Scott Brown defected from his Republicans colleagues this week and voted for cloture on the financial reform bill which will establish curbs on Wall Street and end any future bailouts of banks. The Massachusetts Senator must consider the liberal slant of his constituents if he wishes to be re-elected and so he has broken with his Party leadership on some important legislation. Bob Casey voted yes but Arlen Specter, still licking his wounds I presume, didn’t vote.
The bill goes a long way towards preventing another financial collapse which resulted in a huge economic meltdown. It isn’t a perfect bill but none is. Republicans are trying to exempt car dealers from regulations involving credit and consumers should be outraged over the issue. Auto dealers are universally hated, with much justification, for ripping people off when they sell cars and trucks. Most consumers use dealer arranged financing and most dealers are as crooked as the day is long and will soak them for every penny possible. To do this they frequently break the law, ignore the rules and go laughing (literally) all the way to the bank. Its time for some tough regulation.
The bill still has to go through some amendments and then to a conference committee to reconcile it with the House bill. Hopefully by mid-summer it will be law, almost two years after Lehman Brothers collapsed and the precipitous decline began in the global economy.
The GOP has always been the Party of rich people and Big Business. It has been for decades and yesterday and today they proved their bona fides by voting for Wall Street over Main Street. The Party which repealed Glass-Steagall and refused to regulate Wall Street’s giant gambles with derivatives and other exotic financial instruments meant to poison the financial sector with toxic assets they then allowed these huge bankers unfettered opportunities to bet against their own handiwork and profit yet again. The Republican ideology of pure free markets and laissez faire resulted in the worst global economic meltdown since the Great Depression. Only immediate action by Presidents Bush (TARP) and Obama (ARRA) saved us from another Great Depression.
This week the Senate is attempting to enact a decent bill aimed at reforming the markets. Though not as strong as I’d hoped it has been crafted over more than a year and includes some significant features:
· End Taxpayer Bailouts. As long as giant financial firms believe the government will bail them out if they get into trouble, they only have the incentive to get larger and take bigger risks. This bill guarantees that taxpayers will never again be forced to bail out reckless Wall Street firms by creating a safe orderly liquidation mechanism for the FDIC to unwind failing significant financial companies; shareholders and unsecured creditors will bear losses; and management will be removed.
· End “Too Big To Fail.” The bill provides for strict new capital, leverage, liquidity, risk management and other requirements as companies grow in size and complexity, with significant requirements on companies that pose risks to the financial system. The Federal Reserve will be authorized, as a last resort, to require a large complex company, to divest some of its holdings if it poses a grave threat to the financial stability of the United States.
· Put a New Cop on The Beat. The bill establishes the Financial Stability Oversight Council to focus on identifying, monitoring and addressing systemic risks posed by large, complex financial firms as well as products and activities that spread risk across firms.
· Bring Sunlight and Transparency to Shadowy Markets. The legislation eliminates loopholes that allow risky and abusive practices to go unnoticed and unregulated – including loopholes for over-the-counter derivatives, asset-backed securities, hedge funds, mortgage brokers and payday lenders.
· Guarantee Clear Information in Plain English. The bill creates the Consumer Financial Protection Bureau, which will have the sole job of protecting American consumers from unfair, deceptive and abusive financial products and practices and will ensure people get the clear information they need on loans and other financial products from credit card companies, mortgage brokers, banks and others.
· Protect Against Bernie Madoff-Type Scams. The SEC has failed to perform aggressive oversight and is unable to understand some of the very companies it is supposed to regulate. This bill creates a program within the SEC to encourage people to report securities violations and mandates an annual assessment of the SEC’s internal supervisory controls. The bill also establishes a new Office of Credit Rating Agencies at the SEC to strengthen regulation of credit rating agencies, many of which failed in the past to warn people about risks hidden throughout layers of complex structures.
Every single Republican Senator voted against this bill and they were joined by Democrat Ben Nelson who is again trying to extort the American people into helping his state above all others. Nelson may now be the biggest whore on the planet. Unfortunately it is the American people he is screwing. The financial sector has been pouring cash into Republican coffers and have flooded Washington with lobbyists. There are now five lobbyists for every Member of Congress.
