On Thursday, White House senior adviser Larry Summers came to the defense of "punk staffers" trying to write new financial regulatory reform legislation, pushing back against House Minority Leader John Boehner (R-Ohio) who told the banking industry a day earlier that Wall Street shouldn't let such aides push it around.
"Don't let those little punk staffers take advantage of you, and stand up for yourselves," Boehner told that vase-full of wilting lilies known as the American Bankers Association on Wednesday.
"I do not think that those who want to address these issues are 'little punk staffers' who need to be stood up to," Summers said in a speech at the National Press Club.
Summers noted that the bank lobby is the last interest group in need of a bucking up, given that it has "spent one million dollars on lobbyists per member of Congress."
"At a moment when there are four lobbyists per member of the House and Senate working on this issue, we in the Administration do not believe that the prominent issue is allowing bankers to stand up for themselves," reasoned Summers.
Those hundreds of lobbyists are busily working to poke holes in the Wall Street reform package moving through the Senate. Relying on an army of sympathetic small businesses, banks are trying to carve out major exemptions in the derivatives market. Summers strongly argued that no such loopholes should be allowed.
"We need a comprehensive regulatory framework for over-the-counter derivatives. It should apply to all dealers and all derivatives -- wherever they are traded, wherever they are marketed, whatever they call themselves," he said.
Summers also called for a strong, independent Consumer Financial Protection Agency and noted that the president recently reiterated his support.
He also shot down the lobbyists' argument that if banks are forced to pay into a fund to pay for future bankruptcies, losing that capital will result in a drastic reduction in lending. Yet, Summers pointed out, banks have insisted that paying billions in bonuses - an equal loss of capital - has no effect whatsoever on lending abilities. So which is it?
"I have heard a lot, and I'm not that easy to surprise," said Summers. "When I heard the industry, and prominent members of the industry argue, within successive weeks -- perhaps in some case within successive days or hours -- that on the one hand any suggestion that the payment of bonuses by paying capital out of the financial institutions and thereby limiting their capital would inhibit lending and therefore hurt the economy, that that was just a demagogic suggestion that nobody who understood industry could possibly make -- and then heard prominent trade associations for the same group, just days later, suggest that a $10 billion a year fee would cost the economy $1 trillion in lending, based on some calculation about depleted capital -- I had to wonder about the motives of those who were speaking."
UPDATE: Barney Frank (D-Mass.), chairman of the committee that employs many of those staffers, sent a letter to Boehner calling for an apology. "I urge you to confine your campaign against financial regulation to debates with other Members of Congress, and not engage in this sort of personal attack on staff members who, as you know, are constrained by our rules against even defending themselves from your name-calling," wrote Frank.
Read the letter:
March 18, 2010
The Honorable John A. Boehner
U.S. House of Representatives
Washington, D.C. 20515
Dear Minority Leader Boehner,
I was very disappointed to read a quote from you in the Market Watch article by Ronald Orol, on March 17th, in which you say "Don't let those little punk staffers take advantage of you and stand up for yourselves."
I am appalled that a Leader of the House, who must know what good work is done by our staffs, would take such an inaccurate cheap-shot at these people, for the purpose of ingratiating himself with bankers or any other group. As Chairman of the Financial Services Committee, I work closely with a large number of the staff members whom you are demeaning by this statement, and while I obviously have closer working relationships with the members of the majority staff, I am familiar with the work done by a number of the minority staff members as well, both for the Committee and on personal staffs. Your reference to "punk staffers" trying to "take advantage" of people in the financial industry is wholly unfair to a lot of hardworking men and women, the majority of whom, in my judgment, could be making more money if they were working elsewhere, and working under less stressful conditions and shorter hours. It is of course possible that you were misquoted, and if that is the case, I urge you to quickly make that clear. But if Mr. Orol accurately quoted you in referring to the people who work so hard in the public interest as "little punk staffers," I urge you to apologize to them.
I understand that you differ with what we and the majority are doing in what we believe is appropriate, tough regulation of the financial industry. And of course you are free to defend that industry and work with them to try to defeat those regulations. But picking on members of the staff is unworthy of you. I urge you to confine your campaign against financial regulation to debates with other Members of Congress, and not engage in this sort of personal attack on staff members who, as you know, are constrained by our rules against even defending themselves from your name-calling.
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