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Rick Perry has a financial reform agenda (via The Hill):
Former Texas Governor Rick Perry is taking a position to Hillary Clinton’s left on financial reform, and pushing for a policy to break up big banks staunchly advocated by Sen. Elizabeth Warren (D-Mass.). The GOP presidential candidate laid out his vision for Wall Street reform in a speech Wednesday. And among his policy proposals, Perry apparently advocated for the return of the Glass-Steagall Act, which established a firewall between traditional commercial banking and investment banking. … In remarks delivered in New York, Perry did not mention Glass-Steagall by name, but floated among several policy proposals one that is practically identical. … Perry also floated an alternate idea of requiring large banks to hold additional capital as a cushion, but the idea of cleanly separating commercial and investment banking was a signature provision of Glass-Steagall.
Perry also called on Congress to wind down housing giants Fannie Mae and Freddie Mac, but did not detail a process for doing so. There is bipartisan agreement that the current housing finance system, in which Fannie and Freddie guarantee the vast majority of new mortgages, is unsustainable, but coming up with a new system has been a significant challenge. … In the meantime, Perry said the two government-sponsored enterprises should be placed under stricter rules regarding the types of mortgages they can back, while encouraging private entities to adopt a bigger role in the marketplace. He also pushed for changes to the Consumer Financial Protection Bureau long favored by Republicans, including bringing its budget under congressional control and reworking its leadership structure.
It would be great if all the GOP 2016ers developed meaningful plans. Not only do we want to avoid future crises and bailouts, but also to purge the cronyism from the American political economy. Now I’ve written about the merits of larger capital cushions and banks funding themselves more through equity than debt. Indeed, the WaPo’s Max Ehrenfreund mentioned my work in his piece on the Perry proposal. Certainly, the Glass Steagall stuff is the eye catcher. Some thoughts on that:
It’s hardly obvious the Glass-Steagall repeal was to blame for the [Financial Crisis.] Certainly a direct causal link is tough to find. Both Bear Stearns and Lehman Brothers were investment banks that failed, while JP Morgan — both a commercial and investment bank — weathered the storm. And if Glass-Steagall’s mandated separation between commercial and investment banking still existed, the big commercial banks couldn’t have absorbed Bear and Merrill Lynch — nor could Goldman Sachs and Morgan Stanley have converted themselves to bank holding companies. But Glass-Steagall’s demise was hardly a non-event. As financial reporter Charles Gasparino has argued, when financial giants such as JP Morgan and Bank of America became oversized financial supermarkets, it nudged investment banks such as Bear, Lehman, Morgan Stanley, and Goldman Sachs to take bigger risks to compete. Economist Luigi Zingales thinks Glass-Steagall helped restrain Wall Street’s political power by giving commercial banks, investment banks, and insurers competing policy agendas. “But after the restrictions ended,” Zingales wrote in the Financial Times, “the interests of all the major players were aligned.” So when the financial crisis hit, Washington got the same collective, pro-bailout message from Manhattan. The megabanks spoke with one voice.
Anyways, here is the Perry campaign fact sheet.