Gaius Publius: The Rorschach Candidacy of Hillary Clinton

By Gaius Publius, a professional writer living on the West Coast of the United States and frequent contributor to DownWithTyranny, digby, Truthout, and Naked Capitalism. Follow him on Twitter @Gaius_Publius, Tumblr and Facebook. This piece first appeared at Down With Tyranny. GP article archive here.

Thom Hartmann on Donald Trump’s other strong appeal to Republican voters (hint: Think Ross Perot). People who like Trump for this reason are potential Sanders voters. Mainstream Democratic trade policy, another party problem, is discussed below.

Schedule note: This will be the last piece for a few weeks from me. Writing will resume the third week of August. Happy summer, all!

It’s been clear for a while that from the left, the biggest criticism of Hillary Clinton is her close relationship with holders of big money. One could argue that she may or may not have agreed with Bill Clinton’s strategy of incorporating the interests of “big money” into the Democratic Party. But it’s nevertheless clear that her current relationships, and those of the people around her, show a strong and current interest in maintaining the interests of wealth. More on that below.

This suspicion (on the part of some) and certainty (on the part of others) that Clinton will “take care of” her well-heeled friends while also (and sincerely) trying to mitigate the damage done to ordinary Americans — these form much of the reason the Sanders campaign is surging among Democratic voters. (Our own brief looks at Clinton’s relationship with “money” are here and here and here, among other places. Or just click here and scan the list of titles.)

Now come a series of news stories that add to that larger story.

Hillary Clinton Will Not Reinstate Glass-Steagall

From Robert Reich, former Clinton labor secretary, on Clinton’s unwillingness to reign in Wall Street banks (my emphasis everywhere):

Hillary Clinton’s Glass-Steagall

Hillary Clinton won’t propose reinstating a bank break-up law known as the Glass-Steagall Act – at least according to Alan Blinder, an economist who has been advising Clinton’s campaign. “You’re not going to see Glass-Steagall,” Blinder said after her economic speech Monday in which she failed to mention it. Blinder said he had spoken to Clinton directly about Glass-Steagall.

This is a big mistake.

It’s a mistake politically because people who believe Hillary Clinton is still too close to Wall Street will not be reassured by her position on Glass-Steagall. Many will recall that her husband led the way to repealing Glass Steagall in 1999 at the request of the big Wall Street banks.

It’s a big mistake economically because the repeal of Glass-Steagall led directly to the 2008 Wall Street crash, and without it we’re in danger of another one.

Why does reinstating Glass-Steagall matter? Reich again:

Under the Glass-Steagall Act of 1933, banks couldn’t both gamble in the market and also take in deposits and make loans. They’d have to choose between the two.

“The idea is pretty simple behind this one,” Senator Elizabeth Warren said a few days ago, explaining her bill to resurrect Glass-Steagall. “If banks want to engage in high-risk trading — they can go for it, but they can’t get access to ensured deposits and put the taxpayers on the hook for that reason.”

For more than six decades after 1933, Glass-Steagall worked exactly as it was intended to. During that long interval few banks failed and no financial panic endangered the banking system.

But the big Wall Street banks weren’t content. They wanted bigger profits. They thought they could make far more money by gambling with commercial deposits. So they set out to whittle down Glass-Steagall.

Finally, in 1999, President Bill Clinton struck a deal with Republican Senator Phil Gramm to do exactly what Wall Street wanted, and repeal Glass-Steagall altogether.

What happened next? An almost exact replay of the Roaring Twenties. Once again, banks originated fraudulent loans and sold them to their customers in the form of securities. Once again, there was a huge conflict of interest that finally resulted in a banking crisis.

This time the banks were bailed out, but millions of Americans lost their savings, their jobs, even their homes.

Two ideas — first that big banks are too big to be allowed to fail, so they must be bailed out, and second, that banks can gamble with government-insured customer deposits — add to this state of affairs:

  • All banks will be allowed to continue to gamble on the riskiest of investments.
  • All gambling (“investment”) profit goes to the banks.
  • Large gambling (“investment”) losses go to taxpayers for reimbursement via FDIC deposit insurance or Fed and congressionally managed bailouts, like TARP.

If you’re a Wall Street bank, it’s impossible to lose money in this scheme (a scam or racket, actually). And if you “own” everyone who matters in government, the scheme will never end.

Clearly the not-so-secret formula for ending the hostage relationship between the public’s money and Wall Street banking is to (a) reinstate Glass-Steagall and (b) break up “too big to fail” (TBTF) banks so they can … well, fail … when their business plan brings them to grief (because, capitalism, right?).

Hillary Clinton, according to Reich and others, will not reinstate Glass-Steagall, the first part of our solution, even though, according to Reich, “Hillary Clinton, of all people, should remember.” There’s a lot more in Reich’s piece; it’s a good informative read.

“Bernie Sanders Backs Big bank Breakups, in Contrast with Hillary Clinton”

Now let’s look at the second piece of our “too big to fail” solution — break up the big banks so the public is never forced by their size to bail them out again. We have a pretty clear indication from the Clinton campaign that she would not pursue that policy either, and a clear indication from Sanders that he would.


Bernie Sanders backs big bank breakups, in contrast with Hillary Clinton

Bernie Sanders is backing a bill to break up big banks after advisers to presidential rival Hillary Clinton made clear earlier this week she will not support reinstating the Glass-Steagall Act.

Noting that he’s long supported reimposing a firewall between investment and commercial banks, the Vermont senator said he’s officially rejoining an effort led by Sens. Elizabeth Warren (D-Mass.) and John McCain (R-Ariz.) to break up the big banks, saying, “If we are truly serious about ending too big to fail [TBTF], we have got to break up the largest financial institutions in this country.”

