Sen. Ted Cruz staked out a firm position against bailouts Tuesday night, pledging in the Republican presidential debate that he would “absolutely” go after big banks that were rescued by the government in the financial crisis.
“The opening question … would you bail out the big banks again? Nobody gave you an answer to that. I’ll give you an answer,” Cruz said. “Absolutely not.”
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Cruz suggested that if a bank were to face failure, he would support the Federal Reserve acting as a lender of last resort and issuing loans to struggling banks at penalty interest rates.
Otherwise, however, he firmly endorsed ending bailouts and limiting the Fed’s role in conducting monetary policy.
“Let me be clear, I would not bail them out,” Cruz said of big banks.
“The problem that underlies all of this is the cronyism and corruption of Washington,” he added.
Cruz derided the Fed as “a series of philosopher kings trying to guess what’s happening with the economy,” and reiterated his call to tie the Fed’s monetary policy decisions to the price of gold.
During the Fox Business debate in Milwaukee, other candidates suggested ways to limit bailouts, but none in such stark terms.
Former Florida Gov. Jeb Bush called for higher capital requirements for big banks, allowing them greater ability to lose funds without endangering bondholders.
Ohio Gov. John Kasich also called for higher capital requirements, saying that greater equity would move investors to demand that the bank take less risk. Kasich, however, also drew a mixed reaction from the crowd when he suggested that some creditors of a failing bank could receive some relief.
Dr. Ben Carson, the former neurosurgeon now near the top of the polls, said he would “have policies that wouldn’t allow that to occur,” referring to banks becoming too big to fail. But he immediately clarified that stance by saying that he “wouldn’t want to go in and tear anybody down” at the moment.
Florida Sen. Marco Rubio accused the 2010 Dodd-Frank financial reform law of “codifying” too big to fail by defining some companies as systemically important. The law, he said, is “an outrage” and has to be repealed.
