Former Maryland Governor and obvious Democratic Presidential contender Martin O’Malley penned a piece in the Des Moines Register today about Wall Street reform.
Let’s get two things straight off the bat, obviously, this piece was written to get attention in the first-in-the-nation caucus state, Iowa. Second, O’Malley needs to run to the left of the presumptive Democratic nominee, Hillary Clinton. To that end, this piece reeks of a strange combination of bluntness and desperate pandering. Then again, O’Malley’s style, as those of us in Maryland already know, is not one that leaves most folks wanting more.
That all said, let’s take a look at O’Malley’s piece in the Register and see what he has to say. It’s important to also note that O’Malley is sprinting into the territory of liberal populism in an attempt to court progressives disenchanted with the “moderate” Hillary Clinton. Especially on the issue of Wall Street, Hillary Clinton is seen by many on the left in the Democratic Party as being at best a cooperator and, at worst, a sellout. O’Malley is capitalizing on the same disaffection for Clinton that has buoyed the support for Elizabeth Warren, the ultra-liberal senator from Massachusetts. Warren, famous for her anti-business stance (as well as her questionable heritage), has gotten a cult following despite her denials that she has any interest in the nation’s top post. O’Malley, quite to the contrary, is unabashed in his pursuit of the White House and sees economic liberalism as a way to court progressives. As we all know, primaries and caucuses generally give a disproportionate weight to ideology. O’Malley, hoping to tap the spring of progressive angst is steering to the left.
O’Malley begins his piece in the Register with a blunt allusion to nuclear disaster: “Seven years after the Wall Street meltdown, Americans are still experiencing the fallout.” If this is your first taste of Martin O’Malley, get ready for a lot of similar rhetoric.
O’Malley then cites a piece in the New York Times by Eduardo Porter from January of 2014 for the statistic that the recession “cost every American $120,000.” But is that what the Porter piece actually said? Let’s take a look: “At a bare minimum the crisis cost nearly $20,000 for each American. Adding in broader impacts on workers’ well-being — an admittedly speculative exercise — could raise the price tag to as much as $120,000 for every man, woman and child in the United States.” So, O’Malley has taken the absolute worst-case figure and made it the presumptive cost of the recession. Look, there’s no reason to belabor the point of how bad the recession hurt American families, but this is a question of credibility. If you’re going to cherry-pick your statistics for impact, make sure you report them correctly. O’Malley could just as easily have said “could have cost up to $120,000.” He could even have written that it definitely cost $20,000. I don’t know a lot of people who would shrug their shoulders at twenty grand. But, again, like the nuclear disaster allusion, O’Malley is playing on rhetoric.
So, “[w]e were forced to save our economy by bailing out big banks.” Pretty sure a lot of libertarians rolled their eyes at this line, but let’s just move past it. O’Malley’s thinking is the government knows best (and, by extension, if he runs the government, he knows best).
Continue with the eye-rolling with the definitive statement “2010 Dodd-Frank Act did not go far enough.” Now, if you don’t know about the Dodd-Frank Act, it is one of those things that sounds pretty reasonable in rhetoric until you think about the people holding the reins. Very simply, it put restrictions on financial institutions with the goal to prevent the type of catalysts that caused the banking and investment collapses in 2007. On its face, some reforms were necessary, but giving politicians with noted hostility towards business control and oversight of institutions they know nothing about is a cause for a lot of concern among conservatives.
O’Malley, though, is not playing to a conservative base. Frankly, he’s not talking to Republicans or to anyone on the right in this article. Rather, this one goes out to the progressive critics of Dodd-Frank. Despite the fact that the reforms and restrictions of Dodd-Frank were some of the largest since the Great Depression, O’Malley and the hard left think that there should have been more done. In what reeks of the old Rahm Emmanuel “never let a crisis go to waste,” O’Malley thinks that more should have been done to curtail banking and finance.