“Allowing commercial banks to merge with investment banks and insurance companies in 1999 was a huge mistake. It precipitated the largest taxpayer bailout in the history of the world. It caused millions of Americans to lose their jobs, homes, life savings and ability to send their kids to college,” said Sanders, who said that change in the financial world “substantially increased wealth and income inequality.”

Earlier this week, a Clinton campaign adviser told Reuters that “you’re not going to see Glass-Steagall.” Clinton was also interrupted by a heckler on Monday who challenged her to revive the depression-era policy, though she did not answer the question.

By moving quickly to reassert his support for a proposal from liberal superstar Warren, Sanders is highlighting the differences between his platform and Clinton’s more centrist [in DC and NY] positions on financial regulations, a major issue among progressives. Sanders actually cosponsored a version of the bill in 2013, well before he began challenging Clinton for the Democratic nomination, and in a press release reminded reporters of a speech he gave in 1999 as a House member.

I realize that the statement “you’re not going to see Glass-Steagall” is the same one that Reich uses, and is about Glass-Steagall only. Is Politico being unfair to Clinton in saying she would not back a Sanders-Warren–style breakup policy? I don’t think so, since of the two “not-so-secret solutions” I listed above, reinstating Glass-Steagall is by far the milder from a Wall Street standpoint.

And now the third news story in this story.

Hedge Fund Titans Choosing Hillary Clinton Over Top Republicans

It’s hugely rewarding to Hillary Clinton professionally to maintain money-friendly policies like these, independent of whether you think she’s personally aligned with the interests of “big money” and “the one percent,” or whether you think she’s disgusted by their behavior but feels somehow forced to go along. Either way, it looks like she’s taking their money and planning to advance their interests.

It looks like they think so too. About that “taking their money” part, here’s Bloomberg:

Hedge Fund Titans Choosing Hillary Clinton Over Top Republicans

Hillary Clinton received donations from some of the biggest names in the hedge fund industry, including Paul Tudor Jones, even as the presidential candidate wants to boost their tax rate.

Jones, the billionaire founder of Tudor Investment Corp., Jamie Dinan, who started York Capital, and Neil Chriss, who runs Hutchin Hill Capital, each contributed the maximum $2,700 to Clinton’s bid for the White House, according to Federal Election Commission filings for the second quarter.

Clinton, who’s made closing the wealth gap the centerpiece of her campaign, lured more donations from boldface industry names than Republican candidates 16 months before the election. Hedge fund managers, their employees and family members donated at least $54,000 to Clinton, a Democrat, according to the FEC. Republicans Jeb Bush got at least $27,000, Marco Rubio took in at least $10,800 while Carly Fiorina received at least $4,200.

“Something is wrong when CEOs earn more than 300 times than what the typical American worker earns and when hedge fund managers pay a lower tax rate than truck drivers or nurses,” Clinton said in May.

The candidate’s populist rhetoric didn’t dissuade many managers from supporting her. They include Frank Brosens, co-founder of Taconic Capital Advisors, Mitchell Julis, co-founder Canyon Partners, David Shaw, the billionaire founder of D.E. Shaw & Co., BlueMountain Capital Management Managing Partner James Staley, Jake Gottlieb, who runs Visum Asset Management, and Richard Perry, who heads Perry Capital.

Bush, Rubio and Fiorina drew a smaller cohort of top hedge fund managers.

Note that this story merges two elements. The first, that even though Clinton speaks against income inequality (not the same as speaking against wealth inequality, by the way) …

“Something is wrong when CEOs earn more than 300 times than what the typical American worker earns and when hedge fund managers pay a lower tax rate than truck drivers or nurses,” Clinton said in May.

… the big money people are financing her anyway …

The candidate’s populist rhetoric didn’t dissuade many managers from supporting her.

You can draw a number of conclusions about why this is happening. In that sense, the “Clinton and money” story is a kind of Rorschach test — you can see in this picture what you’re looking for.

The Rorschach Candidacy

Put these stories together and ask yourself what this means to you. You could end up in a couple of places.

If you’re Clinton-resigned — If you’re a Clinton fan who was really “ready for Warren,” resigned rather than eager, you may see someone who cares about people but has to deal with “big money” to get elected. She doesn’t like what many are calling “rule by the rich,” but like many of her supporters, she’s also resigned. The way of the world is regrettable, but the exclamation point at the end of “Jeb!” is a dagger to be avoided at all costs. No Republicans; vote Clinton anyway — even in the primary so she comes out strong.

If you’re Clinton-quite-hopeful — If you’re an eager Clinton fan, you’re much more positive. In a Clinton presidency, you may expect strong advocacy for “Black Lives Matter,” maybe even with DoJ prosecutions of murdering police and corrupt departments. You may expect to see executive-mandated immigration reform with even more teeth. And you certainly would anticipate that all of the issues faced by women, from abortion rights to pay rights, will certainly find an eager and effective friend. All of this offsets for you whatever damage her “friends of money” bargaining may entail.

And if you’re very hopeful, you’re convinced that her presidency could be far to the left of the other Clinton presidency, even on money matters. After all, there’s no proof yet that this hopeful analysis is wrong. If this is your picture, your primary choice is easy — it’s Clinton all the way.

If you’re Clinton-appalled — But if you see “capture by wealth” as the root of almost every evil in this country except our deep-seated racism, and especially if you see that the climate crisis will reach multiple additional tipping points and are certain a carbon-captured Clinton would be a disaster … well, what’s a Democratic primary voter to do?

I’ll put that differently. The Clinton-appalled (on the left) see a candidate who’s threading the progressive needle while trying not to anger her moneyed friends, or at least not undo their expectations that this “rein in the rich” stuff is just campaign talk. Her critics on the left see one who does care about people, but also one who sees her role as confirming the current order, with better mitigation for the suffering worst among us.

