The President's rhetoric today at Cooper Union was impressive and his body language indicates a major shift in administration attitudes towards the big banks over the past year. This is commendable.
But there is still the awkward question of legislation that would actually reduce the political power of big banks -- and make our financial system significantly safer. The latest indications from the Senate are that there will be some sort of "Dodd minus" compromise bill brought to the floor early next week. The Republicans have substantially backed down from Senator McConnell's "hell, no" position of last week because the polling is crystal clear: Anyone perceived as opposing financial reform will lose badly in November.
But the Democratic leadership is not seizing on this advantage and on the opportunity presented by the SEC case against Goldman Sachs -- key figures in the Democratic establishments are too worried about upsetting financial sector donors. As a result, come November, independents will view the Democrats with scorn, while the Democratic base will be far from energized; you do the math.
What can you do? What makes sense in both economic and political terms?
Call your Senator, call Senator Harry Reid (Senate majority leader), and call the White House. Tell them that you support the Brown-Kaufman SAFE Banking Act (unveiled yesterday) -- as an amendment that would greatly strengthen the Dodd bill by capping the size and leverage of our biggest banks. Politely ask the people who answer the phone to make certain that this amendment gets an "up or down vote" in the Senate.
The Brown-Kaufman Act is our best near-term chance to reduce the size of Wall Street megabanks that are too big to fail and that threaten our economy. (If you don't understand why this is important, read 13 Bankers; quickly -- this could all be over by this time next week.)
Tell everyone you know why this makes sense and ask them to make the call also. These calls will determine the outcome. If the Democratic leadership understands the groundswell of support for breaking up big banks, the Brown-Kaufman proposal has a chance to come to the floor -- and who exactly on the Republican side would like to be on the record as opposing it?
If no one who reads this post speaks out (and makes the call), the Brown-Kaufman amendment will not come to the floor. If some of you speak out, there is a sliver of a chance. And if all of you -- and everyone you know and everyone they know -- make three simple, short, and friendly phone calls, there will be a vote.
This post is crossposted at The Baseline Scenario. The book 13 Bankers is on sale now.
James Kwak: '13 Bankers': How Big Are The Biggest Banks? If Derivatives Aren't Counted We Won't Know
We need to have a more accurate grip on just how big our largest financial institutions already are, in order to show how much damage could be caused to the financial system in a crisis.
Don McNay: Is Being Anti-Goldman Sachs Being Anti-American?
The real scandal of the entire bailout mess was how money was funneled through AIG to pay "counterparties" like Goldman Sachs 100 cents on the dollar.
Anyone can talk tough when markets are calm. But in the middle of a financial crisis it takes a special breed of hard-ass to insist on haircuts, since no one can be sure that squeezing creditors won't shut down the entire bond market.
If not delt with seriously, the end game is obvious. A total collapse, sometime down the road, followed by a dictator who will seek power by promising to provide some order out of the chaos. The Republic, as we have known it, will no longer exist. Can that be stopped? Hopefully, but that is a long shot.
we have a petition on the SAFE Banking Act,
http://act.boldprogressives.org/cms/sign/petition_breakup/
Dear Senator Reid, Senate Majority Leader,
The purpose of this email is to urge you to support bringing The Safe Banking Act sponsored by Senators Sherrod Brown and Ted Kaufman to a vote as an amendment to the current Senate financial reform legislation.
The sheer size of the Wall Street banks, and the prospect that they will grow larger, poses significant dangers to the U.S. economy and American taxpayers, if they fail.
By capping their size, they would not only not be "too big to fail," they would not be "too big to manage" or "too big to regulate."
Thank you very much for your consideration in this matter.
all those diplomas on the doctor's wall are symbols of SOCIALISM!!
and it's anti-free market!
instead, we should let anyone open a doctor's office. if they're not qualified, they'll go under. dunno how many they'll kill before that, but it's irrelevant.
THE FREE MARKET WORKS!
*sarcasm*
Now they are rushing a half-baked bill through that doesn't reform anything but just writes into law what was done in this bailout. Thus obligation the governement, or rather the taxpayer, to dole out trillions of dollars in the next crises - which are certain to happen by the bankers own statements - while not fixing the root of the problem at all, which is derivatives and fraud.
And in the end people are asked to support amendments to this half-baked bill, that will certainly improve the original bill but not solve the issues either.
It is necessary to do something about the size of the bank, but I have a feeling nothing will happen here. But it is also necessary to do something about the derivatives and about the fraud.
When Standard Oil was broken up at the beginning of our American twentieth century, the diversity of new American industrial products and companies that manufactured those products grew exponentially as a result.
Whereas before the breakup, Standard Oil had cornered all aspects of the oil economy and all were umbrella'd within the very singular fossil fuel economic hierarchy of its day, divestiture, or the spinning off of industries associated with the processing of that oil, ultimately led to the growth of a set of industrial entities that clearly created an atmosphere of expansive, free market globally oriented economic growth in the process.
As a hundred years have passed since that divestiture and today in 2010 we as a nation find ourselves hauntingly strangled with the same financial narrow mindedness of 1910, whether or not financial reform succeeds ultimately depends upon the larger issue of how alternative energy technologies are woven into the fabric of forward thinking energy investment strategies.
As in many ways I believe that banking reform is putting the cart before the horse, how can we possibly deal with our financial shortcomings if first we don't blueprint the industries that will eliminate those shortcomings?
Subsidizing alternative energy was a mistake in the Bush administration (Ethanol) and is a mistake now. We can play around with solar and wind to make people feel "greener", but those sources will never supply more than a negligible slice of our total energy needs at kwh costs that are multiples of coal and nuclear power. The problem with wind is that (1) it requires enormous amounts of land which is only available in the middle of nowhere, far from where the power's needed, (2) wind power is maximized at night precisely when people don't need it. It's possible that some revolution in solar cell technology will occur. If it does then solar will be able to compete and win without subsidies. Maybe subsidizing solar cell research rather than solar plants would make sense. To be a "green leader" we would need to invent new technologies that reduce the kwh cost of solar\wind below that of coal and nuclear (good luck with that). Until then, excessively taxing consumers and giving it to organizations that are represented by the likes of AWEA is government at its absolute worst.
"As you wander through this world, you see lots of funny men.
Some will rob you with a six-gun, some with a fountain pen."
Well all I have to ask is, "Are those 'fountain pens" loaded, and are they aimed on us or on the charlatans who caused this collapse?"
Priorities...
The power of the industrial-military complex has to be reduced, too.
The race in military technologies is sickening and it is being announced as unavoidable destiny.
It's Republican rabidness, yes, but backed by militaristic dementia.
You know what? It's people like you that are helping the demagogues to make democracy meaningless. Public opinion matters plenty if you want it to.But no, you'd rather have your dramatic moment and say "What's the use? It's all a myth!" Why don't you just move to China, you don't appreciate what you have here, it's just not perfect enough for you.
The same is true of the Dodd bill and the Lincoln bill.
So when you are asking people to support it, wouldn't it be a good idea to provide the text, so that people actually could have knowledge of what they are asking to support?
We are asked to discuss and support bills without being given the possibility to acutally check the contents of said bill.
What kind of democracy is that supposed to be, plebiscitarian?
You also have to watch that slow creep back towards one big monster company.
While we're at it how about we do this to the news market monopolies like Fox News. After that we can target the pharmaceuticals.