Republican Platform: Breakup The Big Banks

July 19, 2016 at 9:01 am Leave a comment

7TaKLqXTAParty platforms are little more than vehicles to pander to a party’s most ardent supporters and provide little guidance as to what a presidential  candidates would do if elected.  This is particularly true in a year in which the Republican party has been Trumped. Nevertheless,  they provide  good guideposts of  where our politics is headed.  Here is a look at the Republican’s 2016 platform.  I’ll do the same for the Democrats next week. A quick note to the Republicans:  You have a lot of credit union supporters.  Joint references to community banks AND credit unions would be nice to see.

The proposal that has gotten the most attention in the financial press  this morning is the Republican call, apparently at Trump’s urging,  to reinstate the Glass-Steagall Act of 1933 which put up a firewall between investment and consumer banking until it was repealed  in 1999 at the urging of the  Clinton administration.  It means that both the Trump Wing of the Republican Party-whatever that is-and the Sandernista’s on the Left of the Democrats   both firmly believe that not enough has been done to reign in banking excesses in the aftermath of the Great Recession. They are correct.

This is shrewd politics and good policy. Its good politics because it gives Trump  a wedge issue with which to  further alienate Sanders supporters from Hilary Clinton.  As Trump’s campaign manager explained in a press conference yesterday  “We believe that the Obama-Clinton years have passed legislation that has been favorable to the big banks, which is one of the reasons why you see all of the Wall Street money going to her.”

Good Policy? One of the biggest reactions I  get from this blog is  when I point out that any true free market conservative should be in favor of breaking up the big banks.  If a bank is too big to fail than it is too big.  The guarantee of a government bailout is an indirect subsidy to the largest banks that isn’t extended to community banks or credit unions.

Among the other highlights:

–It calls for scaling back the federal role in the housing market coupled with “clear and prudent underwriting standards and guidelines on predatory lending and acceptable lending practices.” Interestingly, it doesn’t call for the elimination of Fannie and Freddie but says that the “utility” of both   should be “reconsidered” as part of housing reform.

–The platform complains that over the last century too much power has been handed to bureaucrats. It calls on Congress  “to begin reclaiming its constitutional powers from the bureaucratic state by requiring that major new federal regulations be approved by Congress before they can take effect.”

–Not surprisingly, it colorfully describes the Dodd-Frank Act as the  “ the Democrats’ legislative Godzilla,” that “ is crushing small and community banks and other lenders.”

 

 

 

Entry filed under: General, Political. Tags: .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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