President Obama recently gave an in-depth interview with the New York Times in which he discussed his economic record at length—he delved into the successes, failures, and misconceptions many Americans have regarding the state of the economy.
Obama was candid, particularly regarding Wall Street. However, it was clear that he did not see the fundamental need to dismantle the system that is only accumulating more wealth and power, unlike current Democratic candidate, Bernie Sanders.
Obama expressed that, “There is no doubt that the financial system is substantially more stable [than 2008],” which circumvents the fact that four of the five biggest banks are bigger than they were in 2008.
He continued, “It is true that we have not dismantled the financial system, and in that sense, Bernie Sanders’s critique is correct. But one of the things that I’ve consistently tried to remind myself during the course of my presidency is that the economy is not an abstraction. It’s not something that you can just redesign and break up and put back together again without consequences.”
Obama’s underlying point is that it is impossible to break up the big banks, and he believes doing so would monumentally disrupt the economy.
This view of Wall Street could be tied to the $44.3 million in contributions Obama received from financial institutions during his 2008 run for president; at the very least, having constant access to Wall Street bankers could shape his thinking in regards to their role in our economy.
Respected economist (and fervent Hillary Clinton supporter) Paul Krugman wrote an op-ed in the New York Times, essentially espousing the same ideology: breaking up big banks is unnecessary.
This school of thought wholly contradicts the message anti-Wall Street progressives such as Elizabeth Warren have been championing. Warren was integrally involved in creating the Consumer Financial Protection Bureau through the Dodd-Frank legislation, and has been speaking out against the greed of big banks for years.
Warren could not believe Krugman’s rewriting of history in his op-ed and spoke out in a written statement:
“There’s been a lot of revisionist history floating around lately that the ‘Too Big To Fail’ banks weren’t really responsible for the financial crisis. Today’s announcement [that five of the biggest banks in the country cannot credibly be unwound safely without bailout money from taxpayers]…is a giant, flashing sign warning us about the central role they will play in the next crisis unless both Congress and our regulators show some backbone...Today, our top regulators warned us about the danger of the biggest banks - and we would be foolish to ignore their warnings.”
Warren and Sanders are right. Using authority granted under Dodd-Frank, big banks must be broken up to decrease the systemic risk they pose to the economy.
The bank bailout is one of the most controversial aspects of Obama’s record, and for a good reason. While he may not agree that monumental change is needed, the progressive Democrats undoubtedly do.
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