LATEST UPDATES: Tell us how your call went in the report back section right here, or scroll down below. We have had so many calls and so many reports back, it’s really great to watch the staffers start to get it and know we’re around. This week, our targets are Sen. Johnson, Rep. Frank, Sen. Corker, and Sen. Reed. TPM reports on the four New Dems weakening measures behind closed-doors, can you call them and report back?: Rep. Luis Gutierrez (D-IL), (202) 225-8203; Rep. Gregory Meeks (D-NY), 202-225-3461; Rep. Mel Watt (D-NC), 202-225-1510; Rep. Dennis Moore, Chair (D-KS), (202)225-2865. Rep. Frank has tried to gut provisions to reform credit rating agencies, showing where he is going with the bill… The Senate agreed to expand auditing of the Fed – 1 BIG WIN SO FAR. Our #2 reform discussed now, seems like a win.. Thank you for making the calls! (Follow on @wayfwd, FaceBook, riski)
We’re going to make sure there are no backroom deals that effectively gut the best reforms currently in the bill — we’ve launched “Call-in Days for the Big 3 No Bailouts Reforms” to put every decision maker in the spotlight for gutting or keeping the Big 3. We have 14 days until June 24 to influence the financial reform bill to be something worth passing. So, yesterday on Tuesday, today on Wednesday (6/16), and tomorrow on Thursday (6/17), please help us get enough people so it’s like we’re walking right into the backroom with them and slapping their hands if they do something bad. We’ll update our list on the slimiest and worst on financial reform. Full list below.
Sign up for a day that works for you — you just need a 5 minute chunk of time free — and we’ll make your call effortless. If you’ve already signed up and when you finish your call, add what you find out in the report back section here. As soon as we hear back from you, we’ll update who is acting the sleaziest (you can also report back at #finreg #716 on twitter).
- I have 5 minutes on Tuesday 6/22
- I have 5 minutes on Wednesday 6/23
- I have 5 minutes on Thursday 6/24
We need to call as much as each of us can to stop government support and incentives for banks to become bigger and riskier – this is structural reform.
WHAT’S HAPPENING IN THE LAST LEG OF FINANCIAL REFORM? The financial reform bill is going into the final stage in the legislative process this week and bought-out members of Congress are trying to stealthily remove all the provisions in it that the big banks oppose. The financial reform bill would be a pure product of lobbying and big banking if it were not for the just a handful of “No Bailout Reforms” that are still in the bill as we speak. Can you join us in making sure that conferees don’t gut the strongest provisions in the financial reform bill behind closed doors?
No-Bailout Reform #1, is Section 716, “PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS OF SWAPS ENTITIES”. Currently, the Senate financial reform bill still has language in it that will stop the biggest, most dangerous banks from getting federal bailouts for their riskiest gambling. The provision that provides for this would require banks to spin off the derivatives activities into separate entities without access to discount Fed money and FDIC guarantees. It is structural reform. This is the main provision that our conference committee members are being asked to gut by the lobbyists. 716 literally says this in its own bill text. Without this language financial companies that turned themselves into banks for the purpose of receiving bailouts under the TARP will get to stay bailout recipients in perpetuity. Without this language, the 2008 crisis will lead to a permanent situation where the government continually subsidizes derivatives trades, which were at the heart of what caused the crisis. Here’s more from Bankster.
No-Bailout Reform #2, STRONG CAPITAL REQUIREMENTS FOR BIG AND SMALL BANKS: When banks make their bets, they’re supposed to put some money down. Over the years, the largest banks received exemptions to how much, and therefore their bets got riskier. This time around, Senators Collins and Representative Speier have introduced complementary amendments in the Senate and House to make sure that the money these banks put down for their bets is real capital and is enough to keep the big banks from taking risks they can’t pay for and need to be bailed out by taxpayers. For strong capital requirements, the best of the House and Senate version need to stay. Here’s more from Rortybomb.
