Botch An Interview With The Daily News? It’s Not That Simple., Ryan Grim, Washington bureau chief at The Huffington Post, yesterday
The subtitle of Grim’s article is “The interview exposes as much about the media as it does about Bernie Sanders.” And indeed it does. It exposes this particular editorials board as profoundly ignorant about virtually every subject the interview addressed—not just the specifics of Dodd-Frank but (astonishingly) also about this country’s decades-long position on Israel’s policy regarding new settlements in occupied Palestinian territories and also on the general nature and legal effect of treaties and United Nations resolutions pertaining to them, and a few other things.
It also exposes the board members as high-school-amateurish, not just as journalists but as, well, people. Not just in the adolescent questions they asked but also in their mysterious inability to follow their own questions, which on the banking issue they were unable to recall from one question to the next whether they were asking about current law (Dodd-Frank) or instead about possible new legislation. Not to mention, although Grim did, their failure to distinguish between the role of the Fed and the role of the Treasury Dept. on this issue under Dodd-Frank.
And it exposes a slew of other mainstream-media political analysts as just ridiculous. But particularly, it exposes the Washington Post’s Chris Cillizza, the chemist who started the crystallization shortly after the Daily News released a transcript of the interview, for what he is: a robot, or maybe a computer, whose algorithms are programmed to forecast specific public reactions to certain words, phrases or clauses uttered by politicians in interviews, debates or off-hand responses to a reporter or to a voter at, say, a town hall-type campaign appearance. “I don’t know the answer to that,” or “I haven’t thought much about it,” or “the banks should be allowed to determine what means they will use to pare down in accord with banking-regulation edict” or “I can’t provide the specific citation to the fraud statute in the federal Criminal Code” are definite career destroyers.* Or at least presidential candidacy destroyers.
And since Cillizza is highly regarded among mainstream political analysts who themselves lack those algorithms and must get by with baas, Clinton had a ball she thought she could pick up and run with. So, interviewed yesterday morning on “Morning Joe” yesterday, and asked about Sanders’ responses to the Daily News editorial board members’ too-big-to-fail questions, she had a script prepared not by her consultants but by Cillizza, et al., that included this:
I think he hadn’t done his homework and he’d been talking for more than a year about doing things that he obviously hadn’t really studied or understood, and that does raise a lot of questions.
She went on to question whether Sanders was qualified to be president.
So the Daily News interview debacle serves handily also to highlight what’s wrong with Clinton. Characteristically, she echoed a statement by members of that editorial board that she knew was false and also alluded to Sanders’ befuddlement (incredulousness, really) at other misstatements of fact by the editorial board members—it hasn’t been U.S. policy, for decades, to insist that as part of a two-state solution brokered by the White House or State Dept., Israel must withdraw its West Bank settlements on certain specific lands?—as disqualifying Sanders as a presidential candidate.
Grim’s piece links to the RealClear Politics headline from February 4, posted shortly after the February debate, headlined “Clinton Agrees With Sanders: ‘We Now Have Power Under Dodd-Frank To Break Up Big Banks’”. The article links to videotape. Clinton said, “We now have power under the Dodd-Frank legislation to break up banks. And I’ve said I will use that power if they pose a systemic risk. ”
So Clinton failed to do her homework, either before that debate in February or before that “Morning Joe” interview yesterday. And that does raise a lot of questions. A lot of questions. Which presumably the New York Daily News editorial board will seek answers to when they interview her.
The aforementioned post by Peter Eavis, in the New York Times blog The Upshot on Tuesday, is titled “Yes, Bernie Sanders Knows Something About Breaking Up Banks.” Time to find out whether Hillary Clinton does.
*These aren’t actually direct quotes. They’re my paraphrases.
ADDENDUM: This is an entry posted yesterday at the New York Times Fact Checks of the 2016 Election blog:
Discussing climate change on Monday, Mrs. Clinton cited her “very vigorous record” on the subject. Then she proceeded to express bafflement about a stance she said her opponent had taken.
