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mac
Joined: 07 Mar 1999
Posts: 3440
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 Posted: Mon May 13, 2013 12:16 pm Post subject: Banks, lobbyists, and Republicans |
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By Gary Rivlin in the May 20 "The Nation"
| Quote: | The mood was triumphant on the morning of July 21, 2010, when Barack Obama, not quite two years into his presidency, strode to a podium inside the Ronald Reagan Building, a few blocks from the White House. As he prepared to sign the Dodd-Frank Wall Street Reform and Consumer Protection Act—the sweeping legislative package designed to prevent another spectacular financial collapse—into law, the president first acknowledged the miracle of having a bill to sign at all. “Passing this…was no easy task,” he told the crowd of hundreds. “We had to overcome the furious lobbying of an array of powerful interest groups and a partisan minority determined to block change.”
Indeed, some 3,000 lobbyists had swarmed the Capitol in hopes of killing off pieces of the proposed bill—nearly six lobbyists for every member of Congress. For Michael Barr, then an assistant secretary at the Treasury Department, the trench warfare spurred by Dodd-Frank left him shellshocked. “You pick a page at random,” says Barr, now a law professor at the University of Michigan, “and I’ll tell you about all the issues on that page where the fighting was intense.” Remarkably, despite the onslaught, Dodd-Frank “got stronger rather than weaker the closer we got to passage, which is incredibly unusual,” says Lisa Donner, executive director of Americans for Financial Reform, one of a handful of advocacy groups that fought tenaciously for the bill.
That sense of victory barely lasted the morning. The same financial behemoths that had fought so ferociously to block Dodd-Frank were not going to let the mere fact of the bill’s passage ruin their plans. “Halftime,” shrugged Scott Talbott, chief lobbyist for the Financial Services Roundtable, a lobbying group representing 100 of the country’s largest financial institutions. It was 5:30 am on a Friday when a joint House-Senate conference committee approved the bill’s final language. By Sunday, an industry lawyer named Annette Nazareth—a former top official at the Securities and Exchange Commission whose firm counts JPMorgan Chase and Goldman Sachs among its clients—had already sent off a heavily annotated copy of the 848-page bill to colleagues at her old agency. According to a congressional staffer whose boss was a key architect of Dodd-Frank, Nazareth is one of two “generals” running the campaign to undo the bill. The other is Eugene Scalia, a fearsome litigator and son of the Supreme Court justice. |
Read the rest at: http://www.thenation.com/article/174113/how-wall-street-defanged-dodd-frank
My favorite lines from the article include:
| Quote: | ...there are many hidden gems for progressives buried in Dodd-Frank. There’s an anti-bribery clause requiring companies to disclose payments to a foreign government when they acquire drilling and mining rights...
...two of the more prominent consumer advocacy groups on Capitol Hill, have spent a combined $1.1 million on lobbyists over the past three years—in contrast with the more than $350 million spent by the Chamber of Commerce during that same time period, or the $25 million laid out by the American Bankers Association...
and
Perhaps no part of Dodd-Frank matters more than the CFTC’s battle to implement derivatives reform. Certainly the big banks wouldn’t argue that point: no product peddled by Wall Street has proved as lucrative in recent years, especially for the country’s most elite firms. Just five banks—Goldman Sachs, JPMorgan Chase, Citigroup, Morgan Stanley and Bank of America—account for more than a 95 percent share of a derivatives market that has been generating an estimated $40 billion to $50 billion in annual revenues. Because derivatives have been traded on dark (i.e., unregulated) markets, this “oligarchy” of five, says Darrell Duffie, a finance professor at Stanford’s Graduate School of Business and the author of How Big Banks Fail and What to Do About It, has been able to charge exorbitant rates to the wide range of businesses and government entities that buy them—profit margins that are sure to plummet if Dodd-Frank is fully implemented, Duffie says. That alone would justify the huge sums spent on lobbying to gut Dodd-Frank, a reflection of the banks’ unflinching resolve to protect the billions of dollars in derivatives profits they book every year. “If you look at the energy and ferocity and the dollars the financial sector put on the table, it was overwhelmingly directed at derivatives,” says Michael Barr, the former Treasury official.
This is why derivatives—and by extension, the CFTC—should matter to the rest of us as well, at least if we want to reduce the odds that the banks will again blow up the global economy anytime soon. It was derivatives, after all—all those credit default swaps, collateralized debt obligations and other exotic financial instruments that most of us would learn about in newspaper infographics offered only after the fact—that were the main culprit in the collapse of insurance giant AIG. They were also the main problem in the failures of Lehman Brothers and Bear Stearns, and nearly took down the other big banks as well. |
So you have the son of the Supreme Court justice fighting it, his dad refusing to recuse himself, and Wall Street dedicating most of their contributions to Republicans to fight the law. And some of you don't think there is any difference between Obama and Romney (or the new crop) on this issue. You just aren't paying attention! |
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