The Sixteen Democrats Who Voted to Weaken Dodd-Frank

This past week the Senate passed a bank deregulation bill. This comes under the heading of why are they wasting our time on this crap in my book.

The Sixteen Weenies are:

Bennet, Colorado
Carper, Delaware
Coons, Delaware
Donnelly, Indiana
Hassan, New Hampshire
Heitkamp, North Dakota
Jones, Alabama
Kaine, Virginia
Manchin, West Virginia
McCaskill, Missouri
Nelson, Florida
Peters, Michigan
Shaheen, New Hampshire
Stabenow, Michigan
Tester, Montana
Warren, Virginia

What did this crew vote for?

The bill — one of the few important bipartisan pieces of legislation to move through Congress — would peel back key parts of Dodd-Frank, the 2010 law that was one of former President Barack Obama’s signature achievements, while leaving most of its regulations intact.

It has several elements aimed at scaling back lending rules. They include: relaxed mortgage regulations for small banks; broad exemptions from oversight for regional banks with up to $250 billion in assets; a mandate that the Federal Reserve tailor its rules for big banks; and easier capital and liquidity requirements for a number of the nation’s largest lenders.

The bill includes a handful of consumer protections, such as a requirement that credit reporting companies like Equifax provide free credit monitoring to members of the military — a proposal that has alarmed conservatives who warn that it would expose the firms to lawsuits.

Democrats who helped draft the bill argue that the legislation is an overdue recalibration of Dodd-Frank that would help make it easier for small and midsize banks to provide credit, particularly in rural areas.

Well, that sounds benign. But let’s hear from the other side.

Warren, the Massachusetts Democrat who worked with the Obama administration on banking industry oversight after the 2008 crash, pledged to fight the bill, even if she faced long odds.

“There’s Democratic and Republican support because the lobbyists have been pushing since the first day Dodd-Frank passed to weaken the regulations on these giant banks,” she said during a morning press conference.

She added: “People in this building may forget the devastating impact of the financial crisis 10 years ago – but the American people have not forgotten. The American people remember. The millions of people who lost their homes; the millions of people who lost their jobs; the millions of people who lost their savings, they remember and they do not want to turn lose the big banks again.”

She was joined in her rebuke of the legislation by Vermont senator Bernie Sanders, who said in a statement: “Now is not the time to deregulate banks that have more than $3.5tn in assets and lay the groundwork for another massive financial collapse. Now is the time to take on the greed and power of Wall Street and break up the largest financial institutions in the country.”

Here’s the Vox explanation:

The provision of the bill that has garnered the most attention is one that would raise the threshold at which banks are subject to certain federal oversight, including stress tests that measure a bank’s ability to withstand an economic downturn. Under current law, banks with assets of $50 billion or more are considered systematically important financial institutions (often referred to as SIFIs) and are therefore subject to stricter oversight from the Federal Reserve.

The Senate bill would increase the SIFI threshold to $250 billion. Banks with assets of less than $100 billion would be freed of current oversight requirements, and those between $100 billion and $250 billion would no longer be subject to tougher rules after 18 months, although the Fed could determine periodic stress tests and other tailored oversight measures. That would free up a lot of regional banks from the heightened regulatory scrutiny they face today, including BB&T, SunTrust Banks, Key Bank, and American Express. The bill could affect about two dozen banks in total.

There was an argument, some say, for cranking up the $50 billion limit a tad, but pushing it up to $250 billion is asking for trouble. That’s according to the Congressional Budget Office, anyway.

Among other parts of the bill, CBO analyzed Section 402, which would change the supplementary leverage ratio, or SLR, a simple calculation of total equity divided by total assets. The section lets “custodial banks,” which do not primarily make loans but instead safeguard assets for rich individuals and companies like mutual funds, to eliminate reserve funds parked at central banks from the calculation, reducing leverage by as much as 30 percent. This would juice returns for these banks but also layer on additional risk, by allowing them to hold less equity to offset losses in a crisis. …

…According to CBO, Section 402 would cost taxpayers $45 million over the next 10 years, a measure of the potential for failure of the custodial banks, as well as JPMorgan Chase and Citigroup. This would cost both the Federal Deposit Insurance Corporation’s Deposit Insurance Fund, as well as its Orderly Liquidation Fund, used to unwind complex banking institutions during a crisis.

