Our story so far:
Banks and investment houses spent the last 30 years pouring money into congressional elections, influencing regulations and oversight of their industry. They managed to exempt derivatives from any and all oversight, increase leverage from 12-to-1 to unlimited, repeal Glass-Steagall limits that kept Wall Street and Main Street Banks separated, create a new “Lend-to-securitize unregulated banks.
The most recent decade saw the rise on the Shadow banking system — it existed outside of any supervision or government regulations.
The end result of this: A Financial collapse, frozen credit, and the worst recession since the Great Depression.
Fast forward to the mid-term elections:
While most of the electorate is focused on Tax Cuts, deficit spending, the Tea Party, and who might have practiced witchcraft, my biggest concern is none of the above. The threat to long term economic health will be the attempted roll back of the re-regulation of the financial markets.
Milquetoast as Financial reform was, I fully expect a run at overturning the recent FIn Reg reforms. As hard as it is to believe, 1980s era deregulation-speak is already coming out of the not-yet elected, bank backed candidates and their deep pocketed corporate sponsors.
Consider this most recent bit of governmental genuflecting:
“The most powerful executives in the banking industry didn’t go to the government. The government came to them.
Ben S. Bernanke, the chairman of the Federal Reserve; Timothy F. Geithner, the Treasury secretary; and regulators like Mary L. Schapiro of the Securities and Exchange Commission and Gary Gensler of the Commodity Futures Trading Commission made their way last month to a room called the Nest at the Willard InterContinental Hotel in Washington. There, the members of a group called the Financial Services Forum awaited them.
The event with the forum, which is composed of chief executives, underscored how influential banks, brokerage firms and insurance companies remain in Washington, despite all the critical campaign rhetoric from the White House, Capitol Hill and other quarters. And Tuesday’s midterm elections are likely to leave them in an even stronger position, blunting the most serious overhaul of financial regulations since the Great Depression.
The widely expected prospect of a Republican takeover of the House of Representatives and possibly the Senate would be warmly welcomed by the banks, who want a break from the regulatory push of the last two years. Divided government makes it harder to pass new legislation and brings with it other benefits for the banks, like reducing the chances of an increase in corporate taxes.”
This is no accident — great gobs of money has been funneled to candidates willing to act as the bitches for the banks in DC:
“The example of Wall Street’s attempts to resist financial regulation—and the help provided by the Chamber—is an illustrative one. The Chamber pounced early on Congress to dissuade it from passing the Consumer Financial Protection Agency Act. Donohue’s troops mounted grassroots and media onslaughts around the country, dispatching local chamber officials and business members to lobby local lawmakers, and running local advertisements directly targeting them. In Montana, the Chamber aired an ad targeting Senator Jon Tester that showed a man lying awake in bed in the middle of the night, staring at the alarm clock, while a voiceover intoned, “Call Senator Tester. Tell him to stop the CFPA, because small businesses can’t afford more economic pain.” The Chamber put millions into this sort of advertising.”
As much as the Chamber of Commerce claims to represent business, it is actually “beholden to a cadre of multinationals whose interests are often inimical to those of small business. In 2008, a third of its revenues came from just nineteen companies.”
Thus, regardless of the outcome of this election, sunlight and pressure must be maintained on those who would once again, allow the biggest banks to have their way with us . . .
Financial Leaders Expect Shift of Power After Elections
NELSON D. SCHWARTZ
NYT, November 1, 2010
Show Him the Money
Washington Monthly, July/August 2010