While many of us have been stuck in an oily rut, up to our eyeballs in "crude" stories, the Joint House and Senate Conference Committee on Financial Reform is working on resolving the differences between their two bills. While most of the reports coming out of the process appear positive in that there are signs that the end result bill may be stronger than its original House or Senate versions (stronger meaning tougher regulation of Wall Street Banks), there are some reasons to be concerned and for us to remain vigilant.
So I would like you to take a break from watching your daily Web Opera of "As the Oil Spews", and join me after the jump /\ to take some action on Financial Reform. Yes, I need your help, and Yes, this is important.
Since much has been going on in the past week with regard to financial reform legislation, I have a lot of ground to cover. And since I tend to write long diaries that many lose interest in quickly, I thought it best to get to the point right away before I lose most of you.
Financial Reform legislation is complex with many moving parts. But there are a couple of important parts that we progressives need push for. One is the much talked about Derivatives Swap provision that is currently in the Senate bill courtesy of Blanche Lincoln, or more appropriately due to the Senate primary candidacy of Bill Halter. The other is the Merkley-Levin amendment that never made it into the Senate bill, but that would greatly strengthen the Volker Rule in the Senate bill. I will explain these in more detail later, but for now what you mainly need to know is that the big Wall Street Banks hate both of these bill provisions, so that pretty much makes them good for the rest of us common folk. Whether we get them in the final bill or not will depend in large part on what happens over the next week or two in the Conference Committee. And that, in turn, that will depend somewhat on how much push back we can muster against the big Wall Street lobbyists who have each of these committee members on constant speed dial.
So I am asking my fellow Kossacks today, to take a minute or two of your time and call or E-mail a Dem. Conference Committee member or two and tell them you want them to back the Derivatives Swap provision in the Senate bill and to support putting the Merkley-Levin provisions into the bill to strengthen the Volker rule. We especially need to contact House members from New York, who for reasons I’ll explain later, are threatening to weaken the bill for their friends on Wall Street.
In the block below you will find all the info you need to call or E-mail a Dem. Committee member. The phone numbers are there and each E-mail link will take you directly to the Representative’s or Senator’s contact page. So PLEASE take a little time to make a contact or two, and stay with me after the block list for some more in depth analysis of what is going on with financial reform.
Senate Conferees -- Democrats
Senate Banking Chairman Christopher Dodd (D-Conn.) (202) 224-2823 E-mail
Senate Agriculture Chairman Blanche Lincoln of Arkansas (D-Ark.) (202) 224-4843 E-mail
Sen. Tim Johnson (D-S.D.) (202) 224-5842 E-mail
Sen. Patrick Leahy (D-Vt.) (202) 224-4242 E-mail
Sen. Tom Harkin (D-Iowa) (202) 224-3254 E-mail
Sen. Jack Reed (D-R.I.) (202) 224-4642 E-mail
Sen. Charles Schumer (D-N.Y.) (202) 224-6542 E-mail
House Conferees -- Democrats
Committee on Financial Services
Barney Frank, Chair, full committee D-Mass.- 4th (202) 225-5931 E-mail
Paul Kanjorski, Chair, Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises D-Pa. 11th (202) 225-6511 E-mail
Maxine Waters, Chair, Subcommittee on Housing and Community Opportunity D-Cal. 35th (202) 225-2201 E-mail
Carolyn Maloney, Member of Committee D-NY 14th, 202.225.7944 E-mail
Luis Gutierrez, Chair, Subcommittee on Financial Institutions and Consumer Credit D-Illinois 4th, (202) 225-8203 E-mail
Mel Watt, Chair, Subcommittee on Domestic Monetary Policy and Technology D-NC 12th (202) 225-1510 E-mail
Gregory Meeks, Chair, Subcommittee on International Monetary Policy and Trade D- NY 6th 202/225-3461 E-mail
Dennis Moore, Chair, Subcommittee on Oversight and Investigations D- KS 3rd (913) 621-0832 E-mail
Mary Jo Kilroy, Member of Committee D- OH 15th, (202) 225-2015 E-mail
Gary Peters, Member of Committee D- MI 9th, 202-225-5802 E-mail
Conferees on specific portions of the legislation on which their committees have jurisdiction:
Committee on Agriculture
Collin Peterson, Chair, full committee D- MN 7th, (202) 225-2165 E-mail
Leonard Boswell, Chair, Subcommittee on General Farm Commodities and Risk Management D- Iowa 3rd, (202) 225-3806 E-mail
Committee on Energy and Commerce
Henry Waxman, Chair, full committee D- Cal. 30th, (202) 225-3976 E-mail
Bobby Rush, Chair, Subcommittee on Commerce, Trade, and Consumer Protection D- Illinois 1st, 202-225-4372 E-mail
Committee on the Judiciary
John Conyers, Chair, full committee D- MI 14th, 202-225-5126 E-mail
Howard Berman, Member of Committee D- Cal. 28th, 202-225-4695 E-mail
Committee on Oversight and Government Reform
Edolphus Towns, Chair, full committee D- NY 10th (202) 225-5936 E-mail
Elijah Cummings, Member of Committee D- MD 7th, (202) 225-4741 E-mail
Committee on Small Business
Nydia Velazquez, Chair, full committee D- NY 12th, (202) 225-2361 E-mail
Heath Shuler, Chair, Subcommittee on Rural Development, Entrepreneurship and Trade D- NC 11th, (202) 225-6401 E-mail
BTW: There are Republicans on the Committee, but since they are out numbered by the Dems. on the Committee based on the majorities in the House and Senate and have no real blocking power like on the Senate floor, they are largely irrelevant.