Ironically, I recently found an article on Democratic Senators Most Likely to Lose to a Republican in November. There are five Democrats up for re-election who are currently behind in polls against either their general election opponent or Generic Republic. All five of them are on the list above. Behind in polls:  Tester, Montana; Manchin, West Virginia; McCaskill, Missouri; Donnelly, Indiana; and Heitkamp, North Dakota. Stabenow is slightly ahead in a squeaker.

Coincidence? I don’t think so.

Voting to weaken Dodd-Frank is terrible politics. Ross Barkan writes at The Guardian:

This week, it became clear again Democrats have not truly internalized 2016. Democrats in the Senate joined the Republican majority to vote in favour of gutting key banking regulations passed in the wake of the 2008 crash, leaving dissenters like Elizabeth Warren to howl into the wind.

Beyond the immorality of the votes, they represented poor politics – a concession to the banking lobby in exchange for further distance from the beating heart of the party.

“I hope that our bipartisan work can rub off on the rest of Congress so we can break through the partisan gridlock that has plagued Washington for too long,” said Jon Tester, one of the moderate Democrats who worked on the legislation. …

… It’s worth considering when bipartisanship can still exist in this deeply polarizing moment. It cannot live where there is a growing national consensus, as over the severity of climate change or the scourge of mass shootings.

It cannot live in any kind of economic matter that benefits the working class or the poor, even after Donald Trump managed to shred rightwing economic orthodoxies on his way to the presidency — never mind that he’s governing like a Koch brothers pawn.

Democrats and Republicans can only come together to feather the nests of the rich and powerful. Weakening Dodd-Frank confirms the worst suspicions of any cynical voter – that the political class really is colluding to screw them over.

What Tester doesn’t understand is that this “bipartisan work” will not “rub off” on Congress. This bill only exists because the largest funders of the Democratic party want it to exist. Big donors on the Republican side will kill efforts to ban assault weapons, fix our healthcare system or end our reliance on fossil fuels.

There is only bipartisanship when the rich demand it. Where no demand exists, the war commences. And make no mistake, 21st-century American politics is war.

I realize there’s an argument that more conservative states will only elect conservative Democrats. The problem is that this assumes the most palatable challenger to a hard-core conservative is a “centrist” conservative. But, seriously, there’s no center any more. Voters who don’t want the crazy right-wing asshole Republican to win are not looking for a candidate who is a watered-down crazy right-wing asshole. They want something that’s clearly different.

Here in Missouri, I never hear liberals gush about how much they like Claire McCaskill. People shuffled off to the polls and voted for her six years ago to keep the misogynist creep the Republicans nominated out of office. But there’s no real enthusiasm. To win in a state like this, Democrats have to whip up enthusiasm among not-crazy voters who are not Democratic loyalists, and I don’t see them doing that. McCaskill does have a primary opponent, but I didn’t know that until I looked it up. So far, there’s no primary campaign.

The one thing McCaskill has had going for her is the Missouri Republican Party, which is pretty much a clown act. But her current Republican opponent, state attorney general Josh Hawley, hasn’t yet said anything stupid about “legitimate rape” and, interestingly, is keeping some distance between himself and the Republican establishment in Washington, including Mitch McConnell. If he runs a smart race he’ll probably beat McCaskill pretty easily. (Although, so far, he hasn’t been running much at all. But it’s early yet.)  The only thing that might help her is if Trump is seriously tanking in the Fall and Hawley is put on the spot to support Trump or not. Or, if Hawley were to lose to his primary opponent, Courtland Sykes, McCaskill will enjoy six more years in Washington. Sykes is a one-man carnival sideshow even by Missouri standards.

8 thoughts on “The Sixteen Democrats Who Voted to Weaken Dodd-Frank

  1. In defense of those 16 Democrats, their goal is to try to save jobs – their own.  Fuck everyone else, they'll keep theirs.

    It was only 10 years ago that deregulations almost flushed  America's and the world's economy down the toilet. 

    A lot of people remember.

