Carefully Scripted Debate Answers Don’t Cut It, Part II


The perception that Hillary “won” the debate is growing. The latest polls from New Hampshire show a noticeable shift in her favor. However, what’s not being reported is that Hillary has been on an advertising binge in New Hampshire, so who knows what’s actually caused the shift.

And, hopefully, who cares. What should count is the information we received on Tuesday night.

One clear difference between Hillary and Bernie (and O’Malley) was their respective position on the repeal of Glass Steagall, the New Deal law that required a separation between commercial banking and investment banking. Bill Clinton repealed it in 1999. Sanders and O’Malley (and Elizabeth Warren for what that’s worth) want Glass Steagall re-instituted. Hillary opposes re-institution. Wall Street also opposes re-institution. Guess which candidate is hauling in the Wall Street cash?

Progressives, other than Hillary, who became a progressive Tuesday after previously pleading guilty to being a moderate, strongly favor re-institution of Glass Steagall.

But Hillary was not without a carefully scripted answer. 

The problem, she explained, is not only with the banking system, it’s with the “shadow banking system” and she had a plan to address that. I think she said how many points her plan had, but I forget the number.

Unfortunately, Sanders and O’Malley both let her get away with it. Then, yesterday, in a rare lapse, Paul Krugman did as well. Here’s Krugman:

For what it’s worth, Mrs. Clinton had the better case. Mr. Sanders has been focused on restoring Glass-Steagall, the rule that separated deposit-taking banks from riskier wheeling and dealing. And repealing Glass-Steagall was indeed a mistake. But it’s not what caused the financial crisis, which arose instead from “shadow banks” like Lehman Brothers, which don’t take deposits but can nonetheless wreak havoc when they fail. Mrs. Clinton has laid out a plan to rein in shadow banks; so far, Mr. Sanders hasn’t.

Sorry, Paul, although the shadow banks played a large role in the financial crisis, banks like Citigroup, Bank of America, Wachovia and others dis as well.

More significantly, Clinton’s argument, to which Krugman buys in, is pure sleight of hand.

This is not a question of either or. But if you listened to Clinton or read Krugman, you’d come away with the feeling Sanders doesn’t care about shadow banking and  perhaps even opposes action to rein it in. That’s BS. Does Sanders have a five-point plan? Not yet, but so what? Whoever gets elected will have a plan, and that plan will be re-written after the election anyhow. Nobody on the left disagrees with Clinton’s stated view of shadow banking. Except possibly Clinton herself. After all, one of the largest concentration of key players in shadow banking (think hedge funds) takes place each summer in the Hamptons, where the Clintons vacation each year.

Krugman does acknowledge that the repeal of Glass Steagall was a mistake. Implicitly, that’s a concession it should be restored.

Which means that the real difference here lies in Sanders’ and Clinton’s respective views regarding Glass Steagall, Clinton’s carefully scripted debate answer notwithstanding. And the difference is as clear as it is significant.