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How Wall Street Killed Financial Reform

How Wall Street Killed Financial Reform | Coffee Party News | Scoop.it

by MATT TAIBBI, Rolling Stone

Two years ago, when he signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, President Barack Obama bragged that he'd dealt a crushing blow to the extravagant financial corruption that had caused the global economic crash in 2008. "These reforms represent the strongest consumer financial protections in history," the president told an adoring crowd in downtown D.C. on July 21st, 2010. "In history."

 

This was supposed to be the big one. At 2,300 pages, the new law ostensibly rewrote the rules for Wall Street. It was going to put an end to predatory lending in the mortgage markets, crack down on hidden fees and penalties in credit contracts, and create a powerful new Consumer Financial Protection Bureau to safeguard ordinary consumers. Big banks would be banned from gambling with taxpayer money, and a new set of rules would limit speculators from making the kind of crazy-ass bets that cause wild spikes in the price of food and energy. There would be no more AIGs, and the world would never again face a financial apocalypse when a bank like Lehman Brothers went bankrupt.

 

Most importantly, even if any of that fiendish crap ever did happen again, Dodd-Frank guaranteed we wouldn't be expected to pay for it. "The American people will never again be asked to foot the bill for Wall Street's mistakes," Obama promised. "There will be no more taxpayer-funded bailouts. Period."


Two years later, Dodd-Frank is groaning on its deathbed. The giant reform bill turned out to be like the fish reeled in by Hemingway's Old Man – no sooner caught than set upon by sharks that strip it to nothing long before it ever reaches the shore. In a furious below-the-radar effort at gutting the law – roundly despised by Washington's Wall Street paymasters – a troop of water-carrying Eric Cantor Republicans are speeding nine separate bills through the House, all designed to roll back the few genuinely toothy portions left in Dodd-Frank. With the Quislingian covert assistance of Democrats, both in Congress and in the White House, those bills could pass through the House and the Senate with little or no debate, with simple floor votes – by a process usually reserved for things like the renaming of post offices or a nonbinding resolution celebrating Amelia Earhart's birthday.
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The "Keating Five" Corruption Story Has Lessons for the Citizens United Era

The "Keating Five" Corruption Story Has Lessons for the Citizens United Era | Coffee Party News | Scoop.it

BY WILLIAM K. BLACK, Alternet

April 9, 2012 was the twenty-fifth anniversary of the most infamous savings and loan frauds -- Charles Keating’s successful use of five U.S. Senators to escape sanction for a massive violation of the law. The Senators were Alan Cranston (D. CA), Dennis DeConcini (D. AZ), John Glenn (D OH), John McCain (R. AZ), and Donald Riegle (D. MI). They became infamous as the “Keating Five.” I was one of four regulators who attended the April 9, 1987 meeting and took the notes of the meeting, in transcript format, that were so detailed and accurate that the Senators testified that they were sure I had tape recorded the meeting. (The reality is that I owe my note taking abilities to Bill Valentine, my high school debate coach, and experience debating for the University of Michigan.)

Reviewing my (near) transcript of the April 9 offers a large number of important lessons that would have allowed us to avoid future crises. We suffered the crises because we ignored all the lessons about which approaches are criminogenic and which are successful. The transcript shows four things that work. First, we were apolitical as regulators. I worked closely in the same regional office with my three regulatory colleagues for years, but I do not know their political affiliation (if any). We went after the S&L frauds and their political cronies regardless of party. Second, we were vigorous and fearless enough as regulators that the frauds (e.g., Keating) feared us. Keating knew that despite his fearsome political power and reputation for trying to ruin his opponents we (the regional S&L regulators based in San Francisco) would never back off. [MORE]

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