Late last night, the U.S. Senate rejected the single most important element of Wall Street reform by a vote of 33 to 61. The SAFE Banking Act would have forced the break-up of the nation's six largest banks, and dramatically reduced the political clout of America's financial elite. The 61 votes against the measure are votes in favor of Wall Street's stranglehold on our economy. No matter what else is ultimately enacted in the name of Wall Street reform, Congress has decided that it will not confront the single greatest problem in the U.S. economy: Too Big To Fail.
On Wednesday, the Senate also voted down a $50 billion Wall Street tax that would have been used to fund the cost of shutting down a major failing bank. By rejecting both the break-up bill and the bank tax, the Senate has punted on ending too-big-to-fail. For now, it appears that Wall Street has emerged from the Great Financial Crash of 2008 with even greater political might than it wielded during the reign of George W. Bush. In the Citizens United era, both Democrats and Republicans have decided they can only get so tough with corporate America.
Last night, 27 Democrats joined all but three Republicans to vote against breaking up the banks. President Barack Obama opposed both the tax and the break-up measures, and hosted J.P. Morgan Chase CEO Jamie Dimon for dinner at the White House on Monday. J.P. Morgan is the largest U.S. bank, and spent more money on lobbying in 2009 than any other bank. House Minority Leader John Boehner (R-OH) has aggressively courted Dimon for campaign cash.
There is literally no economic evidence that megabanks do anything to help the economy that cannot be accomplished with smaller institutions. By contrast, centuries of research has shown that giant banks are destructive. Adam Smith was warning against the dangers of megabanking back in the 18th century. And the current crisis in Europe -- which appears to be deepening by the day -- should make those dangers apparent to everyone living in today's economy. There are plenty of good economic reasons to cut our financial behemoths down to size, and no good reasons not to.
The good news is, there are still some smaller-bore reforms in the legislation that are worth voting for, and it appears that some version of reform, however tepid, will ultimately be approved. Congress will be deploying a screwdriver to perform a job fit for a bulldozer, but a few weeks ago, it was not obvious that even the screwdriver would make it through.
Shortly before the vote on breaking up the banks, Sen. Bernie Sanders (I-VT) cut a deal with Sen. Chris Dodd (D-CT) that would subject all of the Federal Reserve's bailout operations to a thorough public audit. Despite all of the attention heaped on the Treasury Department and the Troubled Asset Relief Program, the Fed has operated as the chief bailout engine of the U.S. government, pumping $4.3 trillion into the banking system without almost no public disclosure. We don't know who received money, or on what terms, or who approved the transactions. It now appears very likely that this information will finally see the light of day. Obama, who had opposed a more comprehensive Fed audit, now supports the Sanders plan.
But by allowing megabanks to remain super-sized, Congress has insulated them from the fallout associated with the Fed disclosures, and given them a tool to fight other reforms. Our giant financial institutions are not only too-big-to-fail, they are too-big-to-regulate. There are meaningful reforms still on the table -- a ban on risky proprietary trading, an overhaul of consumer protection and the reining in of the crazy derivatives casino that brought down AIG -- but all will be much more difficult to enforce at the complex megabanks which currently dominate both the marketplace and Capitol Hill.
Major economic realignments are not quickly established. It took seven years for Franklin Delano Roosevelt to pass all of his New Deal-era banking reforms. We have known for some time that this legislation, however stringent, would be incomplete. Hedge funds, credit rating agencies, Fannie Mae and Freddie Mac all must be addressed by separate legislation. The SAFE Banking Act must be considered in every subsequent reform package.
Here are the senators who voted last night to preserve Wall Street's power. Senators in bold also voted for the bailout bill in 2008:
Akaka (D-HI)
Alexander (R-TN)
Barrasso (R-WY)
Baucus (D-MT)
Bayh (D-IN)
Bennet (D-CO)
Bond (R-MO)
Brown (R-MA)
Brownback (R-KS)
Burr (R-NC)
Carper (D-DE)
Chambliss (R-GA)
Cochran (R-MS)
Collins (R-ME)
Conrad (D-ND)
Corker (R-TN)
Cornyn (R-TX)
Crapo (R-ID)
Dodd (D-CT)
Enzi (R-WY)
Feinstein (D-CA)
Gillibrand (D-NY)
Graham (R-SC)
Grassley (R-IA)
Gregg (R-NH)
Hagan (D-NC)
Hatch (R-UT)
Hutchison (R-TX)
Inhofe (R-OK)
Inouye (D-HI)
Isakson (R-GA)
Johanns (R-NE)
Johnson (D-SD)
Kerry (D-MA)
Klobuchar (D-MN)
Kohl (D-WI)
Kyl (R-AZ)
Landrieu (D-LA)
Lautenberg (D-NJ)
LeMieux (R-FL)
Lieberman (ID-CT)
McCain (R-AZ)
McCaskill (D-MO)
McConnell (R-KY)
Menendez (D-NJ)
Murkowski (R-AK)
Nelson (D-FL)
Nelson (D-NE)
Reed (D-RI)
Risch (R-ID)
Roberts (R-KS)
Schumer (D-NY)
Sessions (R-AL)
Shaheen (D-NH)
Snowe (R-ME)
Tester (D-MT)
Thune (R-SD)
Udall (D-CO)
Voinovich (R-OH)
Warner (D-VA)
Wicker (R-MS)
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I'd like to see Grayson get in the White House.