For those who answered the call and took action, I THANK YOU! Now if you stick around I’ll try to go over some of the more recent events regarding the Joint House and Senate Conference Committee on Financial Reform, with highlights of the good, the bad and the ugly. But before I begin, I have to admit, I’m no financial genious. Most of this stuff is Greek to me (and I’m not Greek), so I’ll try to avoid the financial details as much as possible and stick to the politics of it all, something I am more familiar with.
You may have heard or read a number of positive stories of late on how it looks like the financial reform legislation is likely to be strengthened in conference, many of which I will recap in my chronology below. But without trying to be the "Debbie Downer" at the party and throw cold water on things, there are some obvious reasons to be concerned and remain alert to sudden backsliding as the Committee continues to work on the bill. First off, we have mainly Conserva-Dems on the Committee (no Merkley or Levin), with 5 out of the 27 members from the Wall Street State of New York (recent developments indicate that NY Dems. may be a problem – more on that later). Leadership's backing on both the Derivatives Swap and Merkley-Levin is weak at best, and the WH is not supporting the Derivatives piece (although it does not appear that they are not strongly opposed). The banking lobby is in full deployment mode, and with only 27 members to lobby instead of 50 Senators or 435 Representatives, it makes it easier for the lobbyists to pick out a few weak targets and hammer them. Then we have the big distraction of the Gulf oil disaster, which the media and many of us are focused on 24/7. I am not saying that the Gulf does not deserve the attention its getting, I’m just saying it provides perfect cover for backroom committee deals to insert loopholes while hardly anyone is watching.
So where are we, and where might we be going with financial reform legislation. Let’s start off on a positive note, shall we.
Dateline June 4: In
Joan McCarter (formerly "McJoan") FP post here at DailyKos, she indicated that momentum was building to strengthen financial reform legislation in conference based on pre-conference reporting. [BTW – Joan has been doing an excellent job of keeping us posted on financial reform events so that it does not fall off our radar screens. She has posted a number of well written and well researched FP’ers on the topic and deserves a tip of the hat. Thanks Joan!] Specifically, it was expected that senator Franken’s credit agencies reform measures would make into the final bill and that the Merkley-Levin amendment that did not get a vote in the Senate, might make it into the bill. Here’s what Merkley-Levin is and what was being said about its prospects:
[A] proposal — opposed by banks — to toughen a ban on proprietary trading and stop them from betting against products they sell to customers has re-emerged during preparatory work. The provision, sponsored by Jeff Merkley and Carl Levin, two Democratic senators, would toughen the "Volcker rule," which bans banks from trading for their own account or owning hedge funds and private equity firms, but gives regulators time to study the rule and modify it. "That is a very wishy-washy way to approach the issue," Mr. Merkley said.
Mr. Levin said even though the Treasury would "probably...want as much power as they can get to...modify [the bill]," he thought Congress should write a strong final version. "Merkley-Levin in general is very much alive," Mr. Levin said. "The proprietary trading provisions from a legislative perspective are very much in the mix.