They also see someone who will take us into a fossil fuel–heavy future — again with mitigation for the suffering worst, but with no loss of profit for the wealth-heavy carbon industry. For example, this is former Secretary Clinton speaking in 2013 at Hamilton College in upstate New York’s Oneida County:

Late into the lecture portion of Clinton’s Oneida County appearance, she referenced a report that the U.S. in on track to surpass Russia in domestic oil-and-gas production.

That’s good news, Clinton said.

“What that means for viable manufacturing and industrialization in this country is enormous,” she said to the crowd of 5,800 in Hamilton’s athletic field house.

For the Clinton-appalled and carbon-aware, it means “we’re cooked,” literally, and sooner than anyone expects — because this crisis is always moving faster than anyone expects, or publicly claims to expect. (You should know that in private, a great many climate scientists are, frankly, freaking out, and not metaphorically. They know that what no one is saying is nevertheless true.)

In other words, the full awareness of the damage we’ve handed ourselves — the wide-eyed Wile E. Coyote “nothing beneath me” moment — will likely come on a President Clinton’s watch, and she and Obama will get the blame for not being more aggressive, for being too wealth-serving.


Wile E. Coyote considers his climate future.

And that’s just the “Clinton, money and carbon” piece of the story. The “Clinton, money and banking” piece says the next financial meltdown will also come on Clinton’s watch, that the next bailout may be a “bail-in” (a bailout using depositor funds) as is being done in Europe, and in either case, the economy is screwed — but only for people who aren’t good friends of “friends of money.”

So what will hit first under a money-friendly (but better-than-Republican) presidency — climate or the next banking bailout? How about an aggressively pursued endless war that truly “comes home,” the way European and Middle East wars have always come home? How about environmental disaster after environmental disaster caused by exploding oil trains, frack-poisoned ground water, burst pipelines, and oil spill after oil spill?

Or how about even more exported American jobs under a bipartisan (but decidedly Democratic) “trade” regime? Want to go worse? How about imported foreign contract labor being fast-tracked into the country when the deadliest of the coming trade deals, TISA, is signed by the next wealth-serving Democrat? The just-passed Fast Track law — the discussion of which Clinton’s campaign wanted to “go away” — hands, to this president and the next, six years’ worth of job-destroying, global investor–enabling power.

If you’re this appalled, what’s a primary voter to do? Avoid damaging Clinton so no Republican can win? Cheer all the wonderful things that a progressive Clinton might do? Or vote for Sanders and if he loses, walk away?

I’m hearing all three cases being made, and the voices are getting louder. Who’s right? Of course, only time will tell.

Leaving It to the Voters to Decide

You can look at the Clinton candidacy and see what you want by adjusting what’s foreground and what’s background in your mental image. Is Clinton a woman who deserves much better than being trashed by the constant misogyny of the troglodyte Right? You can see that person.

Is Clinton a bright Sixties rebel who now wants a chance to do the best she can to fix a wealth-dominated world? You can see that person.

Is Clinton a person who’s long bought into “rule by the rich” — rule by the class she hangs with, the class that knows better than us how to run things that matter — but thinks their regime can use some tweakage so the “most vulnerable” are protected? You can see that person too.

I guess this is why we are leaving it to voters to decide, and not to the few of us who pay early attention. Because if the voters choose wrong, they will pay the price, but at least they will have done it to themselves.

Unless there’s friends-of-money mischief afoot, of course. Like this perhaps?

DNC Chair Says Candidates Must Meet ‘Threshold’ For Debates, Though Criteria And Dates Still Unclear

Democratic presidential candidates will have to meet a certain “threshold” to participate in the party’s six scheduled primary debates, Democratic National Committee Chair Debbie Wasserman Schultz said Thursday, though she did not specify which criteria, such as state or national polling, will be used to determine who qualifies.

“It’ll be a threshold that’ll be expansive and allows for the maximum inclusion of our major party candidates,” Wasserman Schultz told MSNBC’s Ari Melber. She said the DNC hasn’t “quite finished formulating the details” for the debates, including specific dates, locations and media sponsors.

The lack of clarity has been frustrating to both campaigns and major TV networks, the latter of which produce the debates and need to book venues and handle logistical details well in advance.

In May, the DNC announced plans to hold six primary debates, four of which would be held in the early voting states of Iowa, New Hampshire, South Carolina and Nevada. The DNC said debates would begin in “the fall of 2015,” though didn’t specify when.

Kind of a Rorshach news announcement, right? Starting with how you see Debbie Wasserman Schultz.

Mike Papantonio and Farron Cousins of Ring Of Fire in a discussion of the Bloomberg article linked above. (Apologies for the lurid preview image; not my first choice.

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    1. NotTimothyGeithner

      Pretty much. Of course, Bill couldn’t crack 50% even as the incumbent running against mumble Joe after Newt’s shut down of the government. I think Hillary and friends have been lauded by the wealthy for so long they have forgotten elections are hard work. When Bill was governor, he ran all the time and could maintain a constant presence among voters in a strange environment that doesn’t exist on the national stage (governors are involved in public schools, so 180 days of the year, everyone with kids is involved directly), but since then, Hillary won a safe seat in New York where there were at least six candidates where she could use celebrity to crush the field a divided electorate.

      In 2008, she ran a coronation ceremony which has morphed into tea with the commoners, but I don’t think Hillary and friends have ever looked at results from 92, 96, 00, and 2008. Clinton and friends have never been that successful. My all time favorite story was how Team Blue brought in Big Dog (Bill) to help with a strategy for keeping the House. Absolutely, mind boggling.