“I couldn’t believe it when Senator Sanders opposed the Paris agreement — the best chance we have to actually reverse climate change and deal with the consequences,” Mrs. Clinton said in an interview on “Capital Tonight,” an upstate New York cable news show.
The Paris agreement, reached in December, commits nearly every nation to take action to combat climate change. Given that Mr. Sanders has made climate change a major issue in his campaign, his supposed opposition would indeed seem odd.
But Mrs. Clinton’s characterization was misleading.
It is true that Mr. Sanders did not warmly embrace the Paris agreement. But his lack of enthusiasm was for the opposite reason that Mrs. Clinton suggested.
“While this is a step forward, it goes nowhere near far enough,” Mr. Sanders said in a statement in December. “The planet is in crisis. We need bold action in the very near future and this does not provide that.”
— Thomas Kaplan
So Clinton doesn’t believe her own hallucination. She just wants Democratic primary voters to.
Then again, maybe she really can’t distinguish between a lament by someone that something doesn’t go far enough or isn’t strong enough and one that objects that the thing goes too far or is too strong. This seems to be a recurring type of confusion for her. So she may not be faking it after all. Maybe she really can’t tell the difference.
Addendum added 4/7 at 8:35 p.m.
It’s not enough to defend Bernie; it’s gotta be turned into an attack on Hillary. Does the sun rise in the East?
Great work for Democrats in November.
I admit I am confused about Dodd-Frank authority to force too big to fail banks slim down. But I can check the consistency of the statements of Grim and Eavis who disagree. Also you disagree with Grim.
He says that Clinton’s February claim was true “No media outcry followed her assertion, because it was true”. You think it is false. Eavis thinks Sanders’ recent assertion (as phrased) was not quite correct and edited an “or” to an “and”. However, his explanation seems to me to be consistent with my tentative (ignorant and remember I am not a lawyer) guess that current law is sufficient provided it is enthusiastically enforced.
1. As quoted by Grim, Clinton didn’t specifically claim that the Treasury has authority to force too big to fail banks to downsize, as “the Treasury” is not the only possible referent for her “we” in “We now have power under the Dodd-Frank legislation to break up banks.” I think the executive branch has that authority (exactly as asserted by Sanders). The issue is that said executive branch includes the Federal Reserve Board. This means that Clinton was wrong when she said “I” — the authority of the president and people she can fire at will is not enough so she can’t do it without the Fed. Rethinking I note that Presidential candidates very often claim that they will do things which require the agreement of independent bodies. This is standard rhetoric (as was Sander’s answer).
The way it works (as very briefly explained by Eavis) is that the Treasury declares a bank to be a globally systemically important institution and the Fed imposes impossibly burdensome regulations. If, for example, a bank is allowed to operate only if it has equity equal to 100% of its assets, that bank is not allowed to operate as a bank. Clinton and Sanders will not gain the power to make systemic importance an unbearable burden. The independent Fed would have to do that.
Oddly this means that the un-named member of the NY Daily News editorial board made sense when he or she kept bringing up the Fed after Sanders mentioned the secretary of the Treasury.
I think that, on breaking up banks, Sanders and Clinton agree. I think they both elide the fact that they won’t control the Fed.
Also neither could imagine that a judge would claim the authority to overturn the Treasury’s judgement that an institution is systemically important. http://www.reuters.com/article/us-usa-metlife-appeal-idUSKCN0X42GM . I think this is extreme judicial activism which couldn’t be forecast and not an application of the law. Of course my opinion doesn’t matter and it will be up to an appeals court. In any case, this has nothing to do with them doing their homework.
2. Clinton hasn’t said she didn’t do her homework. I think you might consider adding a tiny little update to explain that you consider that to be the logical implication of her claim that Sanders hasn’t done his. I understand now, but I was confused at first.
