Bernie Sanders' illusion of being a serious candidate for president is collapsing in light of his disastrous interview with the New York Daily News, and his media fans are scrambling to buy him some breathing room.
But they are doing a terrible job. The herd-leader, as always, is the Huffington Post. HP's Washington Bureau Chief Ryan Grim in a grim rebuke to the broad reaction charged that it was the Daily News editors that were getting their facts wrong, not the poor, poor Bernie.
As example, Grim (and the New York Times' Peter Eavis) raises the issue of breaking up banks, a central Sanders campaign theme. Grim posits that Bernie Sanders correctly claimed that the administration - specifically, the Treasury Department - has the authority under President Obama's landmark financial reform law named after its Democratic Congressional sponsors Chris Dodd and Barney Frank to break up banks that are seen as systematically risky.
As the interview went on, though, it began to appear that the Daily News editors didn’t understand the difference between the Treasury Department and the Federal Reserve. Follow in the transcript how Sanders kept referring to the authority of the administration and the Treasury Department through Dodd-Frank, known as Wall Street reform, while the Daily News editors shifted to the Fed.
While it is true that the Daily News editors "shifted to the Fed" while asking about this authority, Bernie Sanders was not able to particularly refute that shift, either.
But the problem with nitpicking at this level, as Grim is doing, is that if you do so, you better have your details right. And Grim does not. The ability to break up banks that pose a systematic risk and are ready to go down, under Dodd Frank, does exist, but it cannot be exercised based on the size of the bank alone. While the authority only applies to the largest banks, in order for it to apply to any bank, it actually has to be close to default or pose a systematic danger. Large institutions that are healthy do not pose such a risk, and Dodd Frank devised a test for institutional solvency that all such large institutions are now passing.
Furthermore, once such a determination is made by the Secretary of Treasury, the actual authority to oversee and implement the liquidation and asset distribution belongs not to the Treasury department but to the Federal Deposit Insurance Corporation, or the FDIC, an independent agency of the federal government.
That Bernie Sanders kept talking about vague platitudes of breaking up banks under authority the "administration" has rather than being able to grasp and articulate the process above, however, is only part of the story of Bernie Sanders not knowing how to break up the banks he so badly wants to break up.
The other part is that Sen. Sanders has no idea whether the administrative process will be enough or if new legislation will be required to implement his vision of breaking up the banks. As even Eavis' generally pro-Sanders commentary points out, asked to describe how he'd do it, Sanders seemed to believe either new legislation or existing Dodd-Frank authority could be used to do it. He seemed to have felt that the legislation he introduced in this regard is optional.
It is not. As discussed, Dodd-Frank only allows for breaking up of the banks - an authority Hillary Clinton has promised to use if necessary - if those institutions pose a risk to the system or are close to financial insolvency themselves. Sen. Sanders' position is to break up the banks based on their size, not based on a risk calculation, because in his mind, the size itself is a big enough risk regardless of an institution's actual financial standing.
The Sanders plan of breaking up banks, therefore, would in fact require new legislation.
Bernie Sanders should know this. Bernie Sanders should know just what type of break-up authority Dodd-Frank allows for and just what he will need new legislation for. He should know this because he has been campaigning with near-exclusive focus on his message of punishing executives and breaking up banks for a year. He should know this because he has claimed to be deeply interested, involved and understanding of the banking system for all of his 25 years in Congress. For someone who claims as much interest in the financial sector as Sanders does, these details should be at the top of mind.
That he does not know this is not a result of an information blackout; it is the hallmark of a man famously angry about the problems yet deeply disinterested in devising solutions beyond a few populist talking points. That he cannot describe existing law on his main campaign issue and is not sure about what additional legal tools, if any, are required to implement what he's selling as his agenda makes a mockery of a serious policy debate.
What all of this means is not simply that Bernie Sanders has badly botched an interview. What all of this means is Bernie Sanders does not know what he's talking about.