Amnesia is bipartisan.
The one thing, apparently, that can get Democrats and Republicans working together is a desire to wreck protections for the economy and investors that were put in place not long ago.
The House overwhelmingly passed on Tuesday the so-called JOBS Act, which purports to make it easier for small companies to raise money by removing some investor protections put in place after the dot-com bubble and bust and the Enron accounting scandal that occurred just a decade ago.
President Obama threw his weight behind the bill, which will mainly provide jobs for criminals, financial journalists and criminologists, Jesse Eisinger of ProPublica and William Black of the University of Missouri have written.
Meanwhile, the Dodd-Frank financial-reform law, which is younger than my pre-school children, is already being worked over by an array of lawmakers from both sides of the aisle.
Barney Frank (D-Mass.), the co-author of the Dodd-Frank act, has asked regulators to simplify the law's Volcker Rule, which forbids proprietary trading, or banks gambling with their own money.
Under siege from the lobbying hordes, federal regulators are probably going to miss a deadline to produce a final version of the Volcker Rule, so Frank asked them last week to propose something simpler to get them by. He also asked for a gentle, two-year acclimation period for introducing the rule.
The complaint that the Volcker Rule is overly complicated comes straight out of the Wall Street lobbying playbook and is partly a result of incessant lobbying. It may in fact be a better alternative to throw the old rule away and set hard and fast lines that banks can easily follow, Eisinger has argued.
But can we really trust this Congress to make risk-taking less easy for the banks?
Before you answer that question, consider the other front on which Dodd-Frank is under assault.
The House financial services committee is considering a bill, H.R. 3283, that would give banks a massive loophole for gambling with risky derivatives. You know, those things that were at the heart of the financial crisis, which is why we're having to bother with Dodd-Frank in the first place.
H.R. 3283 would let U.S. banks trade derivatives, such as credit default swaps, overseas without having to build up any extra capital to protect against a meltdown in those derivatives.
"This would create an overwhelming temptation to move swaps business overseas, indeed to the foreign jurisdictions where regulation was most lax compared to the U.S.," Americans For Financial Reform, a coalition of labor, consumer and other groups, wrote in a letter to the House today.
The bill is being framed as a mere technical fix to Dodd-Frank, but it's a mere technical fix in the same way removing the transmission would be a mere technical fix to your automobile.
"This technical fix is essentially giving banks a roadmap of how to get out from under the regulation of Dodd-Frank," said University of Maryland law professor Mike Greenberger, former director of the division of trading and markets at the Commodity Futures Trading Commission and a frequent critic of derivatives regulation.
It is still too early to tell whether H.R. 3283 will win the same sort of overwhelming bipartisan support the JOBS Act did. Frank and the other Democrats on the committee have voted against it -- though Frank also proposed an amendment to it, which failed, that would have watered the bill down without negating some of its destructive aspects.
But the arguments in favor of it are similar (cue violins): Our poor, put-upon banks are going to be hamstrung around the world if they can't roll the dice with risky derivatives the way other foreign banks are allowed to do. We need to keep these banks competitive, or American jobs will suffer. Jobs, we say!
This same philosophy led us to throw off the shackles of decades-old bank regulations that set the stage for the financial crisis in 2008.
Given how much Congress and the Obama administration already seem to have forgotten about that history, we are probably doomed to repeat it. Great news for financial journalism. Bad news for, you know, humanity.
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