    Especially the heads of America's financial institutions whose losing gambles were paid-off by Uncle Sam. And not only did these greedy and evil bozo's not get arrested and tried, they got yo keep their jobs – AND THEN HAD THE AUDACITY TO GIVE THEMSELVES BONUS'S!  (Remember that?  When they did that, that was about the only time I ever thought a death penalty might provide actual jutice). 

    And now, they're rubbing their hands with glee again, getting ready to gamble big -AGAIN!

    And why the hell not?

    If Obama and the Dem's didn't stick these criminal shits in SuperMax's, tRUMP and the Repub's will not only also pay-off their losses and allow them to give themselves bonuses, but will probably match those bonuses, and then double them!

    WITH OUR MONEY!!!!!

    DINO's never learn.

  2. I disagree, CUND. It's not about getting re-elected in a tight race. The Senator who is in a tight race looks to the golden parachute for congress-critters who lose their election. That's the job AFTER "public service". Lobbying or Wall Street or working for a special interest group. This is a bipartisan club of crooks includes OVER HALF the former members of Congress. It's bribery made legal because the payoff happens after the member has left Congress. 

    Suppose that DC rumor has it that Senator Nelson is chummy with the lobbyist group "Dumb and Dumber". That makes them a prime target for the banking industry to hire – possibly throwing huge money their way. Word will get to Nelson that the lobbyist job got a lot sweeter as long as their client is not disappointed. 

    Lobbyists have this to a science – knowing exactly how many votes and exactly where a vulnerable politician wants to land when he leaves – whether it's voluntary or involuntary. Campaign Finance Reform that doesn't severely limit the appearance of impropriety in the future jobs a congresscritter can take will fail to curb corruption.

    Guns – Consumer Protection – Banking – Environment.  We lose on all until we get the money out of politics.

  3. Agreed, Doug.

    I'm looking at the here and now, but you – like our corrupt pol's – are looking at the future, and what's in it for them.

  4. Its so clear that these political contributions amount to bribery, and it should not be legal for legislators to take money from these groups and individuals when it is also clear that there is an expectation of something in return.  In any other case its a crime, and yet in congress its legal.  

    This is why "fighting for you" didn't work for the democrats in 2016.  Its also why "Trump is a bad man" alone wasn't enough when you have a candidate, with the full backing and blessing of the party, who was the poster child of doing the paid for bidding of Wall Street.  Cute phrases using "street" to intersect "Wall" and "Main" didn't fool enough people to allow the "greatest candidate in the history of time" to triumph over a sexist, bigoted, ignorant cretin as Trump.   Bad as he was/is, a lot of voters simply did not believe the democrats because, besides the ACA, they hadn’t delivered. And this attitude of the party that, you have no where else to go but us is counterproductive.

    Getting the money out of politics is the answer, but its the long game that may not happen in any of our lifetimes, if ever.  Obama and Sanders has shown that you can raise enough money to run a campaign on small donations, and what with technology and social media that is even more possible today. 

    So taking money from the 1% and doing their bidding at the expense of the broader democratic constituency is not a requirement, its a choice.  This is the reality of the democratic party, and its up to the voters to change that.

  5. Spot on analysis. There’s nobody clamoring for this bank bill, except people lobbying for banks.  And when another crisis happens, who will get the blame? 

  6. Rick Santelli will lay the blame on the same people he did during the last meltdown.  Those dumb people who borrowed all that money and expected the government to bail them out.   They should have known better to buy more house than they could afford and succor into those liar loans.  It will be a different day, a slightly different fleece job, but the same script.  Again the banks, politicians, and hucksters will profit and skate and those with little or nothing will be expected to pay the bill.  

     

    Krugman names Peter Navarro as the major threat on the economic front for Trump administration misguidance.  You have to love an article entitled Springtime for Sycophants.

    https://www.nytimes.com/2018/03/12/opinion/trump-trade-peter-navarro.html?action=click&pgtype=Homepage&clickSource=story-heading&module=opinion-c-col-left-region&region=opinion-c-col-left-region&WT.nav=opinion-c-col-left-region

    Tillerson did not survive the ides of March.  He beware too little it seems.  

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