Labor Leader Trumka To Testify Against "Reform" Bill Deemed "TARP on Steroids"
After leading the dramatic three-day Showdown in Chicago at the American Bankers Association (ABA) Convention in Chicago, AFL-CIO President Richard Trumka will head to the House Financial Service Committee today to testify against proposed reform legislation and argue that the bill actually gives the banks more power.
As he testifies against the banksters, he will, in a twist of irony, be sitting at the same table with American Bankers Association President Ed Yingling.
After weakening current law on derivatives, the committee is proposing once again to weaken law in the banker's favor. The draft legislation concerning banks "too big to fail" would actually lead to more bailouts over the long run. In an advance copy of AFL-CIO President Richard Trumka's prepared testimony that I obtained, Trumka will tesify that:
The discussion draft appears to take the most problematic and unpopular aspects of the TARP and makes them the model for permanent legislation.
Essentially the legislation would weaken regulation and lead to the conditions in which the American people would be forced to bail out the banks again. As Trumka testifies:
The discussion draft would appear to give power to the Federal Reserve to preempt a wide range of rules regulating the capital markets - power which could be used to gut investor and consumer protections.
Trumka goes onto explain in vivid details how the Federal Reserve with its lack of accountability has traditionally acted in the interests of the banks:
The Federal Reserve currently is the regulator for bank holding companies. In that capacity, it was responsible throughout the period of the bubble for regulating the parent companies of the nation's largest banks. While regulatory authority rests in the Board of Governors of the Federal Reserve in Washington, routine responsibility for regulatory oversight has been delegated by the Board of Governors to the regional Federal Reserve Banks. The Federal Reserve System's regulatory expertise resides in these regional banks. The problem is that these regional Federal Reserve Banks are actually controlled by their member banks - the very banks whose holding companies the Fed regulates. The member banks control the selection of the majority of the regional bank boards, and the boards pick the regional bank president, who are effectively the CEO's of the regulatory staff... Giving the Federal Reserve with its current governance control over which financial institutions are bailed out in a crisis is effectively giving the banks the ability to raid the Treasury for their own benefit.
Trumka explains how the proposed legislation would give the big banks more of an incentive to take risky bets in order to drive out their competition:
We are also deeply troubled by provision in the discussion that would allow the Federal Reserve to use taxpayer funds to rescue failing banks, and then bill other non-failing banks for the costs.
Isn't that absolutely absurd? If a bank deemed "too big to fail" by the Fed takes out risky bets and its fails miserably, the other banks who were engaged in safe banking would have to bail them out. For the big banks that can afford to take huge bets, this would simply give them more incentive to do it. If they lose, the smaller banks not deemed "too big to fail" would merely go under bailing out the big banks. So why not gamble big on Wall Street since every situation would be a win-win. If you win, big profits. if you lose, you get a bailout and your competition goes out of business. Sounds like a good deal to me.
Furthermore, as Congressman Brad Sherman points out, the proposed legislation would allow the government to bail out banks into the trillions of dollars without having to seek Congressional approval. It would allow the Federal Reserve to bail these banks out secretly without the public knowing about it. This is just simply undemocratic. At least the last time we bailed them out, the bankers at least had to go to Congress and beg in shame. Now, as Sherman points out, the current legislation meant to reform Wall Street would actually be like "TARP on steroids".
The obvious question remains why has the House Financial Service Committee, under the leadership of Rep. Barney Frank, strayed so far from President Obama's plans to regulate Wall Street and dramatically weakened his proposals? Perhaps the $223 million that the banking lobbyists spent on lobbying Congress in the first six months of 2009 alone has something to do it. Or perhaps, as the Wall Street Journal reports, campaign contributions to committee members have increased dramatically as they consider financial reform.
However, as the Showdown in Chicago showed, anger over the bailout and greed on Wall Street has increased dramatically as well. The message is loud and clear: We will go to any venue to take on the banks. We will fight the banks wherever or whenever, whether it be the halls of Congress as Trumka is doing today, the thousands of protesters busting up the American Bankers Association's Convention earlier this week, or, like the members of United Electrical Workers (UE) who, as portrayed in Michael Moore's Capitalism, occupied their factory after Bank of America closed it down, at our workplaces.
We will not rest until real reform of Wall Street is passed. We will hold any politicians—Republicans and Democrats alike—accountable for passing fake reform that merely lines the pockets of Wall Street. We will not rest until justice is done.
Follow Mike Elk on Twitter: www.twitter.com/MikeElk
Robert Reich: Breaking Up the Big Banks, and Why Congress Won't Do It
Two ideas are floating around Washington regarding how to handle 'too big to fail' banks, but only one is supported by the Treasury and the White House. Unfortunately, it's the wrong one.
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Unions are key to restoring America's middle class. Who else will? Good job, Trumka.
Bush squandered billions which may be trillions in the sink hole of Iraq and Obama maybe squandering billions and possibly trillions in the sink hole of the Banking system. The rest of the world, particularly China and Russia, our competitors and sometimes adversaries grow their economies and military strength while we waste treasure and create endless wars of choice. Our economy is in shambles, yet the beat goes on with no way of escaping the down ward spiral. How did we go from prosperity to poverty in just eight short years under Bush/Cheney. I know it's Clinton's fault for eight years of prosperity. If we didn't have all that prosperity, the republicans wouldn't have to make up all their excuses for tryin to avoid responsibility for causing our current misery. Happy anniversary Great Depression. The republicans liked it so well, we've got another.