      1. Cugel

        It’s easy to take shots at Hillary’s campaigning, but then you read the news and look at the two possible Republican opponents – Jeb and Scott Walker. Neither of them can tie their own shoe laces and the Republican Party faces the task of figuring out how to get rid of the Trump Monster without irritating The Donald sufficiently so that he goes rogue and runs a 3rd party campaign that would probably cost them not only the Presidency, but possibly the Senate too. Even just the threat of that might keep Trump in the race until next June. He doesn’t owe anything to anybody, and he doesn’t care about anything but himself so it will be hard to convince him to withdraw and endorse the GOP winner. He has ZERO party loyalty after all.

        So one of those two utter buffoons will have to win the GOP Primary, and it will probably be Bush because the only thing that matters in GOP Politics is how much money have you got? Jeb just has to convince, not the GOP primary voters, but the Koch brothers and he cannot be stopped.

        But, despite all the media flavoring for Bush, he’s just a horrible campaigner who opens his mouth and stuffs his foot in it every time. He’s going to have over 1 year to remind everybody of his brother over and over again. All those verbal gaffs aren’t “cute” anymore. They remind everybody that he’s not “the smart Bush” but Bush III.

        Last I checked a majority of the population still doesn’t want that.

        1. Brooklin Bridge

          The GOP like the DNC, has picked their winner and it is up to Jeb to mess that up. In either party, the actual vote counts probably matter most if they can not be spun or if a surprise, but acceptable and fully vetted candidate surges enough ahead (Obama). The stakes are too high for corporations or their “elected” (ha,ha,ha,ha,ha) agents to treat primaries as if they were some sort of representation of the public voice.

  1. Vatch

    Finally, in 1999, President Bill Clinton struck a deal with Republican Senator Phil Gramm to do exactly what Wall Street wanted, and repeal Glass-Steagall altogether.

    Former Sen. Phil Gramm was also instrumental in preventing the regulation of credit default swaps in the Commodities Futures Modernization Act of 2000. In 2008, we got a vivid lesson in just how bad that policy is. Phil Gramm hurt the country so badly that he deserves to be prosecuted for treason.

    1. Andrew

      It’s notable that Blinder is now coming out against this (anyone know where he was on the issue at the time?). Here he calls it an “amazingly irresponsible action” and “outrageous.”

      1. sgt_doom

        Oh geez, Blinder has, up until recently, always been 100% Wall Street supportive, including a big supporter for the offshoring of most American jobs!

        Blinder is not a valid economist . . .

    2. BillK

      I’m a conservative and I agree about Phill Gramm, another PhD economist of the other stripe but who is no better than the current liberal crop.

      Back in 2009 when I read that CDO’s issued by AIG weren’t treated like insurance, but rather like gambling bets, I got really pissed. I don’t get enraged–I leave that to liberals, but honestly, if Sanders can get to the nomination or Lizzie Warren, they get my vote unless the Apostle Paul Rand gets in the Finals.

      I just want someone HONESTLY motivated by principles to be in charge a while. The current Prez lost me when he picked Timothy “TurboTax” Geitner and the fat guy former president of Harvard to run his financial ship, and then he himself followed up with multi-trillion dollar sledgehammer-blows to its sides with a succession of his executive actions. Anyone who can move the ball even an inch in the direction of integrity would do wonders for our nation’s soul.

      BTW I’m fat too, so it’s okay for me to assign the appellation, since I am NOT a weightist.

      1. crittermom

        “I just want someone HONESTLY motivated by principles to be in charge a while.”
        “Anyone who can move the ball even an inch in the direction of integrity would do wonders for our nation’s soul.”
        Very well said!

      2. JerryDenim

        “I just want someone HONESTLY motivated by principles to be in charge a while”

        The “Apostle” Rand Paul is quite vocal about his Libertarian principles. Which in case you haven’t heard, Libertarians aren’t very big believers in government regulation. If either of the Pauls would have been President in 96′ or 2006 (or 2016) their ‘principles’ would have told them to do the same thing; deregulate the banks (hell, deregulate everything) and let Wall Street run hog wild. Libertarians despise government regulation of any sort and instead prefer to believe in the magical self-regulating powers of “free markets” etc. If you want an honest government with any interest in regulating anything, please realize that it will never be delivered by anyone who self-identifies as a libertarian. It’s a bit like going to a vegan’s house for dinner and expecting porchetta. You can’t wish for leaders with libertarian principles and a well-regulated finance sector. The two are mutually exclusive concepts. You’re going to need a whole crop of hard-charging lefty populists in Washington to take on the banks.

  2. allan

    “take care of” her well-heeled friends while also (and sincerely) trying to mitigate the damage done to ordinary Americans

    The key phrase there is “try to”, which is the essence of loser liberalism. We tried. We really tried.

    Neither HRC nor anyone else can actually both “take care of” her well-heeled friends and mitigate the damage done to ordinary Americans. It’s not even a zero sum game – it’s negative sum. The .01% have understood this for some time, which is why they’re looting everything in site with a fin de siecle intensity. The question is when (or whether) that understanding will trickle down to the 99%

  3. editor_u

    About your sub-head, “Hillary Clinton Will Not Repeal Glass-Steagall”

    She doesn’t have to, because Bill already did it.

    Don’t you mean “Hillary Clinton Will Not Reinstate Glass-Steagall”?

    1. Gaius Publius

      > Don’t you mean “Hillary Clinton Will Not Reinstate Glass-Steagall”?

      Yep. Thanks for the catch. I’ll alert Susan and Lambert.


    2. sgt_doom

      Article has many good points, but any true liberal or real progressive should have been appalled when H. Clinton appointed former Dick Cheney advisor, Victoria Nuland, as well as Bush inner circle guy, Marc Grossman!