No-Bailout Reform #3, A NEW CONSUMER PROTECTION AGENCY: A signature reform of the Obama Administration and TARP watchdog Elizabeth Warren, an independent consumer watchdog agency can stop financial corporations from abusing consumers. “Subprime mortgages. Abusive and arbitrary rate hikes on your credit card. Payday loans. If you’re wondering who lets banks get away with this crap, there are more people at it than you think. There are no less than four federal regulators responsible for overseeing consumer protection in finance, and all of them are terrible,” writes Zach Carter. The Senate bill would house the CFPA in the Fed and allow the Fed to veto their rules proposal. That’s unacceptable. We need an independent CFPA, via the House bill, with full rule-making authority. More from HuffPo.
BIG REFORM #4: First and foremost, we’re advocates of breaking up the big banks. We fought for the Brown-Kaufman amendment to cap the size of banks before they get too big to fail, but it didn’t pass with the Senate bill. Therefore, we agree with Dr. Simon Johnson that Rep. Kanjorski’s amendment to allow regulators to break up the banks is an important part of the finreg bill and are happy to push for it. To see more reforms, see our blog post from Stephanie and Ruth.
Supporters of these measures are Nobel Laureate Economist Joseph Stiglitz and Paul Krugman, renowned Economists Robert Reich, Jane D’Arista, Dean Baker, Simon Johnson, Jennifer Taub, David Moss, Michael Greenberger, financial writers and advocates, Rortybomb/Mike Konczal, Ilan Moscovitz of the Motley Fool, Zach Carter of CAF/Alternet, Public Citizen, CAF, David Dayen/FireDogLake, BanksterUSA, McJoan of Daily Kos. Join them!
AND NOW, WHO IS WATERING DOWN THE BILL? We have figured out who is trying to water down the bill thanks to the many people who have told us what they have heard in the comments of this post and what has been said in public.
Who of the 28+ are running the sleaziest deals (today the top 4 are Frank, Reed, Johnson, and Corker)?:
Big Bank Defenders (they would love to hear from you):
* Rep. Luis Gutierrez (D, IL) (202) 225-8203 here, here
* Rep. Spencer Bachus (R, AL) 202-225-4921 report, report
* Sen. Jack Reed (R, RI) (202) 224-4642 here, CFPA
* Rep. Dennis Moore, Chair (D, KS) 202-225-2865 blue dog, here
* Rep. Mel Watt (D, NC) 202-225-1510 bank cash, pro-CFPA, here
* Rep. Gary Peters (D-MI), (202) 225-5802 here, here
* Sen. Saxby Chambliss (R-GA) 202 224 3521 here
* Rep. Scott Garrett (R, NJ) 202-225-4465 C-SPAN, this
* Sen. Mike Crapo (R-ID) 202-224-6142 here
* Rep. Judy Biggert (R, IL) 202-225-3515 bad
* Rep. Gregory Meeks (D, NY) (202) 225-3461 bad, here
* Rep. Jeb Hensarling (R, TX) 202-225-3484 bad
* Rep. Edward Royce (R, CA) 202-225-4111 here, here
* Sen. Judd Gregg (R-NH) 202 224 3324 report, article
* Sen. Richard Shelby (R-AL) 202 224 5744 here, here
* Sen. Bob Corker (R-TN) 202 224 3344 here
Public Defenders (so far):
* Rep. Paul Kanjorski (D, PA) (202) 225-6511 here
* Sen. Blanche Lincoln (D, AR) (202) 224-4843 gutting, reverting, report
* Rep. Collin Peterson (D-MN) 202-225-2165 prefers House version, maybe
* Sen. Tom Harkin (D, IA) (202) 224-3254 here
* Sen. Patrick Leahy (D, VT) (202) 224-4242 here
* Sen. Tim Johnson (D-S.D.) 202-224-5842 pro-CFPA
* Rep. Maxine Waters (D, CA) (202) 225-2201 here, here
MYSTERIOUS (they need calls ahora)
* Sen. Chris Dodd (D, CT) (202) 224-2823 report, and report, report
* Sen. Charles Schumer (D-NY) 202 224 6542 report, most fin cash, here
* Rep. Mary Jo Kilroy (D, OH) 202-225-2015 neutral
* Rep. Shelley Capito (R, WV) 202-225-2711 (against)
* Rep. Carolyn Maloney (D, NY) (202) 225-7944 unclear, here
* Rep. Barney Frank (D, MA) (202) 225-5931 no, yes, yes, here, YES
We hope that you are helping to call, join us for the next day or call right now, and further target the few people we need to reach. Then, help us finish the job — we can’t wait to hear from you so we can update our list of sleaziest deals — tell us what you hear in the comments of this post. Thanks for making it happen!
written by Stephanie Remington and Ruth Robertson, great ANWF organizers in California.
