Republican presidential candidates Ted CruzRafael (Ted) Edward CruzSenate panel advances bill blocking tech giants from favoring own products Lawmakers press Biden admin to send more military aid to Ukraine On The Money — Ban on stock trading for Congress gains steam MORE and John Kasich sparred during Tuesday night's debate in Milwaukee on whether to let big banks fail or bail them out in crisis.
After Cruz flatly stated that he would let a massive financial institution like Bank of America fail without government aid, Kasich dismissed the idea by arguing individuals in charge have to make tougher calls.
“When a bank is ready to go under and depositors are getting ready to lose their life savings, you just don’t say we believe in philosophical concerns,” the Ohio governor said at the contest hosted by Fox Business Network. “Philosophy doesn’t work when you run something. ... We need an executive who's been tried, has been tested.”
The Texas senator countered, criticizing Kasich for being willing to bail out a bank after the 2008 bailouts, which policymakers argued at the time were necessary but the public still reviles.
“Why would you then bail out rich Wall Street banks and not Mom and Pop?” Cruz asked.
Kasich argued that banks need to hold higher capital levels to reduce the need for a potential bailout, but Cruz kept up the pressure.
“What would you do if the bank was failing?” he asked.
“I would not let the people who put their money in there all go down,” Kasich replied.
He said he would "separate those people who can afford it versus those people who are the hard-working folks who put their money in those institutions," a comment that drew boos from the audience. "When you are faced ... with banks going under and people who put their life savings in there, you’ve got to deal with it. You can’t turn a blind eye there.”
For his part, Cruz said he would not take any steps as president to save a failing bank but suggested that the Federal Reserve could step in and use its powers as a lender of last resort to try and help save it.
The exchange between Kasich and Cruz was part of a broader debate about financial regulation during the debate.
Former Florida Gov. Jeb Bush blasted the Dodd-Frank financial reform law, arguing it heaps regulations on community banks while banks more resources can handle it. He also pushed for higher capital requirements for banks as a way to help protect against future bailouts.
Both Kasich and Bush have ties to Lehman Brothers, the investment bank whose collapse helped set off the 2008 financial meltdown. Kasich worked as a managing director for the bank’s Ohio office, while Bush worked as an adviser for the bank.
Sen. Marco Rubio (R-Fla.) also called for the outright repeal of Dodd-Frank.
--This report was updated on Nov. 11 at 7:19 a.m.