3. I’m not even sure that the statements on to big to fail by the NY Daily News editorial board were false — the key point where the board member seems to have disagreed with Sanders was on whether Fed fiat was required. On that point I think the board member was correct (I note Sanders didn’t claim that the Fed wasn’t involved. It is true that Sanders, unlike Clinton (as far as I know) brought up the Secretary of the Treasury. That’s a lot more specific than “We” and I think a case can even be made that Sanders’s claim is incorrect while Clinton’s claim is correct (I’m not making that case).
I don’t think you can possibly know that Clinton “knew” the claim was false (I don’t know it was false). I also don’t know of her echoing their claim.
There is something else
Addendum on the Paris agreement. Clinton didn’t explain that Sanders criticized the agreement for not going far enough. You didn’t explain that Clinton might think that a refusal to accept half a loaf means ending up with no loaf — that Sanders makes the best the enemy of the good and so, if he had been President, there would have been no accord. Note the word “might”. I don’t claim that this argument was implicit in Clinton’s claim that Sanders opposed the agreement.
On this, I’d say her claim is correct as a matter of fact. I think it is easy to construct a plausible argument that, if one likes the Paris agreement or the ACA, one had better vote for someone who is willing to compromise and not Sanders. It is not at all necessary to equate “a lament by someone that something doesn’t go far enough or isn’t strong enough and one that objects that the thing goes too far” to assert that both laments can have identical effects — no agreement and endurance of the status quo ante.
Again,I don’t claim that I can find that argument in the very brief quote of Clinton — but the quote doesn’t show she is confused or attempting to mislead either.
Ah overlong comment which is at least on the edge of incivility. Should I post it ? I guess I will.
Your thoughts are correct.
Lov’ya Bev, and I support Sanders. But your headline is just wrong. And if it was right, it would mean that the Daily News hit piece on Sanders was correct(in terms of breaking up the big banks). And that piece was certainly a POS.
I haven’t lived in NY for quite awhile, but when I did live there I never knew anyone who read the Daily News except for the sports pages.
Not a bad commentary
But remember, Pauline Kael didn’t know anyone who voted for Nixon. His win was, accordingly, a huge upset.
No, actually, Robert and EMichael, you’re both wrong. Clinton’s statement that Sanders is incorrect that under Dodd-Frank the Treasury Dept. does have the authority to declare particular financial institutions so large that a failure of that institution would create significant danger to the economy or to the broader financial industry and therefore to the economy, and therefore would effectively require a federal bailout, is EXACTLY a reversal of what she said at that February debate when fending off Sanders’s suggestion that additional legislation is needed.
So she either was right at the February debate or she was right this week in her comments about Sanders’s interview with that editorial board, but the statements, two months apart, are mutually exclusive. Since the February one matched Sanders’s statements to the editorial board, her comment that Sanders was wrong and would know this had he done his homework sometime during the 11 months since he began his campaign, she did indeed say by necessary implication that she was mistaken in that statement at the February debate, and that had she done her homework she would have known that.
Clinton is not making the issue of NOT proposing further legislation on too-big-to-fail, but in resisting proposals for further legislation, she sure has made her claim that there is no need for it because Dodd-Frank already takes care of the problem a part of her defense against Sanders’s candidacy.
Further, since apparently there is nothing in Dodd-Frank that authorizes, much less requires, the Treasury Dept. to actually take over the financial institution and break it up, or to dictate how exactly it would be broken up, but does apparently give Treasury the authority to determine that a bank must pare down to a specified size—Clinton was right in February, and Sanders was right in his interview with that editorial board, according to Stephen F. Diamond, an actual expert on Dodd-Frank who both teaches the subject at Santa Clara Law School and advises on it in private practice—the claim by most of the news media and also by Clinton that Sanders’s statement that this is so is exactly what those folks are claiming Sanders’s statement was: wrong as a matter of fact, and indicative of a failure to do homework on the subject. Or, in Paul Krugman’s case in his op-ed piece yesterday at http://www.nytimes.com/2016/04/08/opinion/sanders-over-the-edge.html?_r=0 a deliberate misstatement. (I assume that Krugman is sufficiently familiar with Dodd-Frank to know that, although—who knows? – maybe not.)
