Senate Democrats
join Republicans to gut Dodd-Frank banking regulations
By Tom Hall
16 March 2018
The US Senate voted Wednesday by 67 to 31 to repeal major
provisions of the Dodd-Frank Act, an Obama-era banking regulation law passed
after the 2008 financial crisis.
The bill was passed with bipartisan support, with 17 Democrats
voting in favor. Democratic senators Heidi Heitkamp of North Dakota, Jon Tester
of Montana, Joe Donnelly of Indiana and Mark Warner of Virginia joined
Republican members of the Senate banking committee in support of the bill.
Eleven Democrats had co-sponsored the bill when it first appeared before the
full Senate in January, giving it a filibuster-proof majority and making its
passage a foregone conclusion.
Other Democrats who voted for the bill include Tim Kaine of
Virgnia (Hillary Clinton’s running-mate in 2016), Debbie Stabenow of Michigan,
Angus King of Maine (a nominal independent who caucuses with the Democrats),
Claire McCaskill of Missouri, Bill Nelson of Florida, and Doug Jones of
Alabama. The support by Jones is particularly significant, given the fact that
Democrats hailed his victory over the fascistic Republican candidate Roy Moore,
after a campaign focused largely on decades-old allegations of sexual
misconduct against Moore, as a blueprint for the Democratic Party’s strategy in
the 2018 midterm elections.
The bill increases the threshold from $50 billion to $250 billion
for banks to be considered “systematically important financial institutions”
and subject to closer regulatory oversight. This includes the establishment of
“living wills” which outline the process by which a bank can be liquidated
without destabilizing the economy, and requiring banks to undergo “stress
tests” to prove that they can handle a major economic crash without going
bankrupt, as occurred in 2008 with the collapse of banks such as Lehman Brothers,
Bear Stearns and Washington Mutual.
This was portrayed dishonestly by senators as an attempt to
protect local “community banks” from the allegedly crushing costs of complying
with financial regulations. “What I have said consistently is that Dodd-Frank was
supposed to have stopped too big to fail, but the net result has been too small
to succeed,” Heitkamp told reporters. In fact, companies exempted under the
higher threshold include giant entities such as Barclays, American Express,
BB&T and BMO.
The Senate bill also exempts banks with less than $10 billion in
assets from the “Volcker Rule” prohibiting high-risk investments with federally
guaranteed deposits. It also exempts banks which have granted fewer than 500
mortgages from reporting requirements.
The Dodd-Frank Act was always a fig leaf which did nothing to
significantly curtail the parasitic and criminal activities which led to the
2008 financial crisis in the first place. The years since 2008 have seen the
growing consolidation of the financial industry’s assets into a smaller number
of ever-larger entities which are “too big to fail,” investing in newer, larger
and more dangerous speculative bubbles, fueling record profits and
unprecedented rises in the stock market even as the real economy continues to
stagnate or decline.
Within financial circles, there is growing concern that a newer
and far larger financial crisis is imminent. A report in Bloomberg News on
Wednesday, “Bigger Than Any Past Bubble: Beware of Soaring Household Assets,”
warned that the market value of household real and financial assets increased
by nearly $50 trillion since 2009 to $114.4 trillion, “dwarfing the levels”
immediately preceding the collapse of the housing bubble in 2007-2008.
Nevertheless, the financial industry considers even the Dodd-Frank
Act’s modest regulations to be intolerable, and has pushed for the repeal of
the law for years.
It is unclear at this stage whether the Senate bill will
ultimately be signed into law, given the support by the Republican majority in the
House of Representatives for dismantling even more of the law’s regulatory
measures. In the event that the House and the Senate pass two different bills,
the two versions must be reconciled in a conference committee including
representatives from both chambers.
The differences between the Senate and House positions create a
slight possibility of a repeat of the collapse of the Republican campaign to
repeal Obamacare, which failed due to the opposition of a handful of right-wing
Republicans demanding even more severe measures. Jeb Hensarling, the chairman
of the House Financial Services Committee, has declared that the House would
not even vote on the Senate bill unless Senate leaders agreed to negotiate with
the House.
However, given the widespread support for the repeal of Dodd-Frank
in the financial industry (as opposed to significant opposition from insurance
companies, who benefitted financially from provisions of the law requiring
individuals to purchase healthcare, to the repeal of Obamacare), it is far more
likely that the two houses of Congress will come to some sort of agreement.
As has been widely reported, 10 out of the 17 Democrats who voted
for the bill face re-election in the fall, including seven in states where
Trump won the general election in 2016. To a certain extent, their votes
reflected concerns that Wall Street banks would punish them for voting against
the bill by pouring funds into the campaign war chests of their Republican
opponents.
More fundamentally, the Senate vote demonstrates the fact that the
Democrats, like the Republicans, are a party of the American financial
aristocracy.
The leader of the Democrats in the Senate, Chuck Schumer of New
York, has received more campaign contributions from Wall Street than any other
senator. While he voted against the bill—a meaningless gesture given the
certainty of its passage—he made clear that he would do nothing to dissuade
other Democrats from voting in favor.
The Senate vote comes one month after Democrats provided the votes
necessary to pass a spending bill increasing annual military spending by 17
percent, to $1.4 trillion over the next two years, and three months after the
passage of massive tax cuts for the wealthy and for US corporations. While
Democrats voted against that bill, which passed on party lines, Democrats made
clear their desire to see such cuts enacted, criticizing Republicans primarily
for cutting them out of the negotiations (and thus from the financial rewards
from Wall Street). Earlier this month, congressional Democrats released their
policy proposals for the 2018 midterm elections, calling for maintaining the
vast majority of the tax cuts enacted by Republicans last December.
Schumer Calls on God to Bless the Rich and Corporations
In a speech on the Senate floor on Thursday, Senate Minority Leader Chuck Schumer (D-N.Y.) called on God to bless the rich and corporations.
“I am not against the rich or corporations. God, bless them,” said Schumer.
The Senate Minority Leader made this remark while explaining why he believes the President Donald Trump “talks like a populist but governs like a plutocrat.”
Here is an excerpt from Schumer’s floor speech:
“By the way, I think the President loves having the big crowds of working class people in those tents, but who are his real friends? They are the very wealthy. That is who he hung out with in New York. He cares what they think, and that is why his policies are so aimed at them.
“So, my Republican friends, in a nutshell, this is the problem you face. Your rhetoric, Republicans, is all about helping working people, but your policies and the people developing them are all about helping corporations and the rich.
"I am not against the rich or corporations. God, bless them. Let’s hope they do well. But average Americans need far more help than the top 1 percent and wealthy corporations. Give it to average folks. They need it. They are still struggling with paying for college, affording a vacation, helping their elderly mom and dad through a healthcare problem. They are who need the help, not the top 1 percent. But our Republican colleagues aim everything at that top 1 percent.”
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