Let banks fail

Hillary Clinton tells Colbert: I'd let big banks fail

By Daniel Strauss

Hillary Clinton would not bail out big banks on the verge of failure if she faced a situation like the 2007 financial crisis, she told Stephen Colbert Tuesday night.

Clinton, in an interview with the host of CBS' The Late Show, was asked Tuesday night, "If you're president and the banks are failing, do we let them fail this time?"

The former secretary responded 'yes,' multiple times.

"First of all, under Dodd-Frank, that is what will happen because we now have stress tests and I'm going to impose a risk fee on the big bank if they engage in risky behavior," she elaborated. "But they have to know, their shareholders have to know that yes, they will fail. And if they're too big to fail then under my plan and others that have been proposed, they may have to be broken up."

"Because if you can't manage it, it's more likely to fail," she said.

Clinton's answer to Colbert was one of the most direct she's given on the question of what she would do if elected president and some of the nation's largest banks fell into serious trouble during a Clinton administration.

Earlier in the month, her campaign rolled out a set of proposals that included taxing high-speed traders and penalizing executives who don't bear any of the burden for financial wrongdoing while their shareholders do.

Clinton's plans did not include a proposal to break up "too big to fail" banks or details on cutting down on risks to the economy, both of which progressives like Sen. Elizabeth Warren of Massachusetts insist are essential for any such Wall Street reform plan.