Here we go again. Another round of the game we call Congressional Creep. After months of haggling and debate, Congress finally passes reform legislation to fix a serious rupture in the body politic, and the president signs it into law. But the fight's just begun, because the special interests immediately set out to win back what they lost when the reform became law.
They spread money like manure on the campaign trails of key members of Congress. They unleash hordes of lobbyists on Capitol Hill, cozy up to columnists and editorial writers, spend millions on lawyers who relentlessly pick at the law, trying to rewrite or water down the regulations required for enforcement. Before you know it, what once was an attempt at genuine reform creeps back toward business as usual.
It's happening right now with the Dodd-Frank Wall Street Reform and Consumer Protection Act -- passed two years ago in the wake of our disastrous financial meltdown. Just last week, for example, both parties in the House overwhelmingly approved two bills that already would change Dodd-Frank's rules on derivatives -- those convoluted trading deals recently described by the chairman of the Commodity Futures Trading Commission as "the largest dark pool in our financial markets."
Especially vulnerable is a key provision of Dodd-Frank known as the Volcker Rule, so named by President Obama after the former Federal Reserve Chairman Paul Volcker. It's an attempt to keep the banks in which you deposit your money from gambling your savings on the bank's own, sometime risky investments.
It will come as no surprise that the financial sector hates the Volcker Rule and is fighting back hard.
On March 26, Robert Schmidt and Phil Mattingly at Bloomberg News published an extensive account on the coordinated campaign being waged by the banking industry to persuade regulators to scale back reform. Headlined "Bank Lobby's Onslaught Shifts Debate on Volcker Rule," their report chronicles the many ways in which banks are turning up the heat, enlisting the help of clients, customers, and other companies, among others. "Some banks recommended consultants and law firms," they write, "... to help clients write letters arguing that the proposed language defines proprietary trading too broadly. Partnering with trade associations, the banks also commissioned studies, tested messages with focus groups, distributed talking points and set up a phone hotline for Capitol Hill staffers."
The banks found another ally in the U.S. Chamber of Commerce, the biggest pro-business lobby in America, which helped put together a coalition of companies, including Boeing, DuPont, Caterpillar and Macy's department stores.
In one instance, the banking behemoth Credit Suisse got an assist from a man named Robert Auwaerter, who oversees hundreds of billions as the fellow in charge of the fixed income group at Vanguard Group, a mutual fund company. He came to a briefing Credit Suisse held for three congressmen who belong to the New Democrats, a group of House members known "for their centrist and pro-business leanings."
Auwaerter led the 90-minute meeting and said the three Democrats "were really receptive to our comments." We'll just bet. According to the Bloomberg News reporters, one of them, Joe Crowley of New York, "pushed back at one point, telling the group that he'd recently marched in a Lunar New Year parade in Queens with Thomas DiNapoli, the New York State Comptroller who oversees a state retirement fund of about $140 billion. Why wasn't DiNapoli complaining about Volcker?
"The asset managers told Crowley they have a closer view of how the markets work than the pension funds that hire them. The proposed rule, they said, would slow bond trading, making it harder for them to execute their strategies. They predicted that would mean lower returns for funds like DiNapoli's, as well as for 401(k) plans and individual investors."Less than two weeks after the Credit Suisse visit, 26 New Democrats signed a letter to regulators noting that 'millions of public school teachers, police officers and private employees depend on liquid markets and low transaction costs' to retire with 'dignity and ease.'"
In other words, fellow members and regulators, lighten up on the Volcker Rule! A thick wallet helps, of course -- lobbyists for the financial sector spent nearly half a billion dollars last year. And the congressional newspaper The Hill reports,
"Members of Congress pressuring regulators to go easy on the 'Volcker Rule' received roughly four times as much on average in contributions from the financial industry than lawmakers pushing for a stronger rule since the 2010 election cycle, according to Public Citizen, a left-leaning group advocating for strict implementation."When it is all added up, opponents of a tough Volcker Rule received over 35 times as much from the financial industry -- $66.7 million -- than advocates for a strong stance, who received $1.9 million."
All of which makes it darkly amusing to read in the April 4 edition of the financial newspaper The American Banker that, in the words of Roger Beverage, president and CEO of the Oklahoma Bankers Association, "Congress isn't afraid of bankers. They don't think we'll do anything to kick them out of office. We are trying to change that perception."
Which is why Beverage and his colleague are creating the industry's first super PAC. They're calling it -- we're not making this up -- "Friends of Traditional Banking," a smokescreen of a sobriquet if we ever heard one, vaguely reminiscent of the Chicago mobsters in Billy Wilder's Some Like It Hot who dub themselves "Friends of Italian Opera."