But I guarantee you I will not vote for Obama.
He has disappointed me for the last time.
THEY ARE ALL TALK AND DO NOTHING ... SHAME ON THEM
A return to something akin to Glass-Steagall and resolution authority that provides the sharpest dissincentive for government assistance possible. If you are trying to actually be serious about addressing the real problem, you should be fighting for those two key points, instead of the nonsense of worrying about size.
And until clowns like you actually start to worry about the real issues, your opinions are merely junk messaging, intended to stir up some foll's notion of "populist support".
The President of the United States and the Democrats that voted against the nonsense proposal did so with the understanding that the clown proposals didn't even try to fix the actual problem.
If the clowns are honestly wanting to address the root problems to all of this mess, they wouldn't be so focused on these idiot notions that setting arbitrary size caps will, somehow, protect the taxpayer. In case folks have forgotten, The Great Depression was made far worse for the simple fact that huge swaths of banks, some large ones but mainly small one, all failed at the same time!
Delta Airlines/Northwest Airlines, American Airlines, and United Airlines/Conitnental Airlines are more than a strong enough array of domestic carriers to do the heavy lifting. On top of that, Southwest, JetBlue and US Air/American West are all strong enough companies to handle the shorter intermittent flight load, with others even emerging.
I don't see the need in trying to spin the airline acquisition scenario into something that one could assume, based on your spin, that has left the US with only one airline company, because it hasn't.
If there are 3-4 major domestic airlines doing good business, with another 4-5 airlines doing well in the smaller markets, that is something that I'm more than comfortable with; choice is still available to flyers and decent competition is still readily available.
Banks will go back to focusing on the core elements of banking, deposits, credit, and providing loans to folks, the FDIC will have all the power that it needs to make sure that all banks, large and small, can be orderly seized and replaced when they fail, and those who still want to invest thier own money will have an avenue to do, in an environment where folks' bank deposits are no longer at risk over the success or failure of other people's investment decisions. Period, point blank. The actual problem is seen, analyzed, and addressed in a real and serious way.
No tricks, no scams, no nonsense. Seperate the banks from the investment houses and then let capitalism do its' job. Let the successful banks get as large as their successes allow them to be and let the banks that aren't successfull fail, while insuring that our regulators have the tools to make sure that the unseuccessful bank's failure doesn't put the deposits in danger or endanger the entire banking system.
Quit the junk about trying to set arbitrary size limits; that doesn't solve any problem.
Not if the banks get in a condition to be bailed out by taxpayers and yes, I understand the purpose of "Glassman-Steagall Act" and don't need your lecturing.
TBTF isn't the best way, but it might be the best of what's possible.
If you want everyone involved in the process, no one is going to get exactly what he or she wants.
The alternative is a one-person, or one-party rule. And no one really wants that.
I understand that people expected a bigger change after the 2008 election, but did you guys really think the incredibly effective Republican machine would just fold up and go away? Conservatives spent 30 years figuring out how to get what they want in small, incremental ways, and Progressives don't appear to have learned that lesson.
One of the counter proposals offered by politicians is that CEO's would have to appear on commercials and state something along the lines of. "I'm boss of xyz corporation, and I authorized this message".
I doubt that they will hold themselves to the same standard.
How much more "entertaining" it would be to watch congress live, as each representative presents their arguments and closes by saying "I'm congressman fillintheblank, and this vote was brought to you by my sponsor, Goldman Sachs, Bank of America, JP Morgan Chase, Citibank...............or better yet Parker Brothers, distributor of the game Monopoly.
America, home of capitalism, where we have the best government money can buy.
You disagree with me, fine, no problem. That does not give you the right to call me, or others, childish names. I happen to believe in another old saying attributed to Lord Acton "Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men." I do not differentiate between political power and financial power.
The six largest banks now control assets in excess of 63% of US GDP. (as compared to 17% just 15 years ago). They are still growing. The loss of one institution with assets approaching 15% of GDP, would cause the equivalent devastation to the economy as hundreds of smaller banks did in the 20's. Too big to fail is a legitimate concern, whether or not you choose to believe that, is up to you.
If you want to make a point, I'd advise against name calling, it's unwarranted, and degrades the validity of your argument.
That's all I have to say on this issue. I will not respond to any more of your comments.
Save for a very few, it's time to throw them all out of office.
Since you seem to be late to the party, THAT'S HOW GOVERNMENT WORKS. When the Republicans controlled the Congress for the next decade after Clinton's botched fight for the gays and his budget, Newt Gingrich wasn't able to make the "bold, decisive decisions to benefit the vast majority of Americans" that he wanted either, so what makes the Democrats any different?
Get over yourself