      And, those emails of hers indicating support for the military coup which overthrew President Zelay of Honduras (remember all those Honduran children crossing the border awhile back, which made national news — actions have consequences) plus Clinton was chair of the MCC, which appeared to be financing some or all of that coup!

  4. Jim Haygood

    “Something is wrong when CEOs earn more than 300 times than what the typical American worker earns,” Clinton said in May.

    Something is wrong when Hillary Clinton earns $300,000 an hour for a speech, more than 15,000 times the average US manufacturing wage of $19.84 an hour.

    Elitist maff, comrades. Almost ran out of digits on my calculator …

    1. craazyboy

      Not to mention that even in the Stone Age, and certainly in the Bronze Age, manufacturing made much better products compared to Hillary dinner speeches.

  5. Brindle

    “Is Clinton a bright Sixties rebel who now wants a chance to do the best she can to fix a wealth-dominated world?”

    I don’t think Hillary Clinton was ever a “sixties rebel”. I think for her career path she knew she had to go with the flow, Was she ever a true McGovern liberal?

    —She also worked as a “Goldwater girl” in the 1964 presidential election — cowgirl outfit and all — and was elected president of the Wellesley Young Republicans as a freshman the following year. “I’m a heart liberal, but a mind conservative,” she wrote to a high school friend during college.—,28804,1894529_1894528_1894517,00.html

    1. jo6pac

      As a member of the left, Thank You for pointing that out.

      Nice ad for voting for the lesser evil;)

  6. Romancing the Loan

    I had assumed Hillary was being set up to fail gracefully (like McCain in 2008) to make room for a faux-populist Republican. With Trump pulling into the frontrunner position, though, I’m not so sure this election is going according to anyone’s plan anymore. The old saying is what, that the Republicans are afraid of their base and the Democrats are full of contempt for theirs? This election could actually get interesting if both national parties finally lose all control of their voters.

    Sanders, btw, is very much still on the side of the military/nat sec/foreign policy crowd – would those guys throw Wall St. to the wolves if the alternative looked like a Trump win? If it’s Clinton v. Trump, the far left and the moderate right stay home.

    Even the least generous scenario in this article has Clinton’s rhetoric veering to the economic left (“tweakage”) for reasons other than polling, which is certainly very optimistic.

  7. H. Wit

    But if you see “capture by wealth” as the root of almost every evil in this country except our deep-seated racism, Gaius Publius

    Redlining has certainly been a large part of the reason minorities in the US have found it especially difficult to escape from poverty and thus escape unjust disdain by more sucessful, because more so-called creditworthy, white Americans.

    So even deep-seated racism in this country has its roots in an inherently unjust banking system.

    1. Lambert Strether

      I’m too rushed to find the link, but IIRC the (so-called) race-based classification system used to segregate housing post-war had its origin in a map devised by the Chicago Fed when FDR implemented HOLC (Home Owners Loan Corporation, a solution infinitely superior to Obama’s “foaming the runway” HAMP… except for this one huge hideous social fail and moral collapse…) Readers please expand or correct.

      1. H. Wit

        … except for this one huge hideous social fail and moral collapse…

        If credit discrimination by race is wrong then why is credit discrimination by wealth OK? Why are the poor charged the highest interest rates, assuming they can even borrow, and the rich the lowest? When the banks are, as Yves has said, heavily subsidized?

      2. TheCatSaid

        The Real News Network had some great interviews / panels about this aspect of history. Some from a Baltimore perspective, others from the national perspective. Their website is not easy to search but it’s worth a try–try the Baltimore tab because lots of the pieces there have national significance as well.

  8. Andrew

    Here’s Alan Blinder in May of this year:

    Finally, [Bill] Clinton is sometimes blamed for the lax regulation that led to the financial crisis. There is a germ of truth here: Not much distance was visible between the Clinton Treasury and the famously deregulatory Greenspan Fed. But critics who make this claim often focus on the removal of the Glass–Steagall wall between commercial banking and investment banking in 1999. I debunked this idea in my book After the Music Stopped. In truth, virtually none of the bad practices leading up to the crisis were enabled by mergers between commercial banks and investment banks. Virtually all originated with “pure” banks such as Bank of America (at that time) or “pure” investment banks like Bear Stearns and Lehman Brothers. (source)

    I don’t know enough to respond to this defense, but it’s noteworthy that Blinder calls the derivative exception in the CFMA “outrageous.” He’s threading an interesting needle.

    1. sgt_doom

      Pure Blinder — or rather pure bullcrap [please see suggested bibliography at end of comment]!

      What Blinder most falsely and speciously claims is pure trash: it was during Clinton’s administration that the RMA (REIT Modernization Act), the Gramm-Leach-Bliley Financial Services Modernization Act and the Commodity Futures Modernization Act, were passed, setting the stage for the global economic meltdown, and the massive transfer of wealth from everyone else to the super-rich ($23 trillion in securitized debt was sold from 1997 to 2007, and between 2007 to 2009, US households, according to a US Treasury Dept. report from Alan Kreuger, lost $17 trillion, but add in another $6 trillion from usurious charges and interest rates, etc., and you see the overall picture).

      Also, and exactly to the point of Blinder’s atrocious bullcrap, the entire CFMA was a giant loophole of loopholes. PERIOD!

      Suggested reading:

      Open Secret, by Erin Arvedlund

      False Profits, by Dean Baker

      Extreme Money, by Satyajit Das

      How the Economy Was Lost, by Paul Craig Roberts

      The Divide, by Matt Taibbi

      A Dream Foreclosed, by Laura Gottesdiener

      Broken Markets, by Sal Arnuk

      All About Derivatives, by Michael Durbin

      Private Equity at Work, by Eileen Appelbaum

    2. JohnnyGL

      Recalling my reading of events of 2008 (much of which were on this site), I think he’s got a point that it was the capital markets players that all “had” to be saved (because they paid out all of their capital towards the bonus pool). I think Yves might agree to an extent, too.

