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 In her first major economic speech of the 2016 election campaign,
Clinton assailed financial institutions in detailed terms as she
pledged to cut the income gap and spur wage growth for ordinary
Americans.
The Democratic front-runner stopped short of calling for the
break-up of big banks as some liberal Democrats have sought. Clinton
has no plans to reinstate the Glass-Steagall Act to split commercial
banks from their investment operations, Clinton economic adviser
Alan Blinder told Reuters.
Nevertheless, Clinton said that if elected in November next year,
she would appoint strict overseers to ensure that financial firms
never again indulge in the kind of risky behavior that helped cause
the 2008 banking crash.
Speaking at a liberal university in Manhattan's Greenwich Village,
Clinton, a former secretary of state, devoted an unexpectedly large
part of her address to Wall Street.
Teresa Ghilarducci, a labor economist at The New School who has been
informally advising Clinton's campaign, said her remarks on Wall
Street ended up being lengthier than a draft circulated on Friday
suggested they would be.
Clinton laid out a series of ideas that could change the way major
U.S. companies work. She said banks cannot be "too big to fail."
 She is the clear favorite to win the Democratic nomination but faces
a growing challenge from Bernie Sanders, a U.S. senator from Vermont
and self-styled socialist who is drawing large crowds at campaign
events.
Despite the tough talk, Clinton and her husband, Bill Clinton, have
deep ties with Wall Street. Both have been paid handsomely for
speeches by major financial and investment institutions in recent
years, including Goldman Sachs and the Carlyle Group.
Hillary Clinton, who represented Wall Street as part of her
constituency when she was a U.S. senator for New York, has long
looked to people in the financial industry for large campaign
donations.
'TOO BIG A PROBLEM'
Clinton said in her speech: "As we all know in the years before the
crash, financial firms piled risk upon risk, and regulators in
Washington either couldn’t or wouldn’t keep up."
"I will appoint and empower regulators who understand
that too big to fail is still too big a problem," Clinton said.
She proposed encouraging firms to share profits with employees, and
ensuring that stock buybacks are not used just for an immediate
boost in share prices. She said she will announce a plan to reform
capital gains taxes to reward longer-term investments and not just
quick trades.
Clinton hinted at tougher regulations to stem the serious risks she
said were emerging from the shadow banking system of hedge funds,
high-frequency traders and non-bank finance companies. She referred
to them as "so many new kinds of entities which receive little
oversight at all."
Clinton put the fight for higher wages for working Americans at the
heart of her economic agenda, although her speech was short on
specific policy proposals.
 "The measure of our success must be how much incomes rise for
hard-working families, not just for successful CEOs and money
managers," she said.
BEYOND 'DODD-FRANK'
Clinton will unveil more specifics in a series of speeches in coming
weeks. Liberal Democrats flirting with Sanders are seeking more
details of her plans on increasing the minimum wage, creating
universal preschool and investing in infrastructure.
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Putting some meat on the bones of her economic policy could divert
focus from issues dragging on Clinton's popularity, including a
controversy over her use of a private email account while she was
America's top diplomat.
Clinton said Americans lose job protection and benefits when they
rely too heavily on sources of income like renting out a spare room,
designing websites or driving their own car.
Those remarks were read as directed at start-ups such as car ride
company Uber and short-term home rental service Airbnb, which are
part of the "sharing economy."
Republican presidential hopeful Rand Paul described Clinton as out
of touch.
"America shouldn’t take advice on the sharing economy from someone
who has been driven around in a limo for 30 years,"
Paul wrote on Twitter.
Clinton promised to "go beyond" the 2010 Dodd-Frank law that imposed
stronger regulations on the financial industry after the banking
crash.
But Blinder, an economist who advises Clinton's campaign, told
Reuters the candidate did not plan to resurrect the
Glass-Steagall Act that split commercial banks from their investment
operations.
The act, passed during the Great Depression in the 1930s, was
repealed in 1999.
Both Sanders and Maryland Governor Martin O'Malley, another
Democratic challenger for the nomination, support breaking up the
banks.
In her speech, Clinton called out HSBC bank for allowing itself to
be used to launder drug money from Latin America in a case that led
to the bank receiving a record $1.92 billion in fines in the United
States.
An HSBC spokesman, Rob Sherman, replied to her comment.
"As the Justice Department has noted, we have made material progress
toward meeting the most stringent compliance standards imposed to
date upon a global financial institution," he said.
Clinton also criticized other big banks that have pleaded guilty to
conspiring to manipulate currency exchange and
interest rates.
Her speech earned an unusual level of approval from a group that
represents the Democratic Party's liberal wing. The Progressive
Change Campaign Committee, a political fundraising group, said the
address "shows that Clinton sees a rising economic populist tide in
our politics and wants to be part of it."
(Additional reporting by Amanda Becker; Writing by Alistair Bell;
Editing by Howard Goller)
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