Progressive Democrats are apparently fed up with the big banks and are taking a strong stand on financial reform (this includes the previously "not-so-progressive" Blanche Lincoln, whose Progressive primary challenger apparently stiffened her backbone).
Please call your Senators and demand that they support the following two bills introduced by Democratic Senators -- it's time to end the era of the "Wall Street casino":
- Sen. Blanche Lincoln’s very tough derivatives bill
- Sens. Sherrod Brown (D-Ohio) and Ted Kaufman’s (D-Del.) bill to limit the size of banks
While I was writing this, ABC News reported that Chris Dodd caved in and will now replace his somewhat wimpy derivatives rules with the much tougher rules contained in Blanche Lincoln's bill. Thank God.
Now back to my regularly-scheduled diary (!).........
These two bills are causing Wall Street and the GOP to practically wet their pants. THEY ARE GAME CHANGERS. THEY WILL ACTUALLY HELP END THE WALL STREET CASINO CULTURE THAT BROUGHT THE AMERICAN FINANCIAL SYSTEM TO ITS KNEES. Please support Progressive Senators who are taking this tough stand! Please call your Senators, the White House, etc.
Background:
- Blanche Lincoln’s Derivatives Bill:
Blanche Lincoln's bill requires that most derivatives be exchange-traded and -- most amazingly -- would apparently not let the big banks trade them ("swap desks" would apparently have to be spun off, a move that Jamie Dimon at JP Morgan said would cost his bank up to $2 billion annually). A brief overview of Lincoln’s bill is here, written back when everyone thought it was "doomed": http://blogs.reuters.com/...
Update: Wow, I wonder what happened this weekend to make Chris Dodd get on board with Blanche Lincoln’s bill?
According to an article by Harold Myerson (Washington Post) published Saturday, Lincoln's bill was under attack not just from the GOP, but from Tim Geithner, Larry Summers, Chris Dodd, and Kirstin Gillibrand. They apparently planned to "gut it" behind the scenes, where the public woouldn't see them doing Wall Street’s bidding:
As things stand, those members of Congress who want to keep the big banks as they are will probably not try to change the bill where the public can see them doing it. Sen. Kirsten Gillibrand (D-N.Y.) opted not to introduce her amendment weakening Lincoln's requirement that the banks spin off their swaps operations during Wednesday's Agriculture Committee meeting. "This kind of thing can best go on in conference," one senior congressional staffer told me. Connecticut Democrat Chris Dodd, the omnibus bill's author and floor manager, has even resisted incorporating Lincoln's language into his bill.
Financial reform advocates are also concerned that Treasury Secretary Timothy Geithner and Obama economic honcho Larry Summers, who have declined to endorse much of Lincoln's bill, will work discreetly to defeat it. As Bill Clinton's Treasury secretary, Summers blocked attempts to regulate derivatives a decade ago. "We could be looking at the same damn Larry Summers move 10 years later," one Democratic legislator frets. The conflict is between those who want to nudge Wall Street and those who want to shrink it. In the next couple weeks, senators and representatives will let us know which side they are on.
Here's another article reporting on a big fight last Wednesday between Dodd and Lincoln over which version would go in the bill:
http://www.rollcall.com/...
Apparently, during the meeting, Maria Cantwell indicated that she has had quite enough of Timmy and Larry's Wall Street bullsh*t (Geithner & Summers):
Fans of Lincoln’s bill came to her aid at Thursday’s regular Democratic Policy Committee lunch with harsh criticisms for Dodd and Reid, sources confirmed.
At one point, Sen. Maria Cantwell (D-Wash.) stood up and attacked leaders for not showing Lincoln the respect she deserved on the issue. Cantwell also implied derisively that Banking Democrats believed they were smarter than others in the caucus, the sources said. With White House Senior Adviser David Axelrod, Communications Director Dan Pfeiffer and other presidential staff in attendance, Cantwell saved her sharpest criticisms for White House economic adviser Larry Summers and Treasury Secretary Timothy Geithner, who she said were working at cross purposes with Democrats in the Senate. Cantwell’s office did not return calls seeking comment.
