Warren

A tweet last night from the Nation’s Katrina vanden Heuvel has raised expectations that President Obama will soon nominate Elizabeth Warren to head the new Consumer Financial Protection Agency.  Betty Cracker at Rumproast says if the rumor is true, she’s looking forward to the confirmation fight:

I’d love to see the brilliant, no-nonsense Ms. Warren on teevee analyzing the big shitpile and spelling out exactly how the GOP and its enablers stacked the deck in favor of their sugar daddies at the expense of the middle class.

While Public Citizen has been pushing for Warren to get the job because of her tough, bulldog  approach to Wall Street abuses, Liberaland’s Yashwanth Manjunath says if Obama really wants Warren for the job, he’d just bypass Congress and make her a recess appointment. He doesn’t see it happening, though, because neither the Democrats nor Republicans are all that interested in really reforming the financial markets.

This issue has nothing to do with “liberals” and “conservatives”; it has to do with power, and who really has it in Washington. Elizabeth Warren has no shot of being confirmed by this Congress because, as Dick Durbin once admitted, “the banks own the place.”

On the positive side of the ledger, the bill contains stronger consumer financial protections and curbs on some of the worst practices in the derivatives markets.

Consumer Protection: The bill consolidates and streamlines existing consumer financial protection by creating a Consumer Financial Protection Bureau. This bureau will have the authority to crack down on unfair, deceptive and abusive practices in connection with consumer products such as payday loans, credit cards and mortgages by using new rules and enforcement powers. It also will have authority to ban particularly harmful practices such as forced arbitration. Had the bureau been in place and operating effectively during the run-up to the financial crisis, it would have prevented the predatory and abusive mortgage lending practices that led directly to the crash.

Transparency, Oversight and Stability in the Over-the-Counter (OTC) Derivatives Market: The bill also makes major progress on reining in reckless and unfair derivatives practices. It restricts the most egregious practices, such as federally insured banks engaging in risky proprietary trading and financial institutions making bets against their own clients. It requires the vast majority of previously unregulated OTC derivatives to be cleared and traded on regulated exchanges. Derivatives were a critical cause of the financial crisis; new clearing and exchange rules should go a long way toward stabilizing the system.

There are many other positive components of the bill. How effective they turn out to be will depend crucially on implementation over the next months and years. If Wall Street can regain control of the regulatory process, then many of the potential benefits from this bill will be lost.

Unfortunately, many important reforms are missing from the bill. Some key elements were jettisoned or weakened in the conference process. These include limits on commercial banks owning hedge funds, and the bulk of the requirement that commercial banks spin off their derivatives trading desks.

Other key reforms are absent from the bill. These include meaningful restraints on executive and top trader compensation, a financial speculation tax and rules to break up the biggest banks. The megabanks that now dominate the financial sector – which is more concentrated than at the onset of the financial crisis – pose a continuing threat to our economy and democracy.

Particularly because it does not break up the megabanks, this bill does not ensure that we will not have a repeat of the financial crisis. Another round of reform will be needed to achieve that objective.

Nonetheless, the bill is an extraordinary achievement for regular Americans and will be enacted into law despite a massive and deceptive opposition campaign by Wall Street and its allies.

We have lots more to do, but today we have achieved what many thought impossible just months ago.

Robert Weissman is president of Public Citizen.

The two most notable are substantially stronger consumer financial protections and curbs on some of the worst practices in the derivatives markets.

The Senate is expected to vote on the conference report after the holiday break.  Chris Bowers at Open Left offers an in-depth analysis:

If the bill is defeated by pro-Wall Street forces over the next two weeks, the only parts which will be defeated are the victories, while all of its shortcomings will remain in place. If it is defeated, the 1999 financial deregulation package will remain the basic framework under which our financial system operates, and we all know how that worked out.

Wall Street, an ant? You mean the bankers who have been spending more than a million dollars a day on lobbyists to kill the bill? You mean the gargantuan institutions whose reckless, predatory actions caused the near-collapse of the financial system and plunged us into the Great Recession? Sorry, I’m really not seeing anything ant-like here.

And then he says the reform bill is like a nuclear weapon. I guess he’s trying to say it’s too strong. Yeah, there are some good, strong regulations in the bill, like the consumer financial protection bureau and increased transparency in the derivatives market.