We know what side Republicans are on and Sen. Bob Casey reminds us in case we’ve forgotten:
The President traveled to New York yesterday and addressed the issues around Wall Street reform in the belly of the beast. Congress has been working on this legislation for some time. Regular readers here will have seen numerous articles and coverage of Paul Kanjorski’s hearings and legislative work on the issues. The Republicans in Washington are again trying to paint this as some sudden, overnight vote and say we should wait or go back tot he drawing board. Just as they did with health insurance reform their strategy is to delay by claiming the bills are being crammed down the throats of Americans without enough discussion. Two plus years after the financial meltdown, little accountability to Wall Street and not enough assistance for homeowners, I don’t think that’s going to fly.
Following the President’s speech yesterday Austan Goolsbee, a member of the President’s Council of Economic Advisers, did a conference call which, to me, was revealing for its naivete. On the call he stated he couldn’t imagine a Republican Senator reading and comprehending the bill, taking into account what’s good for the nation and the financial system, and not voting to pass the legislation. What makes Mr. Goolsbee believe Republicans are at all interested in doing what is best for the nation? Has he been in an isolation cocoon for the last twenty years? That isn’t their agenda: they want Barack Obama to fail. Once you understand someone’s agenda, as I always say, you can predict their behavior. If the White House thinks that just because a Republican Senator like Bob Corker worked on drafting bipartisan legislation that even he will vote for it they are mistaken. Sen. Corker is now against the bill he helped draft. Why? Mitch McConnell won’t allow any successful, meaningful legislation to be passed with Republican support. Rush Limbaugh established the GOP agenda directly after the election when he pledged to make this a failed presidency. Republicans do his bidding, they must. They have anointed Rush their defacto leader in the absence of the circus clown named Steele. Once you understand this is their agenda assuming any of them would do something rational, intelligent and responsible illustrates a reckless regard for reality. I certainly hope these beliefs aren’t common in the White House. If these people don’t understand the real Republican agenda we’re all in trouble. We cannot afford a failed Presidency.
The Congressman also spoke at a hearing concerning Lehman Brothers. The giant Wall Street firm collapsed amidst massive fraud and mismanagement triggering the meltdown of the economy.
Mr. Chairman, we meet once again to examine yet another massive corporate failure. We have heard this sad song of corporate greed and regulatory breakdowns one too many times in recent years in instances like the accounting misdeeds at Enron, the massive Madoff fraud, and the audacious bets of American International Group. The events that led to Lehman’s collapse add another verse to this troubling refrain in American capitalism.
In the Lehman tune, it deeply troubles me that we must once again explore how reckless Wall Street titans profited at the expense of innocent shareholders on Main Street. I am also deeply disappointed in the performance of auditors and regulators who failed to uncover wrongdoing, mismanagement and capital shortfalls even as they fiddled in Lehman’s offices. The American people — those who invest their hard earned savings and retirement nest eggs in our markets — deserve not only answers about what happened, but also the enactment of real solutions designed to reform the way Wall Street functions.
The Valukas report also reveals that Wall Street executives continue to embellish the truth, tell half-truths and hide behind their power in the marketplace. Lehman’s former managers claim not to recall transactions or not to have spent meaningful time examining those very transactions important to investors. I find their excuses difficult to believe, especially in the wake of the corporate accounting and attestation reforms mandated by the Sarbanes-Oxley Act.
Moreover, Lehman’s unscrupulous practices illustrate exactly why the Senate needs to quickly pass — and the Congress needs to swiftly finalize — a Wall Street reform bill. The bill already passed by the House would force major participants in our markets to hold more capital and leverage less. Additionally, the House-passed legislation and the pending Senate bill include provisions to end the era of too big to fail, like my amendment directing regulators to break up financial firms that have become too big, too interconnected, too concentrated or too risky.
