Why Clinton’s pick for vice president might contradict her message on Wall Street

From The Washington Post:

Hillary Clinton has picked Tim Kaine as her running mate, despite criticism from liberal Democrats for his lenient positions on Wall Street. A letter the senator from Virginia sent to the Federal Reserve earlier this week shows why they’re frustrated.

In the letter, Kaine and three other senators ask Janet Yellen, the head of the central bank, and her colleagues to exempt some banks from a requirement that they report important data on their financial stability every day.

“The daily reporting requirements may impose significant burdens on the firms without associated benefits to the financial system,” writes Kaine along with Sens. Mark Warner (D-Va.), Gary Peters (D-Mich.) and Robert Casey Jr. (D-Pa.).

This rule forces financial institutions to calculate their liquidity — a measure of how easily banks can pay any debts they owe in the short term. Calculating liquidity can be a complicated process for a large financial institution, and without having to meet daily requirements, banks would be able to make riskier, more profitable investments.

In a financial panic, it can be difficult for banks to secure new loans, so they must be able to cover their existing debts without borrowing money from another bank. If depositors doubt a firm’s ability to do so, there could be a run on the bank, forcing taxpayers to bail out the institution.

For that reason, from the perspective of some liberal reformers, the daily requirement is “incredibly important” for containing the fallout from a future financial crisis, said Mike Konczal of the Roosevelt Institute in Washington.

Confidence can evaporate quickly in a panic, Konczal noted. “It doesn’t matter if you could pay me next year or pay me next month if you have to pay me tomorrow,” he said.

Kaine and his colleagues agree that the requirement is important, but they argue it should apply only to the very largest …

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