It is my understanding that the "Volker Rule" in the current bill calls for a study period of the rule before its implemented and gives Treasury a lot of say in shaping the final rule (In short, weak regulation). Merkley-Levin takes a more Congress directed approach, instead of Treasury directed, and contains a stronger rule that immediately bans banks from trading for their own account or owning hedge funds and private equity firms.
However, the partial downside to Merkley-Levin’s new life, were the rumors at the time that it might replace the Lincoln Derivatives Swap already in the Senate bill. Not a real bad deal necessarily, but kind of a disappointment to those who want both.
Dateline June 7: A Bloomberg Report continues the rumor that the Lincoln Derivatives Swap will be swapped for the Volker rule. According to the Bloomberg Report:
The proprietary trading restrictions named for former Federal Reserve Chairman Paul Volcker may eliminate the need for Lincoln’s swaps-desk plan, House Financial Services Committee Chairman Barney Frank said at a conference on May 25.
"I don’t see the need for a separate rule regarding derivatives, because the restriction on banks engaging in proprietary activity would apply to derivatives," said Frank, the Massachusetts Democrat who will lead the House-Senate talks. Lincoln, an Arkansas Democrat who will be involved in the negotiations, said she will fight to retain her provision.
Just to be clear, derivatives, including swaps, are financial instruments used to hedge risks or for speculation. They’re derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in the weather or interest rates. Meanwhile, Merkley & Levin are still beating on the Conference room door hoping someone inside will listen"
The Senate’s Volcker rule language may also be subject to debate. Democrats Jeff Merkley of Oregon and Carl Levin of Michigan, who unsuccessfully offered an amendment to strengthen the measure during the Senate deliberations, said they will continue to push for changes. Levin and Merkley have said the Senate bill should ban proprietary trading instead of leaving it to regulators to impose the ban, saying it would give them too much discretion to weaken it later.
Oh, and here’s what the Big Banks think (if you care);
"The battleground will end up being the derivatives rule," said Kevin Petrasic, a former bank regulator now with law firm Paul, Hastings, Janofsky & Walker LLP. "It will cause the Volcker rule to be locked in because folks will be willing to give on the derivatives rule if they think the Volcker rule will stay in place," Petrasic said in a telephone interview.
Its obvious they consider the Volker rule to be the lesser of two evils from their perspective.
Dateline June 10: After Lincolns surprise win in the Arkansas primary its become harder to just jettison her Derivatives Swap restrictions without jettisoning Blanche’s re-election chances at the same time. In this FP post,
McJoan explains the situation:
Lincoln's win apparently took a lot of Dems by surprise, however, and now they seem to be thinking that keeping a tough-on-Wall Street reform in the bill might be a popular political idea. Who knew. There's also the little problem for Lincoln of now having to face the electorate once again in November. Had she lost on Tuesday, that analysis from Monday might have held. That's changed, and now the administration--which crowed about Lincoln's victory--is going to have to decide if they'll back Lincoln enough to drop their opposition to the provision.
At this point, with the new-found conviction that tough Wall Street regulation might be a political winner, it's quite possible that conferees won't take an either/or approach to swap-desks and the stronger Volcker Rule language Merkley and Levin are lobbying for, and will include them both.
Include them both! What a brilliant idea! Include 2 provisions that are both tough on Wall Street and have huge positives among voters. What political geniuses! (Sorry, for the snark, I couldn’t help myself).
Dateline June 11: The House-Senate Conference Committee begins work. So how does the joint committee actually work?
Tim Fernholtz from Tapped offers a great explanation:
Presuming all goes as planned, Barney Frank will chair the committee, since the Senate asked for this conference and also chaired the 1999 session. The committee will use the Senate bill, with a few House-bill substitutions, as the default working text, which gives an advantage to reformers, since the Senate bill -- which includes the Volcker rule and tough derivatives-reform provisions -- is stronger than the House bill. In broad strokes, you should expect the Senate to play defense while the House plays offense.
Conference works like this: Going title by title through the bill, House members will submit an offer to the Senate contingent. If any House member wants to change that offer, they can propose an amendment and it will be voted on -- but only by the House members. When the offer is finalized, it goes across the table to the Senate's conferees, who can elect to accept the offer, or amend it to make a counter-offer -- again, voting just among Senate conferees. Conferees may leave the room to negotiate with their respective caucuses, and the offers go back and forth until there is consensus. At no time does the entire conference committee vote on one title or the whole bill; the final version -- the conference report -- is authorized with the signatures of a majority of conferees.
