Hillary Clinton's choice of Tim Kaine as a running mate is an affront to the youthful, vibrant, leftward challenge she faced in the Democratic primary from Bernie Sanders. To those who supported Sanders, as I did, it's a bummer, and it shows something of Clinton's true colors. Yet on one of the issues Kaine is currently being pilloried for, he may come as a blessing in disguise, especially in light of his background in Catholic social teaching.
The matter in question is the big, bad banks. According to The Intercept, Kaine "goes to bat for banks"; miming essentially the same material, Common Dreams frets that Kaine "lets big banks know he's in their corner." But the material in question is not actually about "big banks." It's about two recent letters he signed that implored officials to ease the regulations designed for too-big-to-fail mega-banks on community banks and credit unions (joining a largely Republican set of legislators) and on regional banks (along with fellow Democrats).
The financial regulations rightly imposed after 2008, it is true, did not adequately distinguish between Goldman Sachs and your neighborhood credit union, which had little or nothing to do with the meltdown. This, in turn, has made it difficult for community-based finance to emerge as viable competition, which may have been the purpose of the Wall Street agents who had a hand in crafting the legislation. Fostering widespread, smaller-scale competition for Wall Street is a constructive counterpart to Sanders' call for breaking up the big banks into pieces; it also has the virtue of being highly bipartisan—it's something even Jeb Bush talked about back when he had a shot at the Republican nomination.
The problem, as The Intercept contends, is that deregulated smaller banks could become funnels for abusive practices, using financial instruments from Wall Street to inflict damage on their communities. It's probably true that this is what some bankers, and their politician friends, would like to do. But it's also true that credit unions and smaller banks are more accountable to their communities and their customers; their incentive is fundamentally less strong to screw people over. So, where do Kaine's sympathies lie?
These recent letters, so far, are being presented as almost the sole basis for Kaine's sympathy for banks, but he has a longer track record to consider. On the one hand, a regional bank he has vouched for in the Senate is Capital One, a controversial Northern Virginia-based outfit whose executives have contributed generously to his campaigns. On the other hand, he has been an ongoing supporter of democratic, member-owned credit unions, garnering an endorsement in 2012 from the Virginia Credit Union League.
"I have great respect for credit unions and their ‘people helping people’ philosophy," he said at the time. "Washington needs to ensure the nation’s ‘Main Street’ financial institutions can remain strong, innovative and vibrant for the good of working Americans and our communities." The Credit Union National Association, which represents U.S. credit unions, put out a press release to welcome the news of Kaine's new role.
Much has been said about the role of Kaine's Catholic faith in guiding his positions on abortion and capital punishment, as well as in inclining him to do missionary work in Honduras and learn Spanish. But what about his economic positions?
U.S. Catholic economic thought in recent decades has been mostly indistinguishable from U.S. economic thought in general. But that has not always been the case. Before World War II, many Catholics were strident supporters of distinctive, solidarity-based forms of economy, representing a kind of third way between robber-baron capitalism and authoritarian communism. Economist Msgr. John Ryan, whose ideas contributed to the development of the New Deal, was a proponent of credit unions and other forms of cooperative enterprise. The first credit union in the United States, in fact, was St. Mary's Bank, born out of a Catholic parish in New Hampshire.
I don't know how much this tradition of Catholic credit unionism has impacted Kaine, but I doubt the connection is entirely coincidental.
All this is to say that the very reasons frustrated progressives are attacking Kaine may be precisely the reasons they should consider supporting his bipartisan, highly plausible strategy of support for community-based alternatives to Wall Street. If Sanders had been successful in being elected president and breaking up the big banks—say, by re-instituting the Glass-Steagall Act that Bill Clinton dismantled—it would result in smaller financial institutions, like those Kaine's recent activities support. Of course, it's essential to ensure that community-based financial institutions are bound to regulations that prevent them from manipulation by Wall Street against the interests of their constituencies. But in order for such institutions to be viable at all, they can't be held to the kinds of intensive regulatory requirements that were designed for much larger and more dangerous institutions.
If we're going to create an economy that is truly democratic, and truly in service of human needs, we have to begin by distinguishing one kind of finance from another. There are real differences between a bank designed to extract money from customers to enrich its shareholders and a bank whose customers are its shareholders; a bank firmly grounded in a community will behave quite differently from one that reaches effortlessly across borders. Tim Kaine appears to recognize these distinctions, as does the Catholic tradition that formed him. His critics should too.
