Recently the House Financial Services Committee held a hearing on the proposed reforms. They invited seven pro-industry groups to testify, a pro-industry professor, and Robert Johnson the director of the Economic Policy Initiative at the Franklin and Eleanor Roosevelt Institute. Johnson started reading his opening statement, but before he could finish acting chair Congresswoman Melissa Bean (D-IL) interrupted his statement and cut him off. Bean was sitting in for chairman Barny Frank. Johnson who used to be the Senate Banking Committee's economist was told his written statement would be be linked to in the record. In proper Orwellian fashion neither a transcript of Johnson's verbal testimony or a link to his written statement were included in the Committee's record.
How Wall Street and Its Backers on Capitol Hill Silenced a Critic Calling for Greater Regulation of Derivatives democracynow.org
AMY GOODMAN: I want to turn now to a clip of Timothy Geithner speaking on Meet the Press.
TIMOTHY GEITHNER: Barney Frank and Chris Dodd are moving comprehensive financial reform through both houses of Congress now. Chairman Dodd is drafting a comprehensive bill. Chairman Frank, working with the House Financial Services Committee, has passed through the committee very important reforms to give consumers better protection and to prevent kind of risk building up in the system that brought us this system to the edge of collapse, left taxpayer exposed. And I think we’re making a lot of progress. I’m very encouraged by how much progress they’ve made.
AMY GOODMAN: That was Treasury Secretary Timothy Geithner. I’d like you to talk about what he said.
ROBERT JOHNSON: He speaks as though they’re doing very comprehensive reform. Unfortunately, in the United States, one of the reasons we had the bubble and the crisis was because we have a broken political system, where campaign money, lobbying influence of the financial sector is enormous, and it created bad regulations, bad laws. I’m going back into the Reagan period, Bush the senior, particularly the Clinton era. We’ve made a mess, and now we come back from a crisis where the population knows darn well what a mess we’ve made. But the problem is, at this point, the people in power, the moneyed interests are still in power. And a large portion of these reforms are either cosmetic or designed by the industry and quite ineffective.
Later in the interview Johnson explains how the proposed regulations have a loophole big enough to drive another Great Depression through.
AMY GOODMAN: What were you trying to say in the Senate Finance Committee and the House Finance Committee hearing?
ROBERT JOHNSON: What I was trying to say is that Ground Zero, the San Andreas Fault of our financial system, where it blew up last time, was in the intersection between "too big to fail" firms and over-the-counter derivatives and that these derivatives need to be put on exchanges, because they’re too complex, and when they’re combined with the "too big to fail" firms, which have a 95 percent market share in OTC derivatives, five banks, that it can create a situation, like we were talking about moments ago, where Citibank could not be restructured. The spider web of positions in derivatives is so complex and so entangled that it deters policy officials from being able to put them through restructuring, because they’re afraid of what kind of spin-offs and consequences will happen.
I spoke about the credit default swap market and the illusion of safety that those credit default swap contracts created when they’re unregulated, because everybody thought AIG was going to be able to pay the bill, but they weren’t, and then the taxpayer got to provide that capital.
I just can't get over how Robert Johnson's testimony disappeared from the official record like it never happened.
AMY GOODMAN: Rob Johnson, finally, on the issue of your testimony not being posted, both the oral testimony and also linking to the written testimony that you have submitted, do you think that you’re being silenced?
ROBERT JOHNSON: I think that the process is distorted so it does not represent all voices. And most of the silence happens by omission, who’s not asked. I was given a window, but when I used that window to say things that were uncomfortable for the people that were raising money and trying to serve the industry, they reacted defensively and, I think, unfortunately.
Here's that link that was excluded from the official record: pdf
Its starting to look like the fix is in. The House Financial Services Committee seems to be cooking up sham financial reforms using a recipe supplied by Wall Street.
This reminds me of a Will Rogers quote: "These old Wall Street boys are putting up an awful fight to keep the government from putting a cop on their corner."
Not much has changed in seven decades. We are now having to re-fight the battle FDR won for us in the 30s to regulate the Banks. Lets prevent Congress from taking a dive.