Republicans and Democrats Agree: We Hate Wall Street
With the 2016 election approaching, Republicans and Democrats have surprisingly been able to agree on something. That something is a general disdain for the banking industry. Big name candidates such as Bernie Sanders, Hillary Clinton, Marco Rubio, and Jeb Bush have launched a smear campaign against Wall Street. This issue was prominent in last nights Democratic debate, as Sanders called for a break up of "huge financial institutions", because they "have too much power". These presidential hopefuls accuse Wall Street of acting fraudulently, and acting only out of greed.
Wall Street banks are now faced with many difficult decisions. How should they respond? Should they even respond? The truth is, Wall Street has no strategy as of now. Bankers from J.P. Morgan and Citigroup have called for the formation of a trade group to interact with candidates and stop the unfair portrayal. However, other industry leaders believe that this will make banks look even worse. People could view it as an attempt to shape the views of presidential candidates, which would cause a greater distrust of banks. As of now, the strategy for banks is to wait it out, and hope that the threats made by the candidates are hollow attempts at grabbing popularity, and not the beginning of a long list of new regulations aimed at cutting down their power.
My take: I think these statements are empty, and are simply meant to boost popularity. The statements made by the candidates portray pre-Great Recession banks that lacked adequate regulation. The current state of Wall Street, while not perfect, is much more resistant to fraud. Regulations like Dodd-Frank have successfully controlled the size and power of banks. The article does a fantastic job of pointing out the specific factual inaccuracies in the White House hopefuls statements. I expect banks to avoid confronting the candidates, because that will avoid further tarnishing their image.
Link: http://www.wsj.com/articles/republicans-and-democrats-agree-we-hate-wall-street-1452681567
Sam, I agree with your take. I think the candidates are just saying what the people want to hear, without much regard to the actual facts. I think that there is a general consensus among many Americans that Wall Street is evil, and many blame them to be the sole problem of America. Going forward into a candidate's presidency, I think that they will work with these institutions on Wall Street with a much more even tempered attitude towards their motivations compared to what they are currently portraying.
ReplyDeleteI also agree. It can be tiring listening to candidates with their own agenda and vague explanations for how they are going to change things. There may be something regarding the income gap in America and Wall Street may help to perpetuate that problem on income inequality. However, I don't know much about any of the players to really have an educated response. I do think the candidates like to to just put blame on other things as a way to get support. I also think that candidates and supporters like to oversimplify complex issues that are too hard to sum up in a few sentences.
ReplyDeleteBut is it acceptable to have organizations with still imperfect regulation in our economy which already have proven to be "to big to fail?" Banking is heavily involved in every single industry. They have reached gargantuan sizes, and with the heavy privatization it seems unlikely that they will remain stable forever. Looking at Iceland it becomes apparent why having private companies controlling such huge amounts of capitol is dangerous. I believe that it's unwise to assume that banks won't continue to focus in the short-run.
ReplyDeleteIt is unfortunate to think that candidates believe wall street is too powerful and that there should be a break up between some of the largest banks. The largest banks in the world have the smartest people running them. These people have far more knowledge on the finance industry than any of the candidates mentioned. To think that these people want to shut down something they don't have knowledge on would be very detrimental to the economy. I find it curious to look into Donald Trumps thoughts on this matter, as he may have the most business knowledge out of any candidate running.
ReplyDeleteI think this is a very interesting article and an interesting topic for these candidates to "attack" in their presidential campaigns. Over winter break, I read The Big Short and also watched the movie. This book and movie was all about these huge Wall Street bankers who knew they were cheating the American people and consequently were becoming filthy rich for doing so. No one then and my guess is no one now fully understands the housing market or the financial market as a whole as they did not then. The man who figured out that the housing crisis would occur had written letters to multiple Wall Street firms and parts of the government to share his knowledge and to uncover how he predicted this crisis and no one returned the call. In addition, only one banker went to jail while many others should have been punished as well for the deliberate fraud they were involved in. With this being said, I think it goes to show that many of these banks simply are too big to fail and while the American public may know Wall Street does not have a good reputation when it comes to its business, there's rarely people around ready to listen and fix the problem.
ReplyDelete