Corker is the problem in getting a bill out of the Banking Committee. We’re non-partisan here at AWNF, but so far Republicans have shown no real interest in bank reform. I guess they love socializing the risk of failing corporations after all.
Obstructionists instead of real proposals in Senate. Donny Shaw, Zephyr Teachout, Franz Hartl and I are at the first ever Break up the Banks conference and the first ever Too-big-to-fail conference. People in this conference have more ideas. Follow our tweets or facebook for updates.
One of the two main Republican negotiators Dodd had been working with in recent weeks had a different take, however. Bob Corker, R-Tenn., blamed the breakdown on pressure to get a bill through the committee before the Senate starts a final push for health care overhaul legislation.
“There’s no question that White House politics and health care have kept us from getting to the goal line,” Corker said.
The two sides were close to finalizing a deal on Wednesday, Corker maintained.
“Yesterday was one of the more bizarre days that I’ve experienced in the Senate. I began the day feeling like we were on the five yard line as far as finishing something that we began on Feb. 10. Never did I realize that health care would affect financial regulation,” he said.
Pearlstein of WPost makes a good summary of the stalemate in financial reform in Congress (not in the public mind you):
“There are many parties to thank for this stalemate: Liberal Democrats who insist that the only solution is to micromanage the financial services industry from Washington. Conservative Republicans who can’t accept that their deregulation went too far and can’t bear the thought of handing a legislative victory to President Obama. A financial services industry that says it supports regulatory reform in general but can’t agree to any specific changes. And regulators, in denial about their own failures, who remain determined to preserve their power and influence. “
Unfortunately, Pearlstein, a well-informed financial crisis writer shortchanges fundamental plans to real reform that were left out of the “new solution” by calling the solution attractive. The bill has no Volcker rule as recently pushed for by Obama and which would cap the size of banks at their current size and a stopping of some propietary trading; or that Glass-Steagall separation that keeps your money away from out-of-hand growth for big banks and extreme risk for the American taxpayer, and pushes for an undemocratized single regulator and passes by our most important crusader, Sheila Bair. Our litmus test for financial reform is still “nationalize, reorganize, decentralize” in the face of a crisis and in the construction of a financial industry in the present.
The shape of the regulator doesn’t matter, but its harmony, function, accountability and transparency.
Here’s what the compromis[ed] bill has:
“The compromise hammered out between Dodd and Corker would establish a single regulator of federally chartered banks with a dual mission and an independent source of funding, based on my conversations with several key players. One division would promulgate and enforce rules to protect consumers; the other would fulfill the traditional role of supervising banks for safety and soundness. Supervisors from both divisions would participate in the periodic reviews of bank operations, and any conflicts between the two would be resolved by the head of the agency.”
Why the change? Pearlstein says, “Some credit also goes to Obama, whose decision to embrace a more populist critique of Wall Street in recent weeks has rattled financial markets and persuaded big banks to push for a compromise rather than leave a cloud of regulatory uncertainty hanging over their heads. Apparently nothing focuses the mind of a Wall Street banker so much as the prospect of being forced to shut down his proprietary trading desk.”
The bill includes our “nationalize/receivership” rallying cry that would stop the bailouts to too big to fail banks and put them through an insolvency process in order to contain crises and keep capitalism on an even keel: “Dodd, Corker and Democratic Sen. Mark Warner of Virginia are putting the finishing touches on a plan reflecting these judgments. As they envision it, any time a big financial institution is threatened with insolvency, the government would be authorized to take it over and close it down in a bankruptcy-like process. The government could provide temporary loans to ensure an orderly liquidation process and prevent financial panic, but only to the extent that the loan would be repaid from proceeds of the sale of the bank’s assets. Although insured depositors would be protected, creditors, counterparties and investors would all suffer losses.”
Insider scoop from Politico: “Treasury Secretary Timothy Geithner meets with Senate Banking Committee Chairman Chris Dodd (D-Conn.) and Sen. Bob Corker (R-Tenn.) this afternoon to get a briefing on the progress they’ve made hammering out a compromise on financial regulatory reform and to strategize about how to move things forward.
MEANWHILE, SIGNS OF PROGRESS – POLITICO’s Victoria McGrane reports: The widespread consensus forming Tuesday was that the Dodd-Corker bill won’t be ready until next week – multiple industry sources heard Dodd tell his ranking Republican, Richard Shelby, as much. But the signs are auspicious for a bipartisan bill – and one that might actually be able to pass the Senate. Corker told POLITICO Tuesday that Republican support for the Dodd-Corker product is building behind the scenes.””