Go get`em Mr. T the IAM is behind you and so is the rest of us that have been getting screwed these past 30 years of deregulation!!!!!!!!!!!!!!!!!
Richard; we're a government of the bankers, by the bankers, and for the bankers, not the people..!
You'd might was well be bargaining with a bunch of Somali pirates..!
I know it's popular to blame Obama and the Democrats and I don't think that's wrong, but if Americans elected Republicans last year we wouldn't even be discussing banking regulation right now. We'd be discussing how to penalize the poor fools whose homes are getting foreclosed. Then we'd be working on tort reform, less regulations and less oversight. We'd also be dealing with a full-fledged depression because there wouldn't have been a stimulus bill, additional bailouts and oversight of TARP, so many more companies would have gone bankrupt in the name of free market.
I'm just as pissed about many of the details of Obama's financial plan as everyone else here, but I don't think the Republicans are saying anything productive at all.
While Democrats pass bills that are watered down and at time conciliatory towards big business, at least they are working towards larger goals that I agree with. Republican's priorities are just too out of whack for me to even consider.
Good point. If McCain/Palin had been elected, we'd be discussing how many poorhouses and debtor's prisons we need to open (privatized, of course!) and what else can we do with all these awful, lazy poor? Oh yeah, and it would be Bill Clinton's fault, because what Republican ever takes responsibility for the mess they cause?
The difference is worth about a dime.
Dear HP,
I would like to read more stories like this. This ought to be the lead story. Please use your media presence to make Trumka's position vis-a-vis the American people and financial reform better known.
Thank you.
RvS
I certainly will be posting more stuff like this in the future
no matter how painful it is there should never be anything to big to fail. which would leave no no one to little to care about.
Thomas Jefferson had it right. We will wake up slaves one day soon to find everything we own gone.
If the American people want to write President Obama off so quickly and it's the Democrats fault that we got hammered by all bad news from the war criminals that held the White House for 8 years then i say h*ll yeah why hold back ram everything down the GOP's political throat till they choke from there own hateful spew! It is at least 1 year to shove bills that represent the people that put you there the GOP is a bunch of whining sore looser's any way!
Yes the GOP put us in the situation we are in, but that does not mean we have to finish the self destruction that they started.
These policy proposals are Obama's, not the GOP's. It looks to me like Obama is going to manage to double down in one year the bad moves that the GOP took eight to accomplish.
HuffPost, this should be the number one story.
..."the proposed legislation would allow the government to bailout banks into the trillions of dollars without having to seek Congressional approval. It would allow the Federal Reserve to bail these banks out secretly without the public knowing about it.... At least the last time we bailed them out, the bankers had to go to Congress and beg in shame."
THIS has GOT to STOP.
Yikes, have I got this straight.? A government Wall Street buddy (ie Giethner and Goldman Sachs) could give taxpayer money to their Wall Street buddies and it wouldn't have to be brought to public light by requiring Congress to approve it? You've got to be kiddin', this is a prime example of the fox guarding the hen house. Are the American people gonna' stand for this?
Hopefully not... it's f'ing outrageous!
It's high time someone took on all this false reform and we are glad the AFL-CIO is doing it. We must break this ill or it will break us.
Congressional and the American body politic has gotten so clogged up with the special interest way of doing things that the American people but no longer can fake reforms be masked as for the good of the people, as before. Recall that banking deregulation, cause of much of the current crisis, was to propser us all! To let the free market reign for our good! (Really to line elite pockets) .
But now, due to the enormity of the crisis, the stakes are too high for us not to pay attention to the few in the know, like the write above and Trumka. The politicians are again selling us out for campaign funds, money and greed. There will be nothing left, if we do not stop it.
The crash last year has evidently not had as great an effect as needed to call the politicians to account. Do we need another Great Depression to do so? Trumka and others have taken the lead. We must hold these "progressives" to accout, or face economic armageddon, all for the short term profit of a few: the Wall Street elite traders, bankers and politicians writing their free tickets. For more, see my blog, http://www.wrathofmcgrath.com
Well said, Mike.
...."Perhaps it's the $223 million that the banking lobbyists spent on lobbying Congress"
PERHAPS????
While the popular fires of anger against the banksters burn higher and higher, the Senate fiddles.
I wonder if future historians will be able to pinpoint exactly when our democratic republic turned into a corporatocracy?
The only thing the Senate is interested in is its own self-preservation and the maintenance of the status-quo. The Republic died when the "Patriot Act" was passed.
Tell'em Rich! We won't go away quietly anymore! We need to make sure we have candidates who work for the people. Money, property and prestige will divert you from your primary purpose everytime. I've decided that I'm changing my affiliation to independent. All of our politicians (at least most) have been bought and paid for including our president. At the beginning of the year, I was so hopeful, and I'm not saying some good things haven't been done. But if you want change we can believe in, then he needs to role up his shirt sleeves and stop rolling over to the rethugs and playing the game as usual. WE VOTED FOR BOLD CHANGE AND LEADERSHIP!
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