Imagine a world where banks can appeal to the highest office in the land for help if some pesky financial regulator tries to tell them what to do.
It's easy if you try: In fact, there is a bill slouching its way through the Senate right now that would give the president of the United States the power to slam the brakes on new regulations that banks find insufficiently lenient, The New York Times wrote on Monday. Update: Scott Patterson at the Wall Street Journal wrote about this late on Friday.
The bill, introduced by Sens. Rob Portman (R-Ohio) and Susan Collins (R-Maine), would give some future POTUS -- presumably not the current White House occupant, whom we all know is a bank-hating socialist -- the power to call for a prolonged study of any possible side effects of new regulations.
The current POTUS may already have this power, the NYT notes. And regulators are already supposed to do cost-benefit analyses of new rules they create. Never mind all that; the important thing here is that this legislation would create yet another helpful roadblock, another tactic to delay bank reforms for months while lawyers haggle.
"This legislation would give Wall Street lobbyists another powerful set of tools to delay and derail the implementation of financial safeguards that are needed to protect our economy," the nonprofit group Americans for Financial Reform wrote in a letter to Congress opposing the bill.
Another nonprofit group, Better Markets, today called the bill "a breathtaking, almost inconceivable power give-a-way by Congress to the White House" and "one of the worst ideas from Congress in decades," which is saying something.
The NYT says the bill's future is "uncertain," with Congress unlikely to act on it any time soon. Well, certainly not now anyway, now that the NYT has noticed its existence. But don't think the banks are going to give up on it. This is just the latest in a string of examples of Wall Street pushing back -- with the help of millions in campaign donations and lobbying money -- against new rules Congress and regulators have tried to impose in the wake of the financial crisis.
In fact, just last week, the American Bankers Association formed a SuperPAC to help funnel cash to Senate candidates that want to weaken the Dodd-Frank financial-reform act.
The financial industry has already muddied and delayed Dodd-Frank. It has successfully fought an effort by the Securities and Exchange Commission to reform the money-market industry. It has pushed back efforts by the SEC and the Commodity Futures Trading Commission to regulate credit-default swaps and derivatives trading. With the help of the aforementioned socialist, President Obama, it has rolled back investor protections put in place after the dot-com bubble.
And why does the financial industry have so much cash to spare? It helps that the Obama administration, in what we can only assume is an effort to mask its incorrigible socialism, has docked the industry all of $2 billion in penalties for crisis-causing shenanigans. Compare that to the $200 billion in bonuses Wall Street paid its top executives between 2003 and 2011, according to the nonprofit group Better Markets, and you get a sense for how little the industry's ability to buy politicians and regulators has been crimped.
Meanwhile, those same bank executives have not been bothered -- and apparently won't ever be bothered, according to a report this weekend by the Huffington Post's Ben Hallman -- by criminal charges arising from the financial crisis. Not having to worry about going to prison leaves them plenty of time to think of ways to fight financial regulation.
But don't come away from this thinking that there are no consequences for bank wrongdoing. Far from it: The Wall Street Journal reports that JPMorgan Chase and Citigroup are giving serious thought to trimming the size of the bonuses of top executives at those banks. Why are these banks daring to take a machete to the sacred bonus cow? In the case of JPMorgan, it's because executives oversaw an embarrassing trading loss in credit derivatives. In the case of Citigroup, they came up with an executive pay package so ridiculously untethered from the bank's performance that even typically sheepish shareholders rebelled against it.
But JPMorgan CEO Jamie Dimon, who has long been the nation's loudest voice in the wilderness crying about the evils of regulation, needn't worry about actually getting his pay cut, the WSJ notes: JPMorgan's paymasters "are grappling with the question of how to [cut bonuses] without drastically reducing the executives' take-home pay."
Yes, it is important not to reduce anybody's pay too much. Those lawmakers aren't going to pay for themselves! Unless you ask nicely, maybe.
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