      However, we should still break up the large institutions, anyway. It’s progress toward a solution, not a solution, per se.

      I think there was an enabling function whereby the cheap, stable funding base of commercial banks is/was very useful to derivatives players like Citi and JPM.

      Also, keep in mind, the FDIC is the resolution solution for commercial banks. What’s the cap markets equivalent? The answer ended up being the Fed and Treasury who threw up smoke and mirrors while they threw bags of cash at the liquidity problems and waited for ZIRP to let them earn their way back.

      1. Oldeguy

        Thank you Lambert for posting this level headed and clear eyed analysis of Hillary and her supporters- well done Gaius.
        Breaking up the Too Big To Fail Banks is the only way I can see to, if not prevent, at least contain the next Big Crash. We must return non-bailoutable corporate and individual risk to the financial system.
        This is not “Leftist Progressiveism”- it’s basic Capitalism 101: it’s our Profit and LOSS system. Remove its risk ( or at least believe that you have done so ) and you guarantee another 2008 if not worse.
        Nothing more clearly illustrates the terminally corrupt state of our political system than the glaring contrast between the prompt vigorous financial system reforms of FDR’s Admin. and the dawdling of the last 7 years.

  9. Synoia

    Is Clinton a bright Sixties rebel who now wants a chance to do the best she can to fix a wealth-dominated world?

    No, no, no, a thousand times no, that person NEVER existed.

    Provide ONE piece of evidence to that persona.

    1. Gaius Publius

      Thanks, Synoia. Notice the context — these are Rorschach Clintons. In the minds of many (but not all) of her strongest supporters, this person is the one we’re may be going to get. Only time will tell, if she’s elected, what we actually do get.

      That said, I lean hard anti-neoliberalism, as many readers know by now.


      1. Brooklin Bridge

        I think the outlines of what we will get with Clinton are reasonably clear. Some work on highly visible identity issues and otherwise a consistently strong bent toward the corporate weal. Stealth privatization will flourish as it has under Obama, the media will be more and more openly enthusiastic about it as part of the reality “re-definition”, and social programs will languish in an ocean of double speak. Possibly a few efforts towards renewables – particularly if they appear ripe for future history propaganda; but mostly noise and gloss. Automatic second term where Princess Chelsea will get some of the attention she deserves and the country can look forward to more of the House Of Clinton. There may be some minor questions, such as whether or not we get to actually see the labels, “CAT-FOOD”, along with labels on GMO, but otherwise business as usual in the great imperial collapse.

        1. sgt_doom

          Princess Chelsea will get some of the attention she deserves

          Deserves plenty of attention directed at her time with vulture capital firm, Avenue Capital, and the time with the jobs-offshoring practise of McKinsey & Co.

          1. Brooklin Bridge

            Absolutely, though I was implying, “attention she deserves so richly by virtue of her lineage.”

        2. craazyboy

          I think they will still call it “cat food”. But it’s country of origin they are doing away with.

          The problem is, in Malaysia for instance, “cat food” is made FROM cats. It’s like “cheese food” in the US, except opposite. Much like wine making in the Old World, Malaysian slave people stomp on cats with their bare feet until the cats are a nice, mushy consistency. The cat mush is then put in re-cycled plastic barrels and shipped to a canning facility, most likely in China. After it’s canned, then government inspected for botulism, nobody wants to print on the label everywhere the cat food has been. Obviously.

          Sorry to mention such a sad kitty story on the internet. I know that’s hard for everyone to take. hahahaha.

          1. ambrit

            This Oriental Feline Delicacy sounds very much like that Oklahoma ophidian hors d’oeuvre, Snake Tartar. Some say it tastes like Chicken Salad.

  10. shinola

    When I see Hillary I see NEOLIBERAL writ large.

    BTW, her son-in-law is (was?) a Wall St. investment banker.

  11. Brooklin Bridge

    The Queen’s coronation is definitely ON TRACK. In the good ‘ol days, royal lineage benefited greatly by aligning with the Pope. Now it’s with corporations. And that makes sense because the Vichy Democrats are not in the least bit less evil or better choices than their cartoon type-cast evil counterparts from the Republican clown car; but rather, and this is what loosens the corporate campaign contributions spigots, Democrats (someday to be listed in Webster as a synonym for traitor), are far more effective at evil due to the residual gloss of social programs historically associated with the party that traitor Democrats, with the media falling all over itself to help, can still dog whistle with speeches about Gays or Women’s or Hispanic’s or Black’s rights that have little or no impact on the bottom line – cat food.

    And there are an (increasing?) number of voices arguing that Sanders, for all intents and purposes, is simply working the left on Hillary’s behalf; that no debate of serious issues will take place, that Sanders has agreed to back Hillary “if” she wins the nomination, and so on. Of course one can argue that is the only way he gets to play, or that he would be severely punished (and thus Vermont also) by Democrats if he didn’t play by their rules – but, particularly in so far as virtually no debates, and precious little reporting, of any serious or embarrassing topics will take place, it comes down to the same thing. The left will get a little red meat shaken about in their face, and then they can vote for who ever they want and then sit back and watch on TV the coronation of the Queen they voted for. What do you mean, voted for? Ha! Hasn’t anyone understood what the term “coronation” means? Hasn’t the core message from the TTP and it’s horrific siblings sunk in about our wonderful, “Don’t worry your pretty little heads, the ISDS will take care of it”, new form of representative Democracy? As that spiritual forefather of our corporate duopoly -Stalin- used to say, it doesn’t matter who votes, it matters who counts the votes.

