Big banks have gotten two new bills passed in the House of Representatives that roll back regulations that were put in place after the last financial meltdown to keep it from happening again. Yes, that’s right. After the banks nearly destroyed our economy in 2008 (forcing us taxpayers to bail them out to the tune of close to $100 billion) Congress passed Dodd-Frank, which even in its watered-down state on passing was a good step toward reining in some of the most dangerous forms of risk taking on Wall Street. Well, the Republican controlled House (with some help from Democrats too) is doing everything it can to get rid of Dodd-Frank. Why wouldn’t they? They need the money for their campaigns, and Wall Street is only too willing to oblige since keeping down regulations is what lets them take insane risks in the first place and make tons of money. And as long as we keep bailing them out when the risks go sour, there is no incentive for them to be responsible.
Here’s a great rant about it:
What he doesn’t mention is that this bill has passed only the House. The only things keeping it from becoming law is opposition in the Democratically controlled Senate (and even that opposition is not particularly strong, since Democrats depend on campaign contributions from Wall Street too), and from Obama’s veto power (ditto).
Yes, as I am going to great pains to point out, this is definitely a “lesser of two evils” scenario. We absolutely need to reduce the influence of money in politics, and especially to reverse the Citizens United decision. But until we do, the Democrats are the only thing keeping us from heading down the same road to financial melt-down and government bailouts that has repeatedly happened since we deregulated the banks. The diagram to the right shows out the House voted. Republicans are shown in red, Democrats in blue. The position in the diagram is based on an assessment of their ideology. Note that all but three Republicans voted for the bill, and it was mainly conservative Democrats who joined them.
Here’s a website that lets you find out how your representative voted.
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I’m honestly not convinced that the Senate or Obama will stop this. Look at it from a political standpoint: The primary goal of a politician is to get reelected. Sure, many have high-minded ideals of things they’d like to accomplish. However, any successful politician is a realist. They can (and will) sign off on things they really don’t like if it (a) doesn’t harm their chances of reelection, (b) isn’t completely anathema, and (c) will help them to achieve something they want later.
Signing off on gutting Dodd-Frank fits all three criteria. (a) No one’s paying attention anymore. Wall Street isn’t in crisis mode anymore, so there are no mainstream stories about it. Unless you’re representing a district like Berkeley, CA or Cambridge, MA, there is very little chance that this will cost you votes. (b) Almost everyone in Congress is a millionaire. When Wall Street does well, these people tend to do well. And, while banking crises can be catastrophic, they don’t happen every day. I’m sure many of these critters are (naively) thinking that we can undo the regulations and traders will do a better job of making good decisions this time. (c) Free cash for your reelection coffers. That helps you to stay on board to work for things like preserving the ACA, increasing the minimum wage, prevent cuts to Social Security, expand education opportunities, etc. In short, it’s a deal with the devil, but it has a number of properly aligned incentives.
Obama is the wild card, given that he doesn’t have to worry about reelection and just gave a great speech about addressing income inequality. But he has also been a very good friend of Wall Street in the past, and I find there to be a considerable gap between his words and his actions in this realm. Otherwise, he would have dumped Summers and Geithner for Romer, Stiglitz, and Reich in his first term.
Wall Street went in the tank when the earlier version of Dodd-Frank went into effect under Clinton. How short our memory is. Does no one remember what caused the Great recession?
So….take your money out of the big banks
I think it is a mistake to believe that primarily one Party is beholden to big banks, Wall St., etc. Both Democrats and Republicans in both houses, as well as the current White House are all owned. Until one understands this, one cannot comprehend contemporary politics.
Fodderwing, I said exactly the same thing in the original post.
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[…] Big banks have gotten two new bills passed in the House of Representatives that roll back regulations that were put in place after the last financial meltdown to keep it from happening again. Yes, that’s right. After the banks nearly destroyed our economy in 2008 (forcing us taxpayers to bail them out to the tune of close to $100 billion) Congress passed Dodd-Frank, which even in its watered-down state on passing was a good step toward reining in some of the most dangerous forms of risk taking on Wall Street. Well, the Republican controlled House (with some help from Democrats too) is doing everything it can to get rid of Dodd-Frank. Why wouldn’t they? They need the money for their campaigns, and Wall Street is only too willing to oblige since keeping down regulations is what lets them take insane risks in the first place and make tons of money. And as long as we keep bailing them out when the risks go sour, there is no incentive for them to be responsible. READ MORE… […]