Skip to comments.This is how the GOP Congress will regulate Wall Street?
Posted on 12/19/2010 9:28:16 AM PST by Attention Surplus Disorder
"My view is that Washington and the regulators are there to serve the banks"
Rarely do you see a politician quite this honest: Last Wednesday, just hours after securing the position of chairman of the House Financial Services Committee, Spencer Bachus, R-Ala., told the Birmingham News that "in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks."
In the very next paragraph, the newspaper reported that Bachus "later clarified his comment to say that regulators should set the parameters in which banks operate but not micromanage them." But the damage was already done. Bachus' quote rocketed around the lefty blogosphere, and on Monday night the 62-year-old congressman earned a coveted "Worst Person in the World" award from Keith Olbermann on MSNBC's "Countdown."
The candor of Bachus' initial statement is eyebrow-raising, no doubt about it, but the fuss and bother over his revelation is a little bit disingenuous. We don't need to listen to the Alabama Republican's words to understand just which master he intends to serve -- all you need to do is watch his actions. Together with his fellow Alabaman Republican, Sen. Richard Shelby, the powerful ranking member of the Senate Banking Committee, he's part of a dynamic duo of market fundamentalist crusaders who will likely set the tone for how banking reform and regulatory oversight aimed at Wall Street are implemented for the next two years.
Immediately after the midterm elections were over, and long before his confirmation as chairman, Bachus got quickly to work on his anti-regulation agenda. The day after the election, in fact, Bachus sent a letter to the Financial Stability Oversight Council, that, as I wrote last month, was written as if dictated by bank lobbyists. His main target: the so-called Volcker rule, which, as economist Simon Johnson has so eloquently put it, "in principle would force big banks to get out of the business of betting their capital in ways that can bring down the entire financial system."
Three weeks later, Bachus co-authored letters to the inspector general offices at the Treasury Department and the Federal Reserve, demanding detailed information about how the Consumer Financial Protection Bureau is being set up.
"History indicates that the process of setting up a new government agency is extraordinarily challenging and difficult," the two lawmakers wrote, according to Bloomberg. "To date, we know very little about the activities being undertaken by the Treasury to establish the Bureau."
But don't be fooled by Bachus' lament about "a clear absence of accountability and transparency" surrounding the establishment of the CFPB. The clear intention is to harass and block the CFPB interim director, Elizabeth Warren, at every step of the way. Over in the Senate, Richard Shelby has made no attempt to hide his disdain for the very idea of consumer protection or his distaste for Warren, but he's been relatively powerless to do anything about it. Bachus, however, will have plenty of opportunities to create friction. The reports are due Jan. 10. Hearings will undoubtedly follow. Want some must-see CSPAN TV? Watch Warren, with her Oklahoma twang, fend off the hostile questions soon to come from the deep-drawling Bachus.
Let's recap: Who hates the Volcker rule the most? The banks. Who is most annoyed by the Consumer Financial Protection Agency? The banks. Whose agenda is Spencer Bachus already serving to the best of his ability? The banks'.
With a Democratic majority still controlling the Senate and Obama in the White House, Bachus and Shelby won't be able to completely subvert bank reform and gut regulatory oversight. But there's little doubt there's a new sheriff is in town. Alabama, a state that, in terms of GDP, is about one-sixth the size of New York, is set to exert a disproportionate influence on how Washington rides herd on Wall Street.
The Birmingham News tell us that Bachus is the first Alabama Republican to chair a House committee since the 19th century. This is mostly an accident of history. Deeply conservative Alabamans have previously run the primary committees overseeing banking in both the Senate and the House -- but they were Democrats back then, since there was no place for Republicans in the post-Reconstruction South. The chain of events set in motion by the Voting Rights Act that eventually transformed the Democratic South into a sea of red states changed all that. (Richard Shelby, it's easy to forget, was a Democrat as late as 1994, when he switched sides after the big Republican victory in the midterms of that year.)
The most famous Alabaman to influence how Washington regulated Wall Street was probably Henry Steagall, whose name resonates through history from its inclusion as part of the name of the Glass-Steagall Act that separated investment and commercial banking for the better part of 60 years. Both Bachus and Shelby voted to repeal Glass-Steagall, and both of them have worked hard to make sure that the spirit of regulation birthed in the Great Depression, and revivified by the Great Recession, dies stillborn. Henry Steagall was no flaming liberal, but it is hard to imagine he'd be too pleased by today's Alabama agenda.
Am I looking at something the wrong way or is this basically not the guy I’d want in charge of regulating banks??
“Am I looking at something the wrong way or is this basically not the guy Id want in charge of regulating banks??”
The short answer is....it depends mightily upon whether you are a banker or not.
As a citizen you should have concerns also since it will be YOU picking up the tab for bailing them out and why should we did you see how much money they donated to obama,acorn and many of them like JP Morgan are down with Sharia financing.
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End the Fed! Let the so called too big to fail, FAIL on their own dime next time. Many of our smaller banks failed they wiped out their competition that’s not Capitalism that’s Fascism!
It is so corrupt that it is unimaginable.
Dems want to blame for political reasons, but make the banks pay! and defend HUD, Fannie/Freddie at all costs.
Repubs will defend the banks at all costs.
Both are corrupt and both will destroy us.