Sen. Bill Nelson (D-Fla.) also rose to speak in Lincoln’s defense, sources said, but his rhetoric was more tempered.
Of course, while Obama/Geithner/Dodd have been a bit reluctant to step too hard on Wall Street's toes, the GOP has been downright hysterical and has been pulling out all the stops to protect their Wall Street buddies. This is a rather amusing summary of how the GOP Senators who were trying to water down derivatives legislation ended-up shooting themselves in the foot: http://voices.washingtonpost.com/...
- Brown-Kaufman "SAFE Banking Act"
The following summary appeared on Simon Johnson’s blog (MIT professor, co-author of "13 Bankers", and a leading proponent of breaking-up the big banks):
On Wednesday, Senators Sherrod Brown and Ted Kaufman unveiled a "SAFE banking Act" with a clear and powerful purpose: Break up the big banks.
...........
The idea is simple, in the sense that the largest six banks in the American economy are currently "too big to fail" in the eyes of the credit market (and presumably in the leading minds the Obama administration — which saved all the big banks, without conditions, in March-April 2009). The bill put forward by Senator Christopher J. Dodd, the chairman of the Banking Committee, has some sensible proposals — and is definitely not an approach that supports "bailouts" — but it does not really confront the problem of the half-dozen megabanks.
In the American political system — where the power of major banks is now so manifest — there is no way to significantly reduce the risks posed by these banks unless they are broken up.
Much to the consternation of the Big Banks, a "test vote" of a similarly-themed piece of legislation drew more votes than expected in the Senate Budget Committee on Thurday. Introduced by Sen. Bernie Sanders, the bill, although apparently containing complex language, was seen as a test of support for breaking up the six big banks. Eight Democrats voted with Sanders, as did Republican Jim Bunning (the Dems were Patty Murray, Ron Wyden, Russ Feingold, Bob Byrd, Debbie Stabenow, Ben Cardin, Sheldon Whitehouse, and Jeff Merkley (Oregon). Joining 8 Republicans in voting against the bill were 4 Democrats: Kent Conrad, Bill Nelson, Mark Begich, and Mark Warner.
Full article here:
http://www.huffingtonpost.com/...
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Could it be?? Could the "good" Democrats actually be on the verge of trying to pass true financial reform?
If your Senator is one of the "good ones", would you please call/write and thank them and encourage them to keep fighting. And if you have a "bad one", could you please call/write and give them hell?
They have an uphill fight to be sure. This weekend, Fox News trotted out talking heads who warned that Blanche Lincoln’s bill would cause America to lose its pre-eminent financial position. Talk about a load of b-s!! In truth, only the "full faith and credit" of the US can save financial speculators when the derivatives market implodes. Does anybody really think that the UK or Germany or Dubai wants to backstop derivative trading by their big banks? What country will take on the risk of backstopping derivatives? Costa Rica? Who would place billion dollar derivative bets with an institution based in a tiny country like that? The big banks are disgusting: They invent these "weapons of financial self-destruction", spread mayhem with them all over the world, and then say they can't stop doing it because some other country will take over the business! ABSURD!!!!
Wall Street's other tactic is the "Gun to the Head". Quoting Simon Johnson again:
....They are also powerful enough to threaten a form of extortion: If reform is tough, according to JPMorgan Chase’s chief, Jamie Dimon, credit will contract, the recovery will slow and unemployment will stay high.
So Dimon's message is: Screw with us and you can kiss your economic recovery goodbye. Who the hell is Dimon kidding anyway? The big banks are making all their money on fixed-income and other investing these days (courtesy of Bernanke's "free money to the big banks giveaway program"). They're not doing much lending to business anyway so how much could credit actually contract?? That's a pretty weak threat -- Dimon better think of something more scary to terrify us.
Message to Jamie Dimon: My Dad fought in WWII and had a bullet wound in the shoulder to prove it. I may be a 50-year-old middle-class suburbanite woman but I'm up for a fight. You wanna put a gun to my head, you come right over. I'm so filled with rage at selfish pigs like you who are destroying this great country that you won't have much of a chance.