Matt Packard, the super PAC's chairman, told The American Banker, "If someone says I am going to give your opponent $5,000 or $10,000, you might say, 'Yea, okay.' But if you say the bankers are going to put in $100,000 or $500,000 or $1 million into your opponent's campaign, that starts to draw some attention." Don Childears, president and CEO of the Colorado Bankers Association chimed in, "It would be nice to sit on the sidelines or sit on our hands and say, 'Oh we don't get involved in that stuff,' but that just means you get run over. We need to get more deeply involved as an industry in supporting friends and trying to replace enemies."
All of which demonstrates, as per Bloomberg News, "that four years after Wall Street helped cause the worst economic downturn since the Great Depression and prompted a $700 billion taxpayer bailout, its lobby is regaining its power to blunt or deflect efforts to rein in the banks."
Nonetheless, just last week, the Wall Street Journal reported on how a movement to challenge big banks at the local level has gained momentum around the country. Activists want to restructure Wall Street from the bottom up. As a result, the Los Angeles City Council is considering an ordinance that would gather foreclosure and other data on banks that do business with the city. Officials in Kansas, City, Missouri, passed a resolution directing the city manager to do business only with banks that are responsive to the community. And here in New York City, legislation is pending to require banks to reinvest in local neighborhoods if they want to hold city deposits. Similar actions are underway in other cities.
They're turning up the heat. You can, too.
Moyers & Company airs weekly on public television -- check local listings. See more features -- including our all-new TAKE ACTION page -- at BillMoyers.com
Previously posted on Billmoyers.com.
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Dylan Ratigan: Is the Federal Reserve Coming Clean?
Pure drama. Political theater allows media pundits and political hacks to detract and confuse.The proverbial "elephant in the room" is the fact that our 30-some-year experiment in "free trade" isn't working because currency, living standards, compensation and taxation must be similar or the wealth simply transfers.
Globalization is the mother of all "too big to fails" in which the world economy is now so enmeshed that what bubbles as one bursts as one. Wages in the US have been stagnating since the 1970s, on par with influx of cheaper foreign goods and the outsourcing of US jobs. Initially, displaced American workers could retrain, go to school and grab another seat in the game of "economic musical chairs". But we're at the stage now where there are fewer and fewer chairs left to grab. Rather than fix the "real economy", Wall Street, which has profited at every step from the fire sale of America, insists on "creative" moneymaking schemes (derivatives), persisting in their attempts to buy off our elected leaders to mutually inflate one another's pocketbooks.
To end the trend we MUST reform campaign finance!
Do you think that a congress of Joe the Plumbers, Bob the Backhoe Operators and Jill the Hairdressers can govern functionally?
And my avatar is cooler than yours.
And you wish your avatar was as cool as mine.......lulz
Don't minimize the cost by emphasizing only one part. More like 4 to 6 trillion when all counted. Fully a third of the entire economy.
Jeffrey Sachs said it best in his recent book: "People don't know what they want. The media misrepresents the people's views. And politicians do whatever they want/are told regardless of the people's views." [paraphrase] Local activism fixes the first. How do we fix the other 2?
The 1973 Lewis Powell memo challenged corporate and ruling class America to confront all of the new freedoms and challenges to authority that had arisen in the 60's and 70's. They listened and in the ensuing years slowly 'bought' the changes they wanted. They were clever and subtle and like a frog in a gradually warming pan of water, the population acceded to the changes. Getting back some of that freedom and justice will take time; even slowing down the transition to further oligarchy will take time. The economic rules now favor the elites; the police state now favors the elites (cf. Patriot Act 1&2, NDAA, HR 347, repeal of Posse Comitatus, TSA); the monetization of our elections also favors elites, though having a choice between bad and worse is really no choice; perpetual war (military,drugs,terror) dis-favors the citizenry.
Do we as a people have the discipline to resist these attacks on our constitution and society? Will we avoid the divisive distractions of the Right vs the Left that only serves the status quo?
Thank you Bill and Michael for shining light in the darkness.
What are Lobbyists? They are people who bribe Congress in return for money paid to them. That is it, end of story.
Congress understands what laws are written and what they mean, and yet here comes a lobbyist who SUDDENLY can convince an elected official to change their mind. Gee, how does that happen? They promise them campaign money, fundraising etc...
Our elected officials sell their votes to the highest bidding lobbyist. End of story. It is criminal and needs to stop. There is NO other reason that these supposedly smart elected officials need lobbyists to come in and "Explain" the laws to them.
Totally false.