Bernie Sanders and Hillary Clinton engaged in their sharpest, testiest debate yet ahead of next week's New York presidential primary, but Sanders' barbs did little to knock Clinton off stride—or to clarify his own plan for overhauling Wall Street.
The debate on Thursday, ahead of the April 19 Democratic primary, gave Sanders a chance to fill in the blanks on how he'd break up big banks and keep them from sinking the economy in a global meltdown, a key part of his campaign. Instead, he retreated to familiar talking points while Clinton seized the initiative on the issue, even as she defended her past paid speech-making for Goldman Sachs Group Inc.
Sanders struck early, questioning Clinton's fitness to be president by revisiting her support for the Iraq war and trade agreements and ties to super-political action committees and Wall Street donors. “I don't believe that is the kind of judgment we need to be the kind of president we need,” Sanders said.
“Talk about judgment,” Clinton shot back, saying that Sanders had been unable to explain his own banking overhaul plans days earlier in an interview with the New York Daily News editorial board. “Talk about the kinds of problems he had answering questions about even his core issue.” Sanders did not directly address her challenge.
The debate at the Brooklyn Navy Yard was in the same borough as Clinton's headquarters but Sanders clearly had the hometown crowd, who cheered “Ber-nie! Ber-nie!” for the Vermont senator and at one point jeered Clinton for refusing to release transcripts of her Wall Street speeches.
But the debate seemed unlikely to help Sanders close a 10- to 20-point gap in most major polls in the state, which Clinton represented for eight years in the U.S. Senate. She also frequently mentioned President Barack Obama, who remains popular in New York.
Sanders suggested Clinton had been soft on Wall Street and corporations because of her financial ties. Clinton noted Obama also had a super-PAC and took tens of millions of dollars from such contributors—just as Clinton has.
“This is not just an attack on me, it's an attack on President Obama,” Clinton said at one point. “This is a phony attack that is designed to raise questions when there is no evidence.” She said Sanders was unable to point to a single specific instance of her being improperly influenced by Wall Street.
In another instance, she lumped Sanders in with Republican front-runner and Manhattan real-estate mogul Donald Trump for having not yet released his tax returns. That prompted Sanders to pledge to release his 2014 returns on Friday.
Jeff Weaver, campaign manager for Sanders, argued his candidate had a break-through performance by attacking Clinton's reliance on corporate donors and calling on her to release transcripts of her paid speeches. “On issues after issue, he was able to show that his position was more in line with Democratic voters,” Weaver told reporters after the debate, calling it Sanders' “strongest debate of the year.”
Clinton campaign chairman John Podesta acknowledged that Sanders “had his moments in this debate” and “he came in throwing a lot of punches” but “I don’t think that he did anything that’s likely to be a game changer in New York.”
Sanders won cheers for noting his longtime support for a $15-an-hour national minimum wage, higher than Clinton's proposed $12-an-hour platform. Clinton said that she too would sign a $15-an-hour law if Congress passed it but that “we've got to be smart” about a realistic plan to raise the national rate from $7.25 an hour.
Sanders sought to paint Clinton's approach as overly cautious. “History has outpaced Secretary Clinton,” he said.
On the topic of banks, Sanders calls for breaking up big financial firms immediately, but didn't specify exactly how that would be done. Clinton says she'd also take the banks apart, but only if they trigger red flags under existing law—namely, the Dodd-Frank Act.
“I don't need Dodd-Frank now to tell me that we've got to break up these banks,” said Sanders, who said the need to cut the size of the companies is obvious.
“We have a law,” Clinton replied. “You don't just say, ‘Go break them up.’”
And at one point, Sanders erred in describing such restructuring. Sanders said he would let the lenders make their own decisions about how they'd get smaller, which he said would be better than having the Treasury Department do it. But in fact, it's the Federal Reserve and Federal Deposit Insurance Corp. that have the existing, hands-on power to influence banks' structure, not Treasury.
Clinton said it should be regulators who make such calls under the law, though she argued that executives should share the pain when their banks err. And when it's criminal, none of those bankers is “too powerful to jail,” she said.
This week, key federal agencies signaled that some firms on Wall Street could still need taxpayer rescues in a future crisis. Banking regulators handed most of the U.S. megabanks a major defeat when they told the companies their strategies for handling their own hypothetical bankruptcies won't work.
The agencies sent JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co. and other banks back to the drawing board on their so-called living wills.
The industry's embarrassing setback could lend credence to Sanders's arguments that the Dodd-Frank Act failed to rein in bankers after the 2008 crisis, though he didn't take advantage of the topic when moderators raised it. Clinton has maintained a more nuanced position, saying the focus going forward should shift to “shadow banking”—financial firms such as hedge funds that operate outside of the reach of bank regulators.
“You've got to look at the whole picture,” she said.
Clinton has continued to receive campaign donations from her former constituents in finance. Clinton is also advised by former Goldman Sachs Group Inc. executive Gary Gensler, who ran the Commodity Futures Trading Commission until 2013.