Amid all the press preening and words of tepid support from reformers, banks may have much to love about Senator Chris Dodd's latest piece of legislation.
On his blog, the Roosevelt Institute's Mike Konczal is wracking his brain to find something that Goldman Sachs lobbyists will absolutely loathe about the Dodd bill -- in fact, he wants you to help him.
His final verdict: "If I was a Goldman lobbyist, I'd probably shrug and go 'eh, pass it.'"
One key issue in the bill is how it plans to wind down Too Big To Fail banks. The bill calls for the nation's largest financial firms to compose what are effectively "living wills" that detail their plans to resolve their assets in the event of their demise.
But, under Dodd's bill, the process of winding down a systemically important financial firm -- which was done with such urgency and haste over a single weekend during the last days of Lehman brothers -- seems fraught with complexity and time-consuming red tape.
Ezra Klein, for his part, is pleased that this bill gives regulators the authority to act during a crisis, but isn't sure they actually will: "you can lead a regulator to information, but you can't make him drink."
The Washington Post's Steven Pearlstein isn't thrilled by what he sees as obvious political concessions in "Dodd 2.0". The bill "creates exactly the kind of complexity, the opportunities for regulatory arbitrage and the lack of accountability that got us into this mess in the first place," Pearlstein writes.
Surely the strongest section of the latest Senate bill is the one, crafted by Mark Warner (D-Va.) and Bob Corker (R-Tenn.), that would bury the idea that there are banks that are too big to fail and therefore must be bailed out when they get in trouble. Under this proposal, any big bank facing possible insolvency could be taken over and forced into an orderly, government-supervised liquidation, with shareholders and managers losing everything and unsecured creditors forced to accept losses. But even that section reflects distaste with recent bailouts given its arcane, convoluted process for deciding whether to pull the plug, one that involves the Fed, the systemic risk council, a panel of bankruptcy judges in Delaware, the Treasury secretary and expedited legal appeals all the way to the Supreme Court. Call it checks and balances on steroids.
Or as Konczal put it: "I'm sure by the time all the banking lobbyists are done the Senate bill will become one of the key primary sources for students 100 years from now on how broken the Senate of the early 21st Century was. But in terms of lobbying there seems to be nothing that needs to move. Which should worry us all."
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