Democratic Party front-runner Hillary Clinton was confronted on her stance on Wall Street at the Democratic primary debate Tuesday night, challenged by other candidates who favor breaking up big banks.
“We need to separate the casino, speculative, megabank gambling we have to insure with our money from the commercial banking,” said Martin O’Malley, the former governor of Maryland who has struggled to gain traction in the polls.
O’Malley called multiple times in the debate for reinstating Glass-Steagall, the Depression-era law that separated insurers and investment banks that underwrite securities and advise on deals from commercial banks that take deposits. Progressives have pushed candidates to embrace bringing back the law.
Bernie Sanders, the Vermont senator who has gained on Clinton in the polls with a left-wing campaign, stated flatly that “we have got to break them up.”
Clinton, who last week introduced a plan to rein in Wall Street without bringing back a version of Glass-Steagall, defending herself from her liberal challengers by arguing that her plan would address the threats of the future, especially those emanating from outside Wall Street.
“My plan is more comprehensive, and frankly it’s tougher,” Clinton said, arguing that financial risk will shift into the non-bank “shadow banking” system, comprising financial firms like insurers.
The government should crack down on banks, she said, “but I want to make sure we’re going cover everybody.”
“If only you look at the big banks, you may be missing the forest for the trees,” she later added.
O’Malley, however, said banking reform is an area of “huge difference” among the candidates.
“I was proud to support you eight years ago, but something happened in between,” he told Clinton. “And that is … a Wall Street crash that wiped out millions of jobs and millions of savings. And we are still just as vulnerable.”
Clinton, who has been criticized by liberals for being too close to Wall Street and big business, at one point defended her record by noting that, as a senator from New York, “I represented Wall Street.”
During the financial crisis, she said, “I basically said cut it out. Quit foreclosing on homes.”
Sanders pounced on that comment, arguing that the government needs to change laws regulating finance, not issue requests to the industry.
“In my view, Congress does not regulate Wall Street, Wall Street regulates Congress,” the senator warned.