  12. Chauncey Gardiner

    Thanks for this post from Gaius. I had not previously considered the similarity of Trump’s campaign message to that of Ross Perot, nor have many citizens IMO.

    For example, in speaking to a Clinton supporter last week, he argued that she is the only candidate from either legacy party with meaningful international experience, and that is a key determinant behind his support of her candidacy. He said, “We live in a dangerous world, and I haven’t heard a word from Sanders nor any of the Republican candidates about their international views, nor do any of them besides Clinton have any meaningful international experience.”

    Clearly, regardless of its accuracy and one’s view of Clinton’s performance as Secretary of State, this is a key point of differentiation among the candidates for him.

    We need a major change in foreign policy away from the Neocons’ Perpetual War & Chaos Strategy, of which Clinton is not a change agent, but a poster child for the status quo. As a nation, we need to stand for peace, human rights, against corruption and for achievement of global environmental goals. Is Clinton ‘The One’ to accomplish that? I doubt it.

    On domestic economic policy (and WRT its nexus with international policy through the so called TPP, TISA and TTIP “trade agreements”), I am seeking a candidate with the values, will, intelligence and political skills to disrupt the corporatist-bankster Neoliberal 0.01 Percent’s Debt & Austerity Global Looting Operation embedded in these documents, and one who will reinstate the Glass-Steagall Act, regulate the banks and prosecute criminal behavior.

    1. James Levy

      Of course, the United States does not live in a “dangerous world” because other than the Russian nuclear arsenal it faces no significant threats to its viability and existence that are not self-generated (economic crash, biowarfare lab release) or “acts of God” (comet strike, solar flare knocking out the power grid, pandemic). Americans perceive the world as dangerous the same way many want to perceive Mexican immigrants as potential rapists (at least 70% of women are raped by family members, people in loco parentis, friends, or people they work with or work with their parents, but the Evil Dark-skinned Guy lurking in a the Shadows myth persists). And we all know the stats on how much more likely we are to be killed by a drunk driver or through medical malpractice than we are by terrorists, but Americans still seem to want desperately to believe that “it’s a dangerous world out there” and they are in endless need of protection.

      1. Lambert Strether

        Hmm. Just because blowback is self-generated doesn’t make it any less dangerous. And the blowback from our various adventures could take a generation to play out — the kids of relatives of those who were killed in wedding parties, for example. (I also think a good deal of The Fear is simple bad conscience.)

        1. BIllC

          … a good deal of The Fear is simple bad conscience.

          I beg to differ. I usually agree with Lambert’s calls 100%, but I’m afraid here an unwarranted optimism suggests that he’s lately been looking more at the lovely plant world than at the animal world.

          I think The Fear begins with white USAmericans’ visceral animus toward darker-skinned people, amplified at the first stage by our 35-year economic decline thanks to neoliberal austerity, “free trade,” and corporate welfare, then even more effectively amplified through a second stage by the corporate mass media, whose efficacy far exceeds anything the Propagandameisters of the previous century ever dreamed of.

          The second stage is well-tuned, so The Fear’s signal-to-noise ratio is boosted substantially, ensuring that any competing economic, political, or cultural message is indistinguishable from the background noise of professional sports, supermarket tabloids, Dancing with the Stars, etc.

          Much more effective yet subtle than “1984” could possibly presage.

        2. jrs

          So we’re psychoanalyzing the lunacy. Well first off it is quite true I think that some news outlets exist to pound fear all day (CNN cough – I catch glimpses of that everyday at work – not willingly).

          But maybe they just want a fear they think they can control, oh terrorists – we’ve got an app for that, rather than say climate chaos (how is THAT fear for ya?). Of course with the powers that be there are also other intere$ts in it as well.

    2. RUKidding

      The only reason why we may be (it’s debatable whether we actually are) living in a “dangerous” world is because the USA, along with some of our “cousin” countries, has made d*mn sure that the world is a dangerous place. And much that is due directly to Hilary Clinton’s actions as Secretary of State. Clinton hired Nuland and Susan Powers, and look what evils they have wrought upon us. Hiring Nazi’s to mess around in Ukraine and then pointing fingers of blame at the “evil” Putin, who mainly only defended his nation from the attacks of the USA.

      I could go on. The Clintons are nasty greedy grubby people who are not to be trusted… just like their BFFs, the Bush Crime Family. Go ask the poor people (poor in may respects) of Haiti just how much “good” Bubba & Bush did for them after the earthquake. Where did all that money go?? Not to the Haitian people (except maybe to some of the few who are in the Haitian elite), I can assure you. Yet Bubba strolls around larded down with lotsa ca$h.

      Suggesting that HRC is the “best” candidate of a bad lot is suggesting that it’s better to get bitten by a death adder than a taipan. No thanks.

      A lot of voters, though, are woefully ignorant about both Clintons and still view them with very starry eyes as the second coming. Too many ignorant voters mis-remember how things were back in the day when Bubba was King of the world. Yeah, those were somewhat better times for US citizens financially, but Bubba laid the ground work for where we are today. But ignorant voters don’t want to hear that or learn the truth.

      FWIW, my bet is that HRC will be “made” the next POTUS bc of her ties to Wall St, the Banks, the Hedgies, PEs, and other mega-wealthy people (Waltons, etc). We can vote whatever way we chose, but our votes don’t count… or at least, don’t count for much.

      I cannot see this coming down to a cage-match between Clinton and Blowhard Trump. And as kooky as Ross Perot was, I believe (and could be wrong) that his heart was in the right place. Trump? Trump’s in it for the money. Period. The end. Trump’ll say whatever it takes to make himself an extra buck.

      But … a fool and his money is easily parted.

