Republicans and Wall Street Say to Hell With Protecting the Public!
1/18/15



Since December, Congress has twice passed measures to weaken regulations in the Dodd-Frank financial law that are intended to reduce the risk of another financial meltdown.

In the last election cycle, Wall Street banks and financial interests spent over $1.2 billion on lobbying and campaign contributions, according to Americans for Financial Reform. Their spending strategy appears to be working. Just this week, the House passed further legislation that would delay by two years some key provisions of Dodd-Frank. “[Banks] want to be able to do things their way, and that’s very dangerous,” MIT economist Simon Johnson tells Bill.

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Bill Moyers: The safeguards that Congress is tearing down, even as we speak, were put in place after the financial disaster of 2008 to prevent another one like it from happening. Why do you think the Republicans are trying to sabotage them?

Simon Johnson: It’s mostly the lobby, specifically a few very large banks that don’t like those restrictions on their activities. They want to be able to take more risk. They’re not worried of course about how that could negatively impact the rest of us, and they’ve persuaded the Republicans to help them in that quest.

Moyers: Are they putting depositors and taxpayers at risk?

Johnson:Yes, absolutely. That’s the core of the reforms: Try and make sure — and it’s hard — that part of the financial system is safe; that depositors are safe; that the taxpayers, as the ultimate backstop for deposits, are safe; and of course, try and make sure that you don’t have a huge crisis that affects the broader economy with millions of people being thrown out of work. That’s the goal. And JPMorgan, Chase, Citigroup, Bank of America and Wells Fargo don’t like that. They want to be able to do things their way, and that’s very dangerous.

Moyers: Aren’t these the same banks that nearly broke the economy in 2008 and helped to destroy millions of jobs and households?

Johnson: They were at the center of what happened. Citigroup, for example, went spectacularly wrong. Parts of Bank of America were in big trouble. In 2008 and 2009, JPMorgan Chase was relatively okay, but they’ve gotten themselves into lots of trouble subsequently, with big trading losses, the so-called London Whale problem, and by fixing interest rates, and accusations of fixing exchange rates and other kinds of market manipulation. So all of these very big financial institutions are potential trouble....

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Moyers: The first target right now in Congress is the Volcker rule and the Republicans, and some Democrats who are joining in, or at least are compliant, they say they’re only making technical corrections to the Volcker rule. Do you believe them?

Johnson: Absolutely not, that’s just a smokescreen. We should remind everyone that the first thing they wanted they already got, the repeal of Section 716, which pushed derivatives away from the insured bank part of their financial empires. They got that in December.

Moyers: They tacked it onto the omnibus spending bill and Obama and Jamie Dimon lobbied for Congress to vote for it.

Johnson: Yes, but only one of those gentlemen, President Obama, had to sign the legislation that made it go through. Previously, the White House had pushed back and said, “No, we’re not doing Dodd-Frank repeal through this sneaky spending bill business.” But in December, they dropped that. So now the lobbyists are exploring all possible ways they can take this forward, including “technical fixes” to Dodd-Frank that are not technical fixes. They are undermining the substance, reducing the effectiveness and putting more pressure on the regulators not to do their jobs. It’s back to business as usual, pre-2008...

http://www.nationofchange.org/2015/01/18/republicans-wall-street-say-hell-protecting-public/