Diamond had a lengthy post on his own blog on Thursday titled “Don’t blame Bernie – of course the banks can be broken up”, which I learned of because Naked Capital posted its title and link immediately about its post of the title of and link for this post of mine. I clicked the pingback link, saw my post listed, and saw Diamond’s immediately above mine. The link to his post is http://stephen-diamond.com/2016/04/07/dont-blame-bernie-of-course-the-banks-can-be-broken-up/.
The first four paragraphs read:
“In a recent interview, a very confused New York Daily News reporter continually mixed up the Treasury Department and the Federal Reserve in the face of a very straightforward statement of presidential candidate Bernie Sanders that Congress can give the President power to impose changes on the structure of the financial system “under Dodd Frank.”
“Well, the Treasury is an agency of the executive branch while the Federal Reserve is an independent hybrid public-private entity. The former is an extension of the power of the President while the latter has autonomy that limits, understandably, Presidential influence. Apparently in the minds of financial journalists the two entities can be conflated without consequence.
“Sure enough Secretary Clinton jumped on the bandwagon and slyly and indirectly suggested on Morning Joe that Bernie Sanders does not “seem” to know enough about how the economy works to be qualified as president.
“Now that we have cleared up the fact that it was the Daily News reporter who was confused not Sanders, let’s focus on the agency that a President does control, the Treasury. When Sanders said he wanted to use Dodd-Frank to break up the big banks one could consider that from two angles. First, does the current language of that law enable the federal government to break up the banks; and second, could Dodd-Frank be amended to give the federal government the power it needs to break up the banks. Since Sanders talked about going to Congress to empower the government to break up the banks it seems reasonable to conclude he means the latter, second method. But he is taking the view that any such amendment would be consistent with Dodd-Frank, a necessary extension consistent with the spirit of what Congress intended to do.”
Clinton did her usual thing: Someone fed her a line and she parroted it. I hope that at the debate on Thursday Sanders hangs this one around her neck. and tightens the noose until she gets that she needs to stop that tactic–even if she needs methadone to help her break the habit.
You are going to have to convince me that Clinton’s comments were specifically about breaking up the big banks and about no other policies.
I find this nit picking over little sound bytes very discouraging. And judging by the responses from both campaigns over this bs, I think both sides are embarrassed to a certain extent.
I don’t get this, EM. Clinton said at the Feb. debate: ““We now have power under the Dodd-Frank legislation to break up banks. And I’ve said I will use that power if they pose a systemic risk.” What can that possibly mean other than that she thought then—or was saying that she thought then, even if she did not think then—that the federal government now has power under the Dodd-Frank legislation to break up banks. And since she said “And I’ve said I will use that power if they pose a systemic risk,” this presumably was not the first time she said that.
So she said, then and presumably earlier, that she will use that power if they pose a systemic risk. How so? What exactly did she have in mind then? And how exactly did she plan to exercise that power? Did she plan then to have the Treasury Dept. dictate how each bank must pare down? Or did she plan, as Sanders told that editorial board he would, to allow each bank to determine it, maybe with the assistance and recommendations of the experts at Treasury?
This was not merely a flip-flop by her last week; this was a statement by her that Sanders did not know what he was talking about on an issue critical to his campaign. She’s now retracted her own earlier statements—the one during the Feb. debate and the earlier ones she was referring to in that comment at the Feb. debate—and doing so by parroting journalists who clearly have no idea what Dodd-Frank actually contains and what the actual experts suggest would be the best way to have these banks pare down (a method the banks choose or instead a method that Treasury chooses). Did she herself not know what she was talking about when she made those earlier statements? And what exactly are her plans? And if she now believes that Dodd-Frank does not confer that power, does she think further legislation should do so—as Sanders has proposed?