Under these rules where the base bill is the Senate bill, it sounds like Blanche has a good shot at keeping her Derivatives Swap portion in the final bill. But, regardless of the framework, the truth is that when a deal is struct among the power brokers on the joint committee, they will find a way to make it work.
Dateline June 16: Ought Oh! Trouble Ahead! Remember when I warned about pushback from the New York delegation. Well this is why:
House Democrats representing New York are making a last-minute push to defend the interests of the state's most profitable industry.
On Monday night, Gary Ackerman, a Democrat who represents Queens, told his fellow caucus members that if reform is too tough on Wall Street -- particularly, if it includes a tough derivatives proposal from Blanche Lincoln or a hardened Volcker Rule -- the 26 members of the New York delegation may abandon the party on a final vote. He claims that reduced profits for Wall Street translates into lower tax revenue for the state and city, which hurts all New Yorkers.
Yes, you can call them shills for Wall Street ready to sell their political souls for BIG Bank campaign cash, but there is more to it than that. You see New York City and the State of New York get a good chunk of their tax revenue from Wall Street profits and CEO bonuses. So if Wall Street makes money, New York makes money. As a New Yorker, I freely admit that we are as addicted to Wall Street cash as Alaska is to oil dollars. But these New York Reps. who are afraid of killing the goose that lays the golden eggs, need to realize that, in the long run, we New Yorkers suffer more than anyone else from weak financial regulation that allows more busts from high risk behavior on Wall Street that Main Street ends up paying for. We need to remind the New York Reps of this and get them to back off from their pro-Wall Street campaign.
Finally, I’ll leave you with this wise bit of advice from
David Waldman's recent FP post
So what, if anything, can netroots activists do to give themselves a chance at influencing a conference outcome?
- Be prepared well in advance of conference. Know what you want, what your bottom line is, and what you're willing to give up to get it. Conference is a dealmaking exercise. It's entire purpose is compromise. Members of Congress, in fact, often anticipate conference wheeling and dealing, and sometimes toss provisions into a bill that they intend to use as bargaining chips later on. You never know for sure when an ally who fights to include your favorite position in a bill is really going to go to the mat for it, or is preparing to trade it in conference for something else.
- As always, stay in contact with your representatives. If they're on the conference committee (which is usually only the case for the chairs and other top-ranking members of the committees of jurisdiction on the bill), great. If not, urge your reps to work to see your preferred changes made by leaning on conferees. Members can make their wishes known through personal contacts, through letters to the conferees signed by like-minded colleagues, or even motions to instruct conferees offered on the floor -- though none of these (including a floor motion) are actually binding, so there's no way to nail things down with certainty.
- Stay aware, and stay vocal. The biggest influence a disparate and generalized group (like netroots activists) can have in the conference environment, short of somehow hiring a lobbyist, is to let Members of Congress see a sustained interest in and understanding of the conference process. When you contact them, demonstrate an awareness of the process by making your asks as specific as possible -- i.e., "please support the inclusion of the Johnsonheimer amendment in the conference report on H.R. 123," as opposed to "vote to protect the environment." That's always good advice, of course, but it's particularly important to be as detailed as possible (and to know what's possible and what's not in the first place) at the conference stage because the whole point of conference is to iron out the details in the finest of the fine print of the bill. Members who aren't involved in the conference are usually on the outside because they don't have an in-depth, personal knowledge of the details of the bill, and they'll be considerably more comfortable making inquiries about it among their colleagues on the inside if they're armed with material that makes it look like they know what they're talking about, and which can elicit specific answers from Members on the inside, rather than a generalized response.
If you made it this far, Congratulations and I THANK YOU for your attention. What will come out of this Committee is anybody's guess at this point. Their are rumors of providing a two year phase in period for the Derivatives Swap restrictions to give the Big Banks some time to ween themselves off their Derivatives gambling addiction. If this is the only weakening that's done, we can be thankful. However, even though there is a lot of talk of strengthening the bill, I still worry that that old saying about "Like a dead fish, if you leave a bill lying around too long it starts to stink". Hopefully the Committee can finsh its work soon with minimal damage to the bill and maximum improvement.
Now after you have contacted a Committee member or two, please feel free to return to watching BP’s fountain of spewing filth now playing in a Gulf near you!
P.S. Since I'm at work, I won't be able to respond to any comments until later (wouldn't be prudent). But I promise to get back to you later if you have questions.
THANK YOU!