To that end, O’Malley cites to the “Glass-Steagall Act” of 1933. What O’Malley is talking about is the U.S. Banking Act of 1933. Again, very simply, the Act prevented banks from acting as investment companies (very simply, read more about it). O’Malley writes that, after Glass-Steagall, “our country did not see a major financial crisis for nearly 70 years.” Despite the falsity of that statement, see: http://en.wikipedia.org/wiki/Savings_and_loan_crisis and http://en.wikipedia.org/wiki/Black_Monday_%281987%29 and the fact that Glass-Steagall provisions were essentially dead in the 1960s, O’Malley sees the Act as being a pathway to the salvation of the economy. With more control over the financial sector, O’Malley writes, the economy could have been saved in 2007. O’Malley, without a citation, makes the statement that, if the Act hadn’t been repealed, “the crash [in 2007] would have been contained.” Where is the Wikipedia “citation needed” flag when you need it?
O’Malley next states that “five banks control half of the financial industry’s $15 trillion in assets.” The hyperlink to a Forbes article is broken, but if you change the URL you can access the article. Contrary to the reason why O’Malley uses the article, the piece at Forbes is actually addressing the fact that the financial industry is recovering after the collapse in the mid-2000s. In fact, the author dismisses critics of the Too Big to Fail mentality noting: “The next round of financial industry consolidation likely won’t be driven by the Too Big To Fail crowd though. The Federal Reserve has established rules taking effective in 2015 that will prohibit mergers that result in a combined company’s liabilities exceeding 10% of the industry’s total. As a result, dealmaking is more likely among the second-tier and regional banks, and SNL points to BB&T’s recent takeover of Susquehanna as a transaction more illustrative of industry trends.” What this shows is that O’Malley just liked the title of the article without drilling down deeper into what the author was really discussing.
O’Malley doubles-down on his criticism of the financial market by urging the Department of Justice to go after Wall Street. This is a pander to the base that wants heads on pikes as a warning to the rest of the fat cats that they will suffer the same fate. We get it, you think bankers are bad. The article that O’Malley cites at NyBooks.com is a piece that is generally favorable to O’Malley’s views and has a much more in-depth review of the points O’Malley is making. However, the author does conclude that: “one of the reasons the financial fraud cases have not been brought, especially cases against high-level individuals that would take many years, many investigators, and a great deal of expertise to investigate. But a second, and less salutary, reason for not bringing such cases is the government’s own involvement in the underlying circumstances that led to the financial crisis.” Thus, if O’Malley really wants to go after the problem, maybe using government that has proven itself to be corruptible isn’t the best solution?
So, what is O’Malley’s plan? Prosecute bankers, appoint people who will go after criminals, refuse to allow settlements to be kept secret, refuse to allow write-offs of penalties, and revoke banks’ rights to operate if they violate O’Malley’s view of transparency. Without weighing in on each of these, certainly no one will argue that the law should be enforced and that fraud should be prosecuted. However, there are legal reasons why settlements are kept secret that have nothing to do with fat cat bankers trying to keep their noses clean. In fact, settlements that are kept secret are more likely to be larger than ones that are public (companies pay a premium to stay out of the limelight).
In the end, O’Malley takes a shot at Congressional Republicans and Wall Street bonuses as if he’s playing progressive bingo (make sure to hit all the hot-buttons). He closes with “[i]t’s time to put the national interest before the interests of Wall Street” and “[t]he future of our economy — and America’s middle class — depends on it.”
Look, I get it that O’Malley is feeling out how to do this on a national scale, but bringing up the “middle class” in the last line without mentioning it in the rest of the article is just bad writing. Take out the threat of a nuclear disaster and lead off with the middle class. Again, O’Malley is doing his best to check off as many progressive boxes as he can in one opinion piece, but let’s be abundantly clear: if he’s going to have any chance at the White House in 2016, he needs to do more than just sprint to the left and hope no one calls him on his ideas.
While I’m hesitant to give O’Malley advice (he certainly wouldn’t like it), he needs to stop talking like he’s chiding Congress and start touting his role as a former two-term governor. Though banking reform wasn’t a hallmark of his term in Maryland, he needs to relate his policies back to his experience or else he sounds like someone who just read some blogs (and 2014 broken links) and decided he knows what’s best for the nation. O’Malley must do more than rehash old talking points and get real statistics and hard figures that he can throw out at the drop of a hat. Rhetoric will not win against the Clinton machine. If O’Malley wants to be more than just the paper leftist in the Democratic Primary, he needs substance. O’Malley needs to have all reactors charged if he’s going to generate enough power to go after Hillary (see, that’s how you end an article with a callback to the first line, Martin).