The war for finance reform

Posted: 28 May 2010 in Uncategorized
Tags: , , , ,

It’s not just that the making of legislative sausage is enough to turn one’s stomach. It’s also that the sausage being made is inedible.

Matt Taibbi, in his inimitable fashion, explains how the Senate leadership gutted most of the real attempts at finance reform. The only real reform that made it through the Senate (although it will probably be watered down in conference) was the Bernie Sanders amendment to audit the Fed. Everything else—breaking up banks that grow Too Big to Fail, requiring banks to pay up front for their own bailouts, an independent consumer protection agency, and forcing the derivatives market into the light of day—were either voted down or qualified by the introduction of so many loopholes as to be rendered meaningless.

Here’s Taibbi on the weakening of the Consumer Finance Protection Bureau:

The CFPB was always a pretty good bet to pass in some form. Just as pushing through anything that could plausibly be called “health care reform” was a political priority for the Obama administration, creating a new agency with the words “consumer protection” in the title was destined from the start to be the signature effort of the finance bill, which is otherwise mostly a mishmash of highly technical new regulations. But that didn’t stop leading Democrats from doing what they could to chisel away at the thing. Throughout the process, Chris Dodd, the influential chairman of the Senate Banking Committee, has set new standards for reptilian disingenuousness – playing the role of stern banker-buster while taking millions in Wall Street contributions. Dodd worked overtime trying to craft a “bipartisan” bill with the Republican minority – in particular with Sen. Richard Shelby, the ranking Republican on the committee. With his dyed hair, porcine trunk and fleshy, powdery-white face, Shelby recalls an elderly sumo wrestler in drag. I happened to be in the Senate on the day that Shelby proposed a substitute amendment that would have stuffed the CFPB into the FDIC, effectively scaling back its power and independence. Throughout the debate, I was struck by the way that Dodd and his huge black caterpillar eyebrows kept crossing the aisle to whisper in Shelby’s ear. During these huddles, Dodd would gently pat Shelby’s back or hold his arm; it was like watching a love scene in a Japanese monster movie.

In the end, Wall Street, and their friends in the Senate and the Obama administration, will get the financial reform legislation they can live with—which means the same financial institutions that brought the world economy to its knees will win the war.

Comments
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