After nine months of hard fighting, yesterday financial reform came down to this: an amendment, proposed by Senators Jeff Merkley and Carl Levin that would have forced big banks to get rid of their speculative proprietary trading activities (i.e., a relatively strong version of the Volcker Rule.)
The amendment had picked up a great deal of support in recent weeks, partly because of unflagging support from Paul Volcker and partly because of the broader debate around the Brown-Kaufman amendment (which would have forced the biggest 6 banks to become smaller). Brown-Kaufman failed, 33-61, but it demonstrated that a growing number of senators were willing to confront the power of our biggest and worst banks.
Yet, at the end of the day, the Merkley-Levin amendment did not even get a vote. Why?
Partly this was because of procedural maneuvers. Merkley-Levin could only get a vote if another amendment, proposed by Senator Brownback (on exempting auto dealers from new consumer protection rules) got a vote. Late yesterday afternoon, Senator Brownback was persuaded, presumably by his Republican colleagues and by financial lobbyists, to withdraw his amendment.
Of course, Merkley-Levin was only in this awkward position because of an earlier lack of wholehearted support from the Democratic leadership -- and from the White House. Again, the long reach of Wall Street was at work.
But the important point here is quite different. If Merkley-Levin did not have the votes, it was in the interest of the megabanks to have it come to the floor and be defeated. That would have been a clear victory for the status quo.
But Merkley-Levin had momentum and could potentially have passed -- reflecting a big change of opinion within the Senate (and more broadly around the country). The big banks were forced into overdrive to stop it.
The Volcker Rule, in its weaker Dodd bill form ("do a study and think about implementing"), perhaps will survive the upcoming House-Senate conference -- although, because this process likely will not be televised, all kinds of bad things may happen behind closed doors. Regulators may also take the Volcker Rule more seriously -- but the most probable outcome is that the Fed and other officials will get a great deal of discretion regarding how to implement the principles, and they will completely fudge the issue.
Most importantly, everyone who wants to rein in the largest banks now has a much clearer idea of what to push for, what to campaign on, and for what purpose to raise money. This is the completely reasonable and responsible ask:
This post was originally published on The Baseline Scenario.
Stuart Whatley: Financial Reform Won't Alter Capitalism's Icarus Trajectory
This era's troubling reality is that economics now dictates our cultural values. We no longer have a say in how resources, production, and mutual prosperity should be systematized to achieve the best society for all.
Robert Creamer: Senate Vote Signals Historic Change in Wall Street Political Clout
For four decades Wall Street had its way with American government. The big Wall Street banks and their economic apologists dominated the main stream of economic thought. Last night their domination came to a screeching halt.
Fortune's Stanley Bing: A Shout-Out to Lobbyists
But aren't we being a bit unfair to lobbyists? They have a job like any other. I knew a few of them, and they were very nice. If others were writing the script right now, they would be our heroes. If we're not careful, they may well be again.
Richard (RJ) Eskow: Traded-in: These "Used" Senators Sold out the Troops for Auto Dealer Cash
If you have a yellow "Support Our Troops" sticker on your car -- or even if you don't -- you should know the name of the Senators who just sold out our troops, their families, and our military readiness for easy cash offered by auto dealers.
http://economicsofcontempt.blogspot.com/2010/05/yes-merkley-levin-is-still-joke.html
Does anyone consider this situation desirable or TOLERABLE?
What we needed was the re-institution of the ORIGINAL Glass-Steagall Act which had protected the system from Wall Street for more then 6 decades.
Obama is not serious folks - PERIOD.
Did anyone truly believe the Democrats were going to make a difference?
The party affiliation of the occupant of the White House and the benchwarmers in the House and Senate chambers matters not a fig.
Corporate dollars/influence rule the landscape, and now with the 'Citizens United v FEC' decision in their back pockets, they are free to grind us ever deeper into the ground.
Every voter in this nation should be on their knees, begging Ralph Nader's forgiveness. He told you so.
As for it being the dems fault that glass-steagall didn't get put back into the bill - anybody remember who repealed glass-steagall?? Anyone?? It was the republicans in the last administration. SO don't get creative with reality yet again - people will call you on it.
The fact that we have a senate passed bill at all is constructive change. That glass-steagall like provisions are still missing - it may still be addressed in the reconciliation with the house, and when it goes to Obama for signature. If you want to help, send messages to you congress folks telling them you want glass-steagall or merkley-levin or something similar IN THE BILL.
"The merger would have to work around regulations in the Glass-Steagall, which were implemented precisely to prevent this type of company. Weill meets with Alan Greenspan before the announcement and later tells the Washington Post that Greenspan had indicated a "positive response." Unless Congress changed the laws, Citigroup would have two years to divest itself of the Travelers insurance business. Weill makes calls to Washington: to Greenspan, Treasury Secretary Robert Rubin, and President Clinton.
Following the merger announcement, Weill immediately plunges into a public-relations and lobbying campaign for the repeal of Glass-Steagall. One week before the Citibank-Travelers deal, Congress had shelved its latest effort to repeal Glass-Steagall.
The House Republican leadership indicates that it wants to enact the measure in the current session of Congress. In May 1998, the House passes legislation by a vote of 214-213 and in September, the Senate Banking Committee votes 16-2 to approve a compromise bank overhaul. Despite this, Congress is unable to pass final legislation before the end of the session.
In 1997-98 Wall Street spends more than $200 million on lobbying and makes more than $150 million in political donations, eventually passing the repeal.
http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html
You're like the whole "Remove every incumbent!" movement... in the end, who does that benefit? Oh that's right.
No.
Next we deal with holding companies to segregate banking businesses, but overreached and took that to mean make them all smaller when 90% of the largest institutions are outside of the US. A recipe to export even more US jobs and huge portions of our service industries to DeutschBank, SocGen and Barclays. Millions of unintended consequences.
For the 80% that have 401ks, IRAs, savings or US jobs, we simply target FinReg bill to fix real problems. Like consumer protection, uptick rules on short trading and a method to wind down financial institutions of any size with consistent globally regulations. There is no other option that will not damage the economy and still fix the real issues.
The post below demonstrates that Geithner, Obama and Bernanke are HEROS. The market is now 65% HIGHER and we are in a recovery. Imagine if we listened to Krugman, Roubini and Simon. Today Europe is playing chicken with the Global economy; because they do not want to do the tough things we did a year ago. Trust them? No way.
http://www.huffingtonpost.com/2009/03/06/krugman-the-obama-adminis_n_172451.html?show_comment_id=21780138#comment_21780138
But Oboma was against it. The same Obama who took $1M from Goldman Sachs
It's actually a profession, you know. Takes skill, knowledge, practice.
It's about how to actually get things done.
"Politics is the art of the possible".
The author could not have done better, or accomplished more, in the same situation.
In contrast, Obama embraces the special interests whom Roosevelt disdained and is seen by very few Americans as their champion.