NEW YORK Stepping up her rhetoric against Wall Street, U.S. presidential candidate Hillary Clinton vowed on Monday to tighten oversight of the financial industry and warned of serious risks emerging in the "shadow banking" industry.
In her first major economic speech of the 2016 election campaign, Clinton bashed financial institutions in unexpectedly detailed terms as she pledged to cut the income gap and spur wage growth for ordinary Americans.
But the Democratic front-runner stopped short of calling for the break-up of big banks, as sought by liberal Democrats, if she wins the November 2016 race for the White House.
Under pressure from a campaign rival on the left, Clinton said 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, she said banks cannot be "too big to fail."
"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," she said at The New School.
"I will appoint and empower regulators who understand
that too big to fail is still too big a problem," Clinton said.
Clinton laid out a series of ideas that would change the way major U.S. companies work.
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.
The former secretary of state said she will announce a plan to reform capital gains taxes to reward longer-term investments and not just quick trades.
She hinted at tougher regulations to answer the serious risks she said were emerging from the shadow banking system. She described hedge funds, high-frequency traders and non-bank finance companies as "so many new kinds of entities which receive little oversight at all."
A former first lady and U.S. senator, Clinton is the clear favorite to win the Democratic nomination but faces a challenge from Bernie Sanders, a U.S. senator from Vermont and self-styled socialist who is drawing large crowds at campaign events.
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.
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 will unveil more specifics of her economic policy in a series of speeches in coming weeks. Liberal Democrats flirting with Sanders seek more details of her plans on increasing the minimum wage, creating universal preschool and investing in infrastructure.
On Monday, she promised to "go beyond" the 2010 Dodd-Frank law that imposed stronger regulations on the financial industry.
But Alan Blinder, an economist who advises Clinton's campaign, told Reuters she had no plans to reinstate the
Glass-Steagall Act to split commercial banks from their investment operations.
Clinton devoted an unexpectedly large part of her speech to Wall Street. Excerpts from the address had been given to the media in the days leading up to Monday.
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.
"They were very expanded in a way that kind of changed the meaning, there was a lot more detail," she said after the speech.
It remains unclear how her tough language might affect the deep ties Clinton and her husband, Bill Clinton, have with Wall Street. Both have been handsomely paid for speeches by major finance 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.
In her speech, she 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.
Clinton also railed against other big banks for corporate malfeasance, without naming them.
"Five major banks pleading guilty to felony charges for conspiring to manipulate currency exchange and interest rates. There can be no justification or tolerance for this kind of criminal behavior," she said.