Today is the day of our call-in days — please call — as they start to hear from us, they have to move. We’ve got a few days to get good reform – the details matter. The banks are spending a fortune lobbying congress to keep things the way they are, but the rest of us (on the receiving end of their catastrophic risk-taking and blatant fraud) outnumber them. We can’t lose sight of the public interest because we can get what we want by forcing their hand. Lincoln, Dodd, and Congress aren’t going to come back and say, “hey, you really changed our positions, activism really matters!”, but their omissions should are remiss.
Of course the problem with financial reform in the first place is that we’re tackling the entire system at once, including the small details. So many amendments are about very specific, obscure financial operations, which many people just don’t find that interesting. The details have hurt our fight for strong structural reform — everything is presented as and in one sense is complicated, some people just completely tune it out. Well, there are clear, overarching, very general, extremely structural solutions to the key issues leading to the financial crisis.
We only care about structural reforms that address key problems of financial crises:
1. First and foremost, Section 716 which addresses the problem of derivatives is the strongest and currently most possible reform we can push for. It’s gone through many cycles, and our readers have successfully fought through them. The good news is — it is still in the bill. It is the most contentious provision and it will define how strong the Democrats are on the big banks.
No other provision will accomplish what 716 does in terms of removing the subsidy enjoyed by a handful of institutions. Section 716 is the best chance for ending the ongoing threat to the taxpayer in the the current business of derivatives. At the heart of 716 is the structure it provides making a clear separation between the business of banking and that of marketing and trading derivatives. It provides a structure that protects the core financial functions of banks without extending those protections to cover highly risky derivatives transactions.
Section 716 will contribute to shrinking the size of individual institutions’ positions and the market itself by requiring that dealing and trading derivatives move to separately capitalized affiliates that do not have access to Fed lending facilities or FDIC guarantees. The huge capital reserves of institutions that dominate the U.S. market will no longer be available to support their outsized positions. The capital of derivatives affiliates, even if within the same holding company, will have to be much smaller, creating opportunities for non-bank firms to enter the market. Section 716 eliminates the risk the largest banks incur through marketing and trading OTC derivatives. It will help reduce the risk to the system as a whole by encouraging an expansion in the number of dealers in derivatives.
Blanche Lincoln (D-AR) is behind 716 and she won her Democratic primary on the strength of committing to tough new rules on Wall Street. Unfortunately, 716 suffered a couple of casualties that will be fatal to reform if left untreated. But, Sen. Maria Cantwell’s (D-WA) amendment (4086) addresses the loophole.
Lincoln wrote the whole of the derivatives section, including the “safe” proposals — she specified the means to end the biggest source of trouble with derivatives – that “the entire market operates in secret.” She required “central clearing,” a means of shining light on and watching over trades. This provision was undercut by language added by Democrats (Section 739, paragraphs A and B). This section would codify into law the now common practice of refusing to prosecute certain criminals for their demonstrably illegal activity. Section 739, paragraphs A and B, must be removed or voided by including Maria Cantwell’s amendment 4086 – it must be added for Lincoln’s section to work.
The Obama administration (notably, Treasury and Larry Summers), Senate Banking Chair Chris Dodd, and House Financial Services Chair Barney Frank propose a “substitute” (Merkley and Levin’s strengthened version of the Volcker rule). M-L must be in addition to, not instead of, Lincoln’s section. There’s no overlap between them; neither can substitute for the other. Mary Bottari of Bankster USA outlines five unique features of Lincoln’s section here.
2. The Volcker Rule: Zach Carter, Fellow at Campaign for America’s Future, reports that “The best version of President Obama’s signature Wall Street reform was an amendment written by Sens. Jeff Merkley, D-Ore., and Carl Levin, D-Mich. It was never voted on in the Senate and the House bill contains no version of any ban on proprietary trading by commercial banks. The Senate bill does include a weak version of the Volcker Rule that bank-friendly regulators can easily defang if they choose.” We need to push for inclusion of Merkley-Levin (SA 3931) in the conference and for negotiations that lead to a concrete ban on gambling with taxpayer money.
