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riversedge

(69,721 posts)
Sat Oct 10, 2015, 08:59 AM Oct 2015

Ezra Klein Oct 9: This is a very good financial reform plan from Hillary Clinton:

Hillary is a smart intelligent woman and has always been a policy wonk. She deserves to be recognized as such.


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Ezra Klein ?@ezraklein Oct 9

This is a very good financial reform plan from Hillary Clinton: http://nzzl.us/XvlaUi3



Hillary Clinton's plan to tame big banks shows her at her wonkish best


Updated by Matthew Yglesias on October 9, 2015, 7:00 a.m. ET @mattyglesias matt@vox.com
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Hillary Clinton has often stood accused of pandering or shaping policy proposals for political purposes, but her proposals for improving regulation of the financial system show her doing exactly the opposite — tackling the issue of mega-bank risk in a thoughtful way that is likely to prove politically thankless.

Her idea — not exactly optimized for a 15-second television spot — is to "charge a graduated risk fee every year on the liabilities of banks with more than $50 billion in assets and other financial institutions that are designed by regulators for enhanced oversight," with fees scaled to be "higher for firms with greater amounts of debt and riskier, short-term forms of debt."

It's a mouthful. Banks will hate it. It doesn't feature a crowd-pleasing, populist applause line. And it's a pretty great idea.
Hillary Clinton's risk fee, explained


The problem Clinton is trying to address here is that when a big bank goes bankrupt, it creates huge problems for the broader economy. Because of that, governments have a tendency to prevent big banks from going bankrupt.

And because of that, big banks have a tendency to engage in a riskier pattern of business than you see from other kinds of companies. All companies spend money to make money, but banks finance a much larger share of their spending with borrowed money (as opposed to retained profits) than you see from non-banks. And many banks rely very heavily on short-term borrowing, and fund ongoing operations by counting on their ability to get new short-term loans tomorrow. Financing investments with debt magnifies profits when your bets pay off, but it also magnifies losses when they don't. Using short-term debt rather than long-term debt lets you pay lower interest rates, but also exposes you to the possibility of unexpectedly finding yourself unable to get the money you need in an emergency situation. Both tendencies magnify risk.

Clinton is proposing to clamp down on those risks by imposing a tax on bank debt.

That compensates the public for the financial cost of bailouts and the social cost of bank failures, while also creating new incentives for banks to manage their affairs in a less risky manner.
How would this work, exactly?................



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Ezra Klein Oct 9: This is a very good financial reform plan from Hillary Clinton: (Original Post) riversedge Oct 2015 OP
A detailed plan that relies on something more than bellicose rhetoric. A true leader! Fred Sanders Oct 2015 #1

Fred Sanders

(23,946 posts)
1. A detailed plan that relies on something more than bellicose rhetoric. A true leader!
Sat Oct 10, 2015, 09:23 AM
Oct 2015

I also hailed O'Malleys comprehensive justice reform plan and Sanders's detailed college education plan, I do trust everyone on this side of the Greater Divide.

But of course she "cannot be trusted" and is not " sincere" - the "so there!" refrain, disclosing the complete rejection of critical thinking in favor of generalization - will be the all so usual response to any proposal or detailed plan Clinton forwards.

P.s. I forgot the "too little too late" crowd, that is always good for a chuckle as well!

The fact is Clinton is moving her policies to occupy the vacant middle ground to the Left and some of the Left do not like the territorial incursion - when any such movement should be welcomed and hailed.

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