  13. Ishmael

    So Hillary wants to be a populist and create jobs for the middle class. What most people seem to miss that specifically when the Clinton Administration negotiated the trade agreement for China US manufacturing (can you say middle class high paying jobs) were specifically thrown under the bus and in return US financial institutions were given access to China (Robert Rubin ie Mr. Goldman Sachs and Citicorp). I looked at that when it was happening and thought that is idiotic – financial institutions in China will hire Chinese workers while we lose hundreds of thousands of middle class jobs. Tell me do you think this caused the spread between rich and poor to grow much larger. Not only were middle-middle class jobs were lost but tens of thousands of upper middle class jobs were lost through this.

    The author seems to wonder if Hillary will be friends to the upper class to help the vast majority but I think it is far more likely that she will throw a few crumbs to the middle class (maybe increase the SNAP benefits) while lining her contributors pockets and her, Bill and Chelsea will suck down the Veuve, eat caviar and fly around in a 747. That is the way of the top leaders in socialist countries – the masses get a few crumbs while the aristocrat live the high life.

  14. Lambert Strether

    Wasserman-Schultz is a real piece of work. I can see the DNC doing whatever it takes to drag Clinton over the finish line in the debates: Lighting tricks, makeup tricks, microphone tricks, plants in the audience, faux demonstrators, oppo breaking immediately before the debates, and of course whatever they want from their stable of access journalists. Could get ugly.

    1. Brooklin Bridge

      Wasserman-Schultz is exibit A in the thesis that votes are no longer counted anyway unless by some fluke there is absolutely no way to hold the election corruptly. Seriously, who would actually vote for her?

  15. ekstase

    Seems like a lot of people can sense that we are at the end of an era, enforced by our planet, if by nothing else. Would that we could wake up now, before we make this inevitable change even more painful than it already is.

  16. Brooklin Bridge

    For the Clinton-appalled and carbon-aware, it means “we’re cooked,” literally, and sooner than anyone expects — because this crisis is always moving faster than anyone expects, or publicly claims to expect. (You should know that in private, a great many climate scientists are, frankly, freaking out, and not metaphorically. They know that what no one is saying is nevertheless true.)

    In other words, the full awareness of the damage we’ve handed ourselves — the wide-eyed Wile E. Coyote “nothing beneath me” moment — will likely come on a President Clinton’s watch, and she and Obama will get the blame for not being more aggressive, for being too wealth-serving.

    This nugget, coming toward the end, is largely what’s really going on right now. Politics as usual as can be faked while population explosion underlying climate degradation reaches critical mass. It’s hard to see this being documented. There will remain other more pressing issues at hand long after these players are forgotten except possibly in children’s tales intended to paralyze with fright.

    1. ambrit

      Do you mean the Clinton Inkblot on that little Blue Dress?
      I can see the National Enquirer headline now: “DNA Proves; Obama Is Secret Clinton Love Child!!!”

      1. jrs

        In my nightmarish dreams Obama is not black, he’s not even African heritage but not African-american black. No, he’s really Rachel Dolezal putting on makeup. There is no black man behind the curtain – just a white guy with a bunch of deep state special effects. And yet in reverse of Rachel Dolezal who got blacker and blacker in appearance, he’s getting whiter by the day. I swear when I see real pictures of him he looks whiter and whiter … he’s gestures look white … the texture of his skin looks white …

  17. bob the builder

    Does the country hate Hillary more than Obama? I really and truly believe the system was about to implode after Bush. In 2008 The populace had to be given the Illusion of a REAL choice for their next leader. Hillary doesn’t seem like the choice of a free democracy at all. Will the nation tolerate her as president like it did with Obama?

  18. Kurt Sperry

    When I read, “Hedge Fund Titans Choosing Hillary Clinton Over Top Republicans”, I think: of course they are. Firstly, she probably is the favorite of the whole field to win at present and campaign contributions obviously work best when you’ve bribed the future winner with them. If the Republicans had a prohibitive favorite, I assume they’d be throwing money at him too. If Sanders wins the nomination, they’ll be shoveling filthy lucre by the ton to whomever is on the Republican side. And secondly: owning the Democrat side is actually far more important to the 0.01% than owning the GOP side. Most of the potential political dangers to their interests are more likely to emerge from the left* than the right so it’s super duper extra important to keep the Democrats on a very short leash–and they’ve proven time and again they’ll shamelessly do the 0.01%’s bidding for sufficient graft.

    *left in the putative sense, not implying there is anything left about Hillary et al

  19. z80

    Thanks for this article. I love stuff that makes me think! One thing nobody has mentioned so far is the absolutely massive computational power that is currently available to analyze these fictional Rorschach cards and how it will be used in the upcoming election. There are some god like marketing algorithms being pioneered by social media moguls like Facebook, Twitter, etc. In our current contemporary environment, these algorithms will determine what cards are seen and what cards aren’t – essentially supplying Clinton with extremely intelligent information while she is providing the public with ambiguous distortion. I wouldn’t be surprised to see different Clinton adds tailored to different internet user identities or much worse. If some recent articles about Facebook are true, and their algorithms are powerful enough to change an individual users mood and behavioral patterns, we’re in for a hell of a ride this time around.

    I always tell my peers that internet news is reading you more than you are reading it.

    Another alarming thing to look out for.. the internet scrubbing capabilities of TPTB. I can almost bet that Whitewater, Vince Foster, Graham Leach Bliley, Ken Starr stuff, etc. narratives will be altered or completely vanish from the internet. Google has been getting really good at this lately :(

  20. Ron Schul

    This is a big mistake. It’s a mistake politically because people who believe Hillary Clinton is still too close to Wall Street will not be reassured by her position on Glass-Steagall.

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