3. It is also important that we NOT forget about the Kanjorski amendment. While this amendment, introduced by Congressman Paul E. Kanjorski (D-PA), does not impose a hard size cap on banks, it proposes a number of potential objective criteria that could be used to determine when banks need to be broken up, including the “scope, scale, exposure, leverage, interconnectedness of financial activities, as well as size of the financial company.” It would greatly strengthen the hand of regulators and reinforce their power to break up those banks. As the amendment is written, a great deal of discretion would remain with the regulators, so it is much weaker than what is really needed. However, the Kanjorski amendment serves as a public reminder that “bailouts are bad” and it also increases the likelihood that management and directors would be replaced in a failing large bank.
4. An independent Consumer Financial Protection Agency: Dodd gutted an original version, but it can be restored. In its current form it wouldn’t actually protect consumers because, among other problems, it would be housed within the Fed which has yet to use its substantial, already-existing authority to protect consumers. As such it is the staying tuned to tip their hand.
Here’s a great video clip of an interview with Elizabeth Warren, Chair of the Congressional Oversight Panel created to oversee TARP bailout funds. Zach Carter reports that currently, “the House version of this agency is generally stronger than the Senate version, with more independence and broader authority. But the House version also exempts auto dealers from CFPA oversight which the Senate version does not.”
5. Capital and leverage: From Zach Carter: “Thanks to Sen. Susan Collins, R-Maine, the Senate bill contains the strongest language to toughen capital requirements at big banks, forcing them to have more money on hand to cushion against losses. There is no corresponding language in the House bill, but the House legislation does contain a related provision capping bank leverage–the amount of borrowed money banks can use to place bets in the capital markets casinos. How these good amendments fare in the
conference committee will significantly impact how the financial system functions over the next decade.” More from Rortybomb.
6. Fed Audit: Congressman Ron Paul has been called the key battler against central banking and against the Federal Reserve and is the author of the book, End the Fed. His supporters say he has worked tirelessly to bring accountability to what they call “the secretive bank”. The Congressman, who says he has worked to bring transparency to the Federal Reserve Bank for the past 30 years, introduced a bill to audit the Federal Reserve, but that bill did not make it into the Senate version of the Financial Reform Bill. Sen. David Vitter (R-LA) later reintroduced an amendment with the original Audit the Fed language, but the Senate rejected that amendment on May 11, 2010 by a 37-62 vote.
7. Rating agencies: From Zach Carter: “Sen. Al Franken pushed through an amendment that substantively changes the corrupt business model at rating agencies. Right now, rating agencies do not get paid by the investors who use their ratings, but by the very banks who are issuing those securities. Franken would end this system, having regulators select which rating agencies rate which securities, rather than the banks who issue the securities. The House bill largely leaves the rating agency business model unchanged.”
8. Swipe fees: From Zach Carter: “When you buy something at a store with a credit or debit card, Visa and Mastercard charge the store a fee. The store, in turn, charges you more for its products, making everything everybody buys more expensive. Sen. Dick Durbin, D-Ill., pushed through language cracking down on debit card fees, but there is no language addressing swipe fees of any kind in the House.”
9. Too big to fail: Sherrod Brown and Ted Kaufman introduced an outstanding bill that would have ended TBTF. It did not pass the Senate, but is crucial to success of financial reform.
Some of the main obstacles to achieving true reform are people in the Obama Administration, as well as bankers spending big money on Congress members to get their support. Along with our demands for specific language in the bill, we need to be pushing for the removal of Summers and Geithner and the appointment of a new Fed Chairman, which would effectively – and necessarily – get rid of Bernanke. These people, among a larger group of insiders and captive regulators, must be replaced with people with successful track records, who believe in true reform, and who will push for it instead of blocking it at every turn.
We have, in Joseph Stiglitz, Robert Reich, and Simon Johnson, three people whose expertise and commitment to reform make them ideal candidates to replace Summers and Geithner and move our nation toward a healthy economy–an economy that will never again be at the mercy of the big banks. For a new Fed Chairman Joseph Stiglitz, for Secretary of the Treasury Robert Reich, and for Obama’s Economic Advisor, Simon Johnson would make a true Dream Team.