The picture painted from the emails released by WikiLeaks of financial regulations in a Clinton administration is often conflicting and contradictory.
Responding to a 2015 article in the New York Times about the rigging of the forex market, outside advisor Mandy Grunwald said: “I asked Gary Gensler about this last week when the stories first emerged and it sounds like he has good ideas that Jake (Sullivan) has already incorporated.”
Sullivan, a senior advisor to Clinton, did not respond to an email from The Industry Spread, but responded in the email chain that the Clinton campaign was implementing ideas by Gensler, the former head of the Commodity Futures Trading Corporation (CFTC), in combating this kind of manipulation.
The forex scandal exploded in 2014 where traders at more than a dozen bank used secret internet chat rooms to telegraph large currency trades to each other.
In 2012, Gensler addressed the European parliament and suggested that something similar to Dodd/Frank was the answer to combating future manipulation: “The Dodd-Frank Wall Street Reform and Consumer Protection Act gave the CFTC additional authority to prohibit an even broader swath of misconduct. The agency can now bring charges against anyone who recklessly employs a manipulative or deceptive device in connection with swaps, futures, or contracts for the sale of commodities.”
On Dodd/Frank, the emails present a confusing picture. In a February 2016 email from Dana Chasin, who helps runs a pro-Clinton Political Action Committee (PAC), about Minneapolis Federal Reserve President Neel Kashkari’s speech, Chasin noted that Kashkari’s idea for using “tax leverage throughout the financial system ‘to reduce systemic risks wherever they lie,’” was largely stolen from Clinton.
Tax leverage places a penalty on banks which take on too much leverage; Clinton proposed a graduated risk fee on liabilities for certain “risky” financial institutions, according to a fact from her campaign.
Chasin also noted the regulatory authority of Dodd/Frank could be used to break up the big banks- an idea Clinton has publicly embraced- and increase capital requirements to turn them into financial utilities- institutions which strictly handle deposit accounts and loans.
“Taxing leverage and increasing capital are related,” Kashkari said in the speech.
“With political people … there was a lot of complaining about Dodd-Frank, but there was also a need to do something for political reasons.” Clinton said in a speech in front of Goldman Sachs in 2013 also released by WikiLeaks.
Clinton embraced a goldilocks approach to financial regulations in that speech: “There’s nothing magic about regulations, too much is bad, too little is bad.”
Clinton said, “Banks are not doing what they need to do because they’re scared of regulations.”
Clinton said banks being blamed for the financial collapse was “oversimplified” and embraced bankers being stakeholders for financial reforms in the same speech.
One area which will likely face more scrutiny are exotic financial derivatives; Clinton relayed a conversation between Warren Buffett and other individual about credit default swaps: “by the time they got into their fifth minute, I had no idea what they were talking about. And when they got into their tenth minute, I realized they didn’t have any idea what they were talking about.”
“I think it’s in everybody’s interest to get back to a better transparent model.” Clinton said.
The Clinton campaign has declined to answer any questions regarding the leaked WikiLeaks emails blaming Russia for the hack and refusing to confirm the accuracy of any of the emails.
After spending a decade in finance, Michael Volpe has been a freelance investigative journalist since 2009. His work has been published locally in the Chicago Reader, Chicago Crusader, Chicago Heights Patch, and New City. Nationally, Volpe’s work has appeared in a wide variety of publications including the Washington Examiner, the Daily Caller, Crime Magazine, the Southern Christian Leadership Conference Newsletter, and Counter Punch. Volpe has been recognized by whistleblowers as leading the charge in getting their stories out. His first book Prosecutors Gone Wild was published in October 2012, his second book The Definitive Dossier of PTSD in Whistleblowers was published in February 2013 and his third book Bullied to Death was published in August 2015.