Some of the journalists and political commentators who jumped on this bandwagon—Paul Krugman; the Washington Post editorial board—do know that it was not Sanders but the New York Daily News editorial board who was clueless. Yet they chose to misrepresent—outright misrepresent—that Sanders was wrong about Dodd-Frank, the role of the Treasury Dept., and the role of the Fed, as well as the actual mechanism that would be used in paring down these financial institutions: it would be the institutions, not the Treasury or the Fed., that would structure it.
Bill, here’s what I don’t understand. There’s no question that the shadow banking companies—Countrywide and so many others—played a huge role in the collapse. But these weren’t the companies that were packaging these mortgages into mortgage-backed securities, were they? Wasn’t that the major banks (along with the investment banks and securities firms like Goldman and Lehman and Merrill, Lynch and Lehman, which became regular banks in late 2008 or early 2009 in order to get bailouts)?
And didn’t some large regular banks—Wachovia and Nat’l City, for example—as well as Citibank and Bank of America collapse precisely because they were doing what Countrywide was doing with subprime mortgages?
But what matters for purposes of that editorial board interview isn’t what caused the collapse—which wasn’t the questions and answers that caused the controversy. The questions and answers that caused the controversy were about how a bank would be determined to be too-big-to-fail (systemically dangerous) and how a bank would be pared down (and who would decide how) once it was determined that the bank was too big to fail. So the respective roles of the traditional big banks and the shadow banks weren’t at issue in that interview.
The News interview contained much more than one question and one topic.
It sure did, EM. It included a demand that Sanders provide the citation to the fraud statute under which the people financial industry folks that Sanders says should have been prosecuted could have been prosecuted. Actually, there are a few. Here are some links that identify some, but it’s probably not an inclusive list:
Sanders responded by pointing out that fraud is a federal crime, but one of the interrogators kept insisting that unless Sanders could cite the statute he didn’t know what he was talking about. As someone else—I think it was Ryan Grim pointed out, most people don’t know the citation to the murder statute in their state but they know that murder is a felony. But since Sanders doesn’t carry around in his mind a list of the statute citations, he’s not qualified to be president, according to the Washington Post political folks.
They also demanded that Sanders tell them where he would want ISIS and al Qaeda terrorists held and interrogated. When Sanders said he assumed they were getting at Guantanamo, and they said, no, they weren’t, Sanders said he hadn’t thought about it. And according to the political-journalist crowd, any politician who says “I haven’t thought about it” in answer to any question, regardless of the question, is toast.
Then—truly weirdly (it all was truly weird, but this is something they themselves should know)—they just couldn’t believe that Sanders was starting off, on the Israel-West Bank issue, with the premise that any peace accord would have to include a return of some of the West Bank land where recent settlements were built, and that international law and treaties plays a role in determining what belongs to whom. As it was pointed out, again by (I think) Grim (and by others, but not by Chris Cillizza, et al., what Sanders stated has been express U.S. policy for decades. And international law, treaties and U.N. resolutions do actually matter.
Clinton apparently wasn’t interested in identifying where she thought Islamic terrorists should be held and interrogated, and she realized that it might be problematic for her as a former secretary of state—her big selling point in addition to the fact that she’s a woman—to say she would retract decades of U.S. policy on the West Bank (including her husband’s). So she limited her bandwagon comments to the subject of Dodd-Frank, parroting the news media frenzy that had it wrong and hinting that Sanders was ignorant about that signature issue of his. She’d worry later about the fact that based on her earlier recent comments, if Sanders is ignorant on this issue, so is she. And while this isn’t a signature issue of hers, that itself is pretty much Sanders’s point.
You have to convince me that if the big banks did not exist to issue these MBSs, the same amount of mortgages would not have been issued by a bunch of small banks.