His citation that Dodd-Frank provisions enables breakup of the big banks, via Treasury Dept. and other special govt. entities, is correct, nevertheless. It was a major point of the bill. Dodd-Frank had to happen if TARP was to happen. Dodd-Frank and reinstating Glass-Steagall help prevent another TARP. Otherwise, you betcha, we'll see another crash and a TARP within a generation or two.
But the fact that he couldn't answer these questions at the heart of his candidacy is simply astounding. The fact that he has not given thought to negative consequences is no less perplexing. Finally, he flat-out said he hasn't considered the legal ramifications, which is important for legislating actual change. If Obama just passed the first health care bill that came to mind, SCoTUS would tell him to eat a dick.
And also this is one of the big reasons that I dislike Sanders. It's one thing for him to want to regulate Wall Street: I fucking agree with that. It's another thing to give simple solutions to complex problems. Fact is, the repeal of Glass-Steagall had
little to do with the crash in 2008. Turns out, allowing banks to diversify their assets between commercial and investment banking helped them weather the storm. The biggest banks, like Lehman Brothers and Bear Sterans, were exclusively investment banks. Instead, more of the blame for the crash can be given to the
Commodity Futures Modernization Act. This bill, among other Wall Street deregulations, literally
blocked federal agencies from investigating credit-default swaps, which were at the heart of the financial crisis. Now, if a layperson like myself could look into the financial crisis and figure out the real reason that it occurred, it really does beg the question, "why can't Bernie do this?" In fact, as a political insider of Washington for almost 30 years, he witnessed this bill pass; I had to read about this bill almost a decade after the fact. The cynical answer as to why he doesn't cite this bill:
Bernie isn't as anti-Wall Street as he likes to say he is. I've known about the bill and its effect for years, I've known for months that he voted for it, and when I said earlier that I hold back a lot of my criticisms of Bernie, I meant it. As a policy wonk, simple answers bother me, a lot.
Anti trust laws, which the aforementioned are similar to in their purpose, have been effectively used against big companies before, and all those companies' principals and most employee positions survived in their new subsidiary formats. The action has to be applied periodically, though. AT&T, for one historical example, managed to influence politically and monetarily and clump back together as a huge telecom company after being busted up a few decades ago. Dodd-Frank is basically a pair of pruning shears. The overgrown trees likely to crash branches down through the roof will over-grow again if we're not vigilant.
And now you're conflating two separate things. To my understanding, Dodd-Frank is not an anti-trust law: these banks, while huge, do not own monopolies in the traditional sense. True, a handful of banks own a lot of assets, but the other banks are still competitive in the market. This distinguishes it from a standard monopoly in that these banks are not being broken up for possessing a vast majority of the market share, but for being too profitable.* While breaking banks is something I support, doing it in a manner that survives SCOTUS scrutiny is more important. The fact that he says he hasn't even looked into the legal implications of this leaves me flabbergasted.
Further, after reading the cliffnotes of Dodd-Frank that you gave me, and cross-referencing it against the bill, I am a bit confused. From everything that I have read, Dodd-Frank does not appear to give the Secretary of Treasury the ability to bust up "too-big-to-fail" banks. Instead, my reading indicates that it gives federal agencies the ability to oversee and regulate the investment decisions of these banks. To my understanding, the crux of the bill ignores the "too-big-to" part, instead focusing on the "fail." I guess what I am trying to say is that, to my understanding, a bank could have assets of $50 Trillion (ignoring anti-trust issues) and still abide by the law in such a way that would not open itself up to any sort of adverse action from the government. So, if you would not mind pointing me to the portion of the statute that explicitly gives the Secretary of the treasury the ability to break up a bank for being "too-big-to-fail" (with nothing more) I would really appreciate it.
*I hate to phrase it this way as it sounds conservative, but that is essentially what is being argued: a bank should not be broken up for possessing too much of a market share vis-a-vis their competition, but a number of banks should be broken up for having too many assets.