The banks are bigger than they’ve ever been, the only good financial reform bill is still nationalize, reorganize, decentralize, tuned for the different stages of a financial crisis and a steady economy.
As Simon Johnson and Peter Boone say, “As a result of the crisis and various government rescue efforts, the largest six banks in our economy now have total assets in excess of 63 percent of GDP (based on the latest available data).”
With the immediacy of the mess of the financial sector and their quite brutal control of the rest of the economy, I haven’t had the opportunity to write much about other issues which I consider just as important, if not more so. At the top would be the politics of technology, which in the end is of vast greater importance than our greedy financiers, though even less understood. All new technology brings its own politics that shape society. As Marshall McLuhan stated, first we shape technology and than technology shapes us. If some other being from some other planet touched down in Los Angeles, or many other places in America, and wanted to know who was in charge, their first impression might very well be the automobile, and that wouldn’t be so wrong. The politics of technology is little commented on and even less understood.
In the last 20 years, networked electronic information technologies have burst onto the scene, and we really have little understanding about their impact. They are rapidly re-writing the rules of commerce, politics, government, and education. Old power structures, institutions, schools of thought, and technologies are grappling to remain in control,
trying both to co-opt and stop these forces. One really important issue for democratic society in relation to these new technologies is the question of how information is controlled. An important tool the established powers, our great mega-corporations, are using is copyrights and patents. A dozen or so years ago, Lawrence Lessig wrote some good books on this matter, and started a group called Creative Commons. Lessig spent a few years working in DC trying to help our elected officials understand the importance of these issues and how the powers that be were shaping the laws to protect themselves. A couple years ago, to Lessig’s great credit, he quit the charade, and started a new group with Trippi called Change Congress. Their simple message, our politics are broken, and if we don’t fix, it doesn’t matter what issue you think most important, our government is going to not simply be ineffective, but rigged against you. Lessig has a good piece on our broken politics in the Nation, which I recommend. I will add, it’s not just the money in politics and its impact that is the problem, but the same technological forces that Lessig has written about so well impacting copyright and patent law, have also made the idea of 535 people sitting in a building, in the middle of some old swamp, supposedly representing 300 million people, simply incredulous.
Also, The Nation has another good piece by Tom Geoghegan calling for the Dems to let Reps filibuster, good idea. But, I do wish Tom would write about what he knows to be the real problem, not the filibuster, but the Senate, which is the most archaic part of an archaic government structure. We need a lot of new thinking if self-government is going to be a reality in the 21st century. We really should start.
We started with one senator holding, now there are 17. Wall Street Journal is doing a vote tally on Fed Chief Bernanke’s reconfirmation to a second term. They’re doing this because more and more senators are putting a hold on his confirmation, see here. We helped to make this happen with our petition for “No Bernanke in My Name!”
This is certainly the beginning of much needed reforms and changes to the Fed. Whether or not they exist as an entity doesn’t matter to me in particular, but more that we have a system that keeps the banks from growing so big they have so much power. See here at A New Way Forward, we think about process more than particular programs or institutions — what kinds of processes or reforms can transform the amount of power any individual can have, especially when they have none or very little?
I, thus care deeply about corporate domination and collusion with the federal government. The Fed seems to be the worst of that now.
If you think that we need a democratization of our central bank, rather than allowing it to remain as the feeding trough that it is, please sign the petition that has helped to start the restructuring. We think that the Fed needs to be democratically elected, without bankers leading the helm, and have transparency and accountability to the public good, jobs, and our savings. So, sign the petition to start democratizing the Fed and stop the confirmation of bankster chief #2, Ben Bernanke –No Bernanke in My Name.”
Want one reason why he shouldn’t be confirmed? The central bank of all places, and the Fed chief of all people should know that his fixes continue to starve the real economy and aren’t helping to fix them either. “Credit card delinquencies at big banks masked by paynent holidays & other modifications” as reported in “Large-Cap Banks: Dec. Trust Data: Losses Headed Up?” (unavailable without subscription).
Simon Johnson points out the disservice taxpayer-paid Bernanke has done to the American people, “As Fed Chairman, Bernanke allowed Goldman Sachs and Morgan Stanley to become financial holding companies during the financial crisis in October 2008 [which qualified them for massive taxpayer bailouts], and then to continue to engage in massive amounts of proprietary trading, just as they had done previously.”
Lastly, I have been noticing Andrew Jackson’s work when he was president — he stood with the people on economic matters. And that is inspiring because he was able to work with the people and make huge changes to the system. And Simon pointed out that, “FDR’s favorite president was Andrew Jackson. The White House might like to read up on why – Jackson confronted, ran against, and ultimately defeated, the specter of concentrated financial power. President Obama needs to do the same.”