“Both are corrupt and both will destroy us.”
Glass-Steagall wasn’t so bad after all...except for those that wanted to be high flyers. High flyers and their friends in Congress crashed us and it’s time for them to burn.
You’re looking at this the wrong way. This article is a liberal hit piece which accuses Republicans who support the free market of supporting the banks.
Then why was it that the banks that failed were only the ones that did NOT merge according to Gramm Leach Bliley?
The big banks control both parties. Both parties were willing to give them taxpayer money to pay off risky bets they lost on. The Fed also gave them $12 trillion during the time democrats controlled all of Washington.
The classical understanding, in the founders day, was that “to regulate” meant to “regularize”: to make standards that served to level the playing field - everyone plays by the same rules - and help prevent negligence and fraud.
It did not mean to simply criminalize any particular business practice just because a politician thought the practice was “unfair”; in as much as individuals do not lose the right of contracts, permitting anyone the liberty to NOT enter into a contract they believe is “unfair” to themselves. That is why helping to obtain transparency - full knowledge of the facts in a financial transaction - are also part of “to regularize”; but transparency itself is meant to “shine a light” on what is taking place and not necessarily criminalizing something.
That said, it cannot be said that “regulators” did their jobs, in the run up to the “financial crisis” of 2008.
However, any regulatory error that they made DID NOT REQUIRE any new legislation, or any new powers for them to have insisted on different standards than what prevailed up to 2008. For the most part, they simply needed to act differently than they did, within the powers that they already had.
And guess what, the “financial reform” legislation of 2009 is not very specific on exactly what the new standards ought to be either. The majority of what that bill did was not in detailing new standards, but in INCREASING the depth, breadth, reach and minutia of new federal power to regulate nearly every “financial transaction” imaginable (not just banks and not just “financial” institutions - but “financial transactions” (any and every possible “consumer contract” or transaction between anyone, individual or corporate), and empowering new federal dictators to dictate what the details of their own new “standards” will be.
When it is clear what the true purpose and true objective of the Dims 2009 federal legislation really was - increasing the depth, breadth and reach of federal power (with the excuse of the “financial crisis” as the reason); then you understand where Bachus could be coming from; when he is concerned about “regulation” becoming too involved in to much “minutia”.
The worst part of the 2009 "financial reform" legislation is that it insures that banks now know that in the next "crisis" that they help create, some of them automatically don't have to worry, because the law mandates that regulators will chose who has to be "bailed out" and that they carry it out - at our expense. It - the law - insures there will be a next time, because "too big to fail" is not only accepted, it is institutionalized, by law. And next, time, the "regulators" don't have to ask Congress how much the "regulators" can put us all on the hook for any new bailouts - they now have authority to do so on their own. What we needed was the opposite message to all the banks - no one is "too big to fail", and the only ones we will ever help out is the depositors with FDIC insured accounts - not the bank corporations, not their bondholders, not their stock holders. With THAT kind of notice, sheer self preservation would change their behavior.
Was 0bama being truthful when the first thing out of this mouth is "...my Muslim faith..." or, is he being truthful when he is corrected and then says "my Christian faith"?
In this financial crisis, which has brought the nation, indeed much of the world to its' knees...the number of prosecutions has been essentially zero. Banks have learned a lesson from the use of "human shields" as in the mideast, and that position has been repeatedly ratified. Henry Paulson walked into Congress with a 3-page "do this or you will see tanks in the streets and martial law and by the way, my personal immunity clause is on page 2" document that was by any measure the greatest piece of extortion in the history of mankind. And within a small number of days, what he did was NOT what the money was allocated for, meaning, his threat was nothing but a threat. But a threat nonetheless, bazooka and all pointed atthe collective throats of Congress. Now...Henry Paulson http://cfprod2-cornelledu-ssl.cit.cornell.edu/video/index.cfm?VideoID=985 claims that "young people owe America service".
Well, yes, they do, and they shall pay it, minimally in the form of their future earnings and their deteriorated standard of living which will most assuredly ensue for the next decade. Largely because of the financial shenanigans of Mr. Paulson and his cronies.
If you're at all familiar with Bill Black (heartily reco many of his appearances on YouTube) who was the chief prosecutor during the S&L crisis, outside of a scant handful, there simply have been no prosecutions during this crisis. None. Banks at the top of this food chain have been granted de facto immunity. The Bank of America swore that 155,000 affadavits it submitted in order to pursue foreclosures were truthful and validly sworn documents, and when it was shown that they were not, they were granted leave NOT to accept a penalty of perjury * 155,000, but to go back and resubmit their claims! Would you or I get to do that, to retract a statement made under oath and then be given the opprtunity to restate it? Fraud has ben ratified as the operating theme and modus of the entire financial system, from top to bottom.
My point is, that if wouldn't matter if Bozo the Clown were the chief regulator of the financial system although that in itself would be a positive step towards transparency because lacking the will or the ability or desire or inclination to prosecute these egregious crimes, the entire topic of "fraud" is moot.
It hardly matters whom is named the chief cop when the cops are never called.
“Then why was it that the banks that failed were only the ones that did NOT merge according to Gramm Leach Bliley?”
Good question, but then I like conspiracy theories. Why is Chase still in business with all of the phoney paper that it has on its books?