We already have arcane, nuanced rules and regulations designed to subtly control the financial sector. The problem is, they don’t work. And the reason they don’t work is that they rely on regulators who all too often come right out of the institutions they are supposed to be regulating.
So when we compare the two major candidates’ plans to regulate Wall Street, we see that one candidate wants to put more power in the hands of these regulators who aren’t doing their jobs, more rules for them to find ways not to enforce. Often these legal work-arounds are brain children of various Wall Street law firms, and we find that these very law firms are the ones donating most heavily to this candidate’s campaign, that this candidate has a history of coddling the largest investment banks and in fact being very cordial with them, counting them as a core constituency. This same candidate maintains that their plan is actually the tougher plan, because hey, look at all these shiny new rules! They tout their “tough” plan with a knowing wink to the same law firms donating to them, because these firms know full well they will be able to skirt the new rules with ease.
It sounds good, it looks good on its face, but it is not good. If this system worked, we wouldn’t be having this conversation.
Then there’s the other candidate. What we know of his plan thus far is that it is not subtle, not nuanced, does not rely on ineffective regulators to magically become effective. It does not willfully ignore the fact that corruption is rampant in the SEC or that the banks have more political clout than any other industry. It takes the problem head-on, and says simply “Break up the big banks. If you’re too big to fail, you’re too big to exist.” Given that the current system doesn’t work, this is the only choice that will deliver the results our economy needs. It’s not corruption or lawyer-proof by any means but it is much harder to maintain consolidated power when the large financial institutions are broken up. We will have this fight again, even if this second candidate’s plan goes through. Like gravity, major institutions have a way of merging again. Capitalism will always seek monopoly power, it is woven into its very nature. But this candidate actually recognizes that and seeks to reform the system in a way that speaks to the truth of the situation we find ourselves in, not in a way that relies heavily on ignoring the concrete truth that the system is itself broken and enforcement is already woefully inadequate. What good does it do to put more tools in the toolbox of regulators, if those regulators left their tools behind and are out to lunch with their old pals from the very institutions they are supposed to be regulating?
If you don’t believe that this second candidate’s plan is stronger on reforming Wall Street, just follow the money. Wall Street and their lawyers are backing and have backed one candidate, and Wall Street is the mortal enemy of the other. Wall Street knows who they want.