May 4, 2017

AP’s Gordon Tries to Cast Trump As Indecisive Hypocrite Over Two Separate Regulatory Issues

The Associated Press’s descent into an ever more reflexively anti-Donald Trump, anti-conservative outlet which disguises itself as a wire service continues. On Tuesday (apparently updated sometime on Wednesday, based on its current “Yesterday” label), the AP’s Marcy Gordon used a shopworn argument that a Republican or conservative who generally supports reducing government regulations and red tape is a hypocrite if he or she ever supports, even tentatively, any form of stronger regulation.

Gordon couldn’t handle the idea that President Trump, whose basic instincts have been to reduce regulations, could possibly be “entertaining the idea of restoring the Depression-era firewall between commercial banking and its riskier investment side.”

(This post won’t debate the pros and cons of the idea of restoring that firewall, except to note that if implementing that idea reduces the dominance of the four “too big to fail” major money-center banks — which currently control a larger share of the industry than they did before the housing and mortgage-lending implosions a decade ago — it would arguably result in banking, lending and brokerage markets that are freer and more competitive than they are now.)

The AP’s headline writer attempted to capitalize on Gordon’s dispatch to portray Trump as unfocused, undisciplined and indecisive: “Is he for or against regulation? Trump swings in 1 day.”

Here are Gordon’s opening paragraphs (bolds are mine throughout this post):

While Republicans in Congress craft a bill to unwind the tighter financial rules that took effect after the 2008 crisis, President Donald Trump is looking in another, seemingly opposite direction: He’s entertaining the idea of restoring the Depression-era firewall between commercial banking and its riskier investment side.

If Congress reinstated such a law, it might lead to the breakup of big banks.

Trump, who also has denounced the Dodd-Frank crisis financial law and promised to dismantle it, swung between those two extremes of restoring bank regulation and deregulating in a short space of time on Monday in two White House settings.

For heaven’s sake, Marcy.

For starters, repealing Dodd-Frank is not an “extreme” position. Given its role in slowing economic growth since its passage, one could make a stronger argument that passing Dodd-Frank was what was genuinely “extreme.”

Second, the presence of the post-Depression firewall between banking and investments existed for well over 60 years until the repeal of Glass-Steagall in 1999. Was the U.S. operating under “extreme” financial industry circumstances during that entire time? Of course not.

More fundamentally, as John Hinderaker at Powerline noted Tuesday evening:

I would hazard the wild guess that Trump is for some regulations and against others, like just about every other person in the world. But the AP is deliberately obtuse.

one thing reinstating Glass-Steagall and repealing Dodd-Frank have in common is that both would be bad for the biggest banks.

The AP reporter presumably caught at least a glimmer of this reality, since she reported on Trump’s speech to an audience of community bankers, some of whom wore red baseball caps that said “Make Community Banking Great Again!” That should have been a clue, but the AP nevertheless persisted doggedly with its theme that the president contradicted himself by opposing some regulations, while being open to imposing other, completely different ones.

If that is the best the Associated Press can do, it is just as well that most Americans have given up reading newspapers.

Unfortunately, escaping AP content is not as easy as giving up reading newspapers, because “More than 15,000 news outlets and a range of businesses worldwide” subscribe to AP content in multiple formats. The sad reality is, if you hear it or see and it seems left-biased, there’s a significant chance that it’s fundamentally based on AP reporters’ output.

Cross-posted at NewsBusters.org.

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4 Comments

  1. Why is there an assumption on the part of so many conservatives that just because something is “bad” for big banks, or any other big business for that matter, than that automatically means it’s good overall for America. Sometimes, yes, but that’s not always the case. And there is a big difference between there being more freedom and competition because the free market is strengthened and freed from federal constraint and more competition and freedom *for some* because the government decided to hamstring or rig the game against bigger corporations via regulations and mandates in order to favor “the little guy.”

    As for Glass-Steagall, the whole thing was a big government scheme and fraud from the beginning. What it did was enure Wall Street banks from competition for commercial banks. And it was not “repealed” in 1999, only parts of it were and even long before then certain other parts had been changed or removed.

