Financial regulations have been a crucial issue and a common sparring topic for Democratic presidential hopefuls Hilary Clinton and Bernie Sanders. Although both have been calling for a greater oversight of financial deals and stringent rules, they differ on key components of the proposal at reforming Wall Street.
Senator Bernie Sanders was all set to unveil his financial regulations plan when Hillary Clinton took on a pre-emptive stance to undercut his Wall Street reform strategy.
Clinton’s election campaign CFO Gary Gensler, who was also a former top regulator at the Commodity Futures Trading Commission, lambasted Sanders’ ‘hands-off’ approach on regulating risky hedge funds and investment banks.
“Any plan to further reform our financial system must include strong provisions to tackle risks in the ‘shadow banking’ system, which remains a critical source of potential instability in our economy”, Gensler said in a statement.
Gensler called upon Sanders to “go beyond his existing plans for reforming Wall Street and endorse Clinton’s tough, comprehensive proposals to rein in risky behaviour within the shadow banking sector”.
Clinton’s plan calls for greater transparency from financial institutions to ‘measure risks’, higher ‘collateral and margin requirements’ for short-term borrowing and make sure new financial regulations adequately ‘protect taxpayers’.
Sanders has proposed a taxation system on financial institutions to curb high-speed trading and Wall Street speculation. Previously, taxes were largely focused on controlling huge bank funds.
While Sanders and former Maryland governor Martin O’ Malley support restoring the Glass-Steagall Act – separating conventional and investment banks activity – Clinton disapproves of the idea. The opposition on the Glass-Steagall Act comes from Clinton, endorsing the fact that this legislation was a major cause for the financial crisis of 2007-2008.
Clinton has also been criticised for close ties with financial tycoons on Wall Street, and faced criticism for eliciting political donations from them while she was a New York Senator from 2001 to 2009.
Clinton is combating all these criticisms with her aggressive reform agenda on Wall Street and has pledged to block corporate inversions. A corporate inversion is one of the many strategies companies employ to reduce the ‘tax burden’ by having their operations re-incorporated by a foreign company. Assets are then owned by the foreign company and the old incorporation is dissolved.
Clinton says that “by having a block on the corporate inversions would help reduce tax evasions by financial giant companies which will contribute towards a healthy financial system”.
At a recent town hall meeting in Keene, New Hampshire, a voter asked Clinton why he should vote for her when Sanders was offering to lift (the) middle class and combat (the) Wall Street speculative market. She responded by stating that she has “just as much passion as reflected in her proposal to deal with the financial industry”; she also vowed not to raise taxes on households making less than $250,000 annually.
Clinton pledged that as the president of the United States, she would make Wall Street dynamic and stated that “no bank is too big not to fail and no banker is too important not to jail”.
New Year’s Eve saw many promises and rallies by the prospective presidential candidates vying to station themselves at 1600 Pennsylvania Avenue – where the race to the White House culminates on November 8 this year when Americans will go to the polls. Only time will tell who will make ‘America great again’.
The writer is a freelance journalist, political analyst and media strategist.