The thoughtful Valukas report additionally highlights the importance of my whistleblower reforms and tipster bounties contained in the House bill. Furthermore, his report proves the need to fundamentally change the way the U.S. Securities and Exchange Commission operates. Among other things, the House bill doubles the Commission’s budget over 5 years and requires a comprehensive review and overhaul of the Commission’s operations.
In sum, today’s hearing builds the case for Wall Street reform. Hopefully, this Lehman hearing will be one of the last arias of this all too gloomy opera about the dark side of American capitalism. The proverbial fat lady has begun to sing; we must now complete our work.
Congressman has been deeply involved in hearings and legislation redesigning financial regulatory reform for the 21st century in light of the economic and financial calamity which befell the world from the repeal of important safeguards by Republicans (and some Dems). Too many banks and insurers became “too big to fail,” too few regulatory laws were in place, too many were repealed and regulation of Wall Street wasn’t effective because of too many loopholes. We must have serious reforms and we’re already several too late. Congress, as it is, is closing the barn door after the horses have escaped. Now we must secure those doors before more horse sh*t hits the fan.
The bills being considered aren’t actually good enough, they don’t go far enough but they are what can be passed in what passes for bipartisanship. I’m not quite sure why Democrats need to continue watering down important legislation in a futile attempt to secure one or two votes. The GOP will demonize and destroy whatever good legislation is drafter so why not do something actually meaningful? If Democrats had any effective means of messaging (though we’re seeing some now on this bill) they’d simply destroy the Republicans for opposing this. The American people want Wall Street to pay for what they did, they want to be assured these abuses will never kill the economy again and they want Washington to do something yesterday.
The Republican leadership meets with Wall Street behind closed doors then says the bill amounts to more future bailouts. No, the bill creates a fund (paid for by banks) so they can be liquidated, not bailed out. The $50 billion fund is designed to do the opposite of what Mitch McConnell claims. Where have we seen this sort of lying misinformation before, do death panels ring a bell? The GOP is joined at the hip with Wall Street, they created the conditions and policies which crashed the economy and destroyed millions of lives. Opposing real reform should be the death knell for the GOP, their political coup de grace but Democrats will, once again, flail and fail. This will be as painful to watch as that horrendous bill which emerged from health care reform.
Tom Marino, one of the three “Loyal Bushie” Ashcroft prosecutors (Pat Meehan and Mary Beth Buchanan are the others) running for Congress here, lied about his income on a required financial disclosure statement. As if standing up for alleged mobster Louie DeNaples on his gaming application weren’t bad enough, as if going to work for him after having to resign over the embarrassment wasn’t bad enough now we know Marino actually earned $249,999 working for the former casino owner and not the $24,999 he put on his form. Oops, maybe he simply pulled the wrong lever. Voters should pull the proper one this fall and insure they don’t vote for this crook.
It appears Patrick Murphy will get Jack Murtha’s open seat on the House Appropriations Committee. The seat is sought after because the Committee has enormous influence. Murtha used it to bring gobs of pork to his District. Chris Carney is livid over the decision but if he were more of a Democrat he’d have had more of a chance.
A lot of people are clamoring for the prosecution of Don Blankenship, CEO of Massey Energy Co. for the killings of the 29 miners killed at their mine in West Virginia last week. The company has had a sordid and extensive history of safety violations like most non union coal mines across the country. At what point do we hold the miners responsible for failing to unionize? The United Mine Workers wouldn’t have tolerated the conditions at Massey and these men would be alive today. Unions protect their workers which is why we don’t see tragedies such as this at their work sites.
Republicans are now trying to scare and mislead the country about Wall Street reform and regulation. Instead of being honest they are trying to protect those who crashed the economy by telling the country the new regulations, the very ones which would have prevented the economic collapse, would trigger more bailouts. These are the same economic experts who brought us the repeal of regulations, the catastrophic financial collapse and TARP and now we’re supposed to back off moderate new (these aren’t actually very tough regulations) reforms so they can continue getting millions of dollars from their Wall Street fat cat friends?
I’m seriously considering shaving off my beard. What does everyone think? It’s been ten years and I’m ready to get rid of it.