    Here’s a great link exposing the mythology of Glass-Steagall: http://www.heritage.org/markets-and-finance/report/the-glass-steagall-act-unraveling-the-myth

    and another about how Glass-Steagall and Dodd-Frank are cut from the same mold: http://www.heritage.org/markets-and-finance/commentary/dodd-frank-and-glass-steagall-consumer-protection-billionaires

    Please Trump, don’t be mislead into fully reinstating a socialist New Deal boondoggle just because its managed to hide it’s failures via good PR.

    Comment by zf — May 4, 2017 @ 5:46 pm

  2. Okay, “Glass-Steagall was not technically repealed in 1999, but it was effectively neutered. Legislation was passed that year that allowed bank holding companies to engage in previously forbidden commercial activities, such as insurance and investment banking”:

    http://www.npr.org/sections/thetwo-way/2015/10/14/448685233/fact-check-did-glass-steagall-cause-the-2008-financial-crisis

    If one doesn’t believe that G-S was a factor in the housing/mortgage lending mess, there’s this: “The 1999 changes to Glass-Steagall led to much bigger banks.”

    Even if you buy the arguments made in the Heritage articles (which I mostly do), I’m not a fan of ever-bigger banks, especially because they’re even more seen now as “too big to fail” than 10 years ago. The belief is that if any other the Big Four go under, confidence tanks, and then so does the economy. I’d rather not test that.

    So the starting point would be to repeal Dodd-Frank and see if the industry starts to have more players and becomes more competitive. If we still have the “too big to fail” problem in several years, or especially if it gets worse, then what?

    Comment by Tom — May 4, 2017 @ 8:29 pm

  3. First off, to address the ultra-liberal NPR’s report, here’s another link again showing that Glass-Steagall was never as strong and absolute as people say it was and that it had been “watered down” long before 1999. Many regulations and limitations are and were STILL left intact and in fact some were even added. You NPR quote simply regurgitates the same standard mythology that has been debunked time and again. In 1999, GS was not “neutered” and BHC’s did indeed engage in many forms of insurance and investment banking long before 1999, including dealing with mortgage backed securities.

    https://www.cato.org/publications/policy-analysis/repeal-glass-steagall-act-myth-reality#full

    Here’s a very relevant quote from said link regarding NPR’s assertion on G-S and bank size: “Even banks’ growth is blamed on the repeal of the Glass-Steagall Act, when in fact barriers to merging with or acquiring banks in other states were removed by the Riegle-Neal Act of 1994, which led to a rapid increase in interstate banking before the GLBA became law in 1999.”

    -

    “Even if you buy the arguments made in the Heritage articles (which I mostly do), I’m not a fan of ever-bigger banks, especially because they’re even more seen now as “too big to fail” than 10 years ago. The belief is that if any other the Big Four go under, confidence tanks, and then so does the economy. I’d rather not test that.”

    Ah, so you are against banks being big, regardless of how and why they do it even if they grow large mostly fairly and it’s beneficial to society and the economy as a whole. Because they then also become “too big to fail.”

    Fine, then. I disagree with the “too big to fail” doctrine but if you truly believe banks need to have their size capped (by who and under what threshold for “too big”, I wonder) there are less destructive ways to do it than by crippling freedom and competition by dictating to banks what services and products they can provide and to whom. Dodd-Frank repeal would be a great start, that I can agree on.

    Comment by zf — May 5, 2017 @ 12:35 am

  4. Thanks for that info. The wave of bank mergers, assuming that 1994 is the real start date and that G-S therefore wasn’t the only driver, was I’m sure helpful at first but, I’m sure with Dodd-Frank’s help during the past six years, has given us the “really too big to fail” banks.

    The “beneficial to society” part of having a few big banks is very questionable (yes, even if you can say that they “earned it” to get that point).

    Concentration of economic power leads to those who have it exercising political control at worst, or extracting political favors at best. If you’ve convinced everyone that you’re “really too big to fail,” you get favors and considerations ensuring that you won’t.

    Comment by Tom — May 5, 2017 @ 4:03 am

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