But, much to the dismay of many pro-reform progressives, it doesn’t break up the big banks or end “too big to fail.” Boehner’s buddies (with help from some disappointing Democrats) made sure of that. But this battle can be fought and won another day.

So nope, nothing nuclear here. If anything, supporters of Wall Street reform are anxious about whether the bill is equal to the task. Most agree it’s a good first step.

So what are we to make of Boehner’s babbling? Unless he’s making an out-of-context reference to Them!, the B movie classic with mutant ants the size of buildings rampaging across New Mexico, this really makes no sense.

No one should listen to Boehner’s nonsensical comments. Instead, tell your members of Congress to pass the Wall Street reform bill. Nobody likes compromises, but there’s a lot to like about this bill, and Congress should pass it.

Image from monroelab.net

This week, we partnered with the Center for Responsive Politics (CRP) on an update to that report that included data from CRP’s in-house revolving doors database (catching lobbyists who do not report to their employment histories on their lobbying disclosure forms) as well as Senate records showing an additional two reporting quarters.

The result: At least 1,447 of the lobbyists employed by the financial services sector since 2009 previously held a government job. That is nearly 56 percent of the 2,603 lobbyists, all told, who worked for the sector in the time period.

Among these “revolving doors” are 73 former members of Congress (including two former Senate majority leaders, two former House majority leaders and a former speaker of the House), 83 lobbyists who either served on a House or Senate banking committee as a member or staffed for the key committees, and 82 lobbyists whose previous bosses now serve one of the banking committees.

What can be done? From the Huffington Post:

Stop talking to colleagues who cash out, says Public Citizen’s David Arkush.

From the press release (and included in the USA Today story):

“Wall Street hires former members of Congress and their staff for a reason,” David Arkush of Public Citizen said in a statement. “These people are influential because they have personal relationships with current members and staff. It’s hard to say no to your friends, but that’s what Congress needs to do. Listening to them would result in a bill that would fail to get the job done and would disappoint the American people.”

Tell your lawmakers that you won’t stand for this. Take action. Sign the petition to stop the revolving door.

From the press release:

“Wall Street is fighting hard to keep its casino open for business,” said David Arkush, director of Public Citizen’s Congress Watch division. “They want to keep making risky bets, awarding themselves billions in bonuses and running to Uncle Sam for handouts when they lose. Their position is ridiculous and discredited, so it’s not surprising that they would hire nearly a thousand lobbyists to drown out reform advocates.”

Want to make sure your voice is heard when the Senate tries to rein in Wall Street? Sign the petition. Call your senators. Tell a friend. We can’t let Wall Street’s sheer man power overtake this much-needed overhaul of the abusive financial sector.

On Friday, May 14, Public Citizen published an open letter to Congress in CQ Today, an “insider” newspaper hand-delivered to every senator and representative. The letter calls for strong financial reform legislation and includes the names of well over 500 Public Citizen supporters who signed on by making a contribution to help us continue fighting corporate power. The letter was published as critical financial reform legislation is being hotly debated in the Senate.

You can still sign on! Although it’s too late to be listed in CQ Today, support Public Citizen today and we’ll add your name to the letter on our home page, where everyone who visits our website can see it.

See the letter as it appeared in CQ Today.

LEARN MORE and TAKE ACTION.

By a 33-61 vote, the Senate defeated the Brown-Kaufman amendment, which would have forced the largest banks to get smaller. Three Republicans, including Richard Shelby, the ranking member of the Banking Committee, joined 30 Democrats in supporting the measure.

This was a very big deal loss. But things aren’t over by any means.

There are many important things still up for grabs in the Senate bill — controlling derivatives, strengthening and protecting the consumer financial protection bureau, eliminating a global deregulatory scheme on insurance issues, and much more.

One vital measure would reduce bank size indirectly, while also restraining the Wall Street speculative impulse. An amendment proposed by Senators Jeff Merkley, D-Oregon, and Carl Levin, D-Michigan, would implement the “Volcker Rule” — the proposal from former Federal Reserve Chair Paul Volcker to keep commercial banks out of speculative investing. The Merkley-Levin amendment would eliminate loopholes in the Senate Wall Street reform bill, and ensure commercial banks stop betting on the equity, bond and derivatives markets. It would prevent banks from running their own hedge funds. It would make large, non-bank financial companies hold more capital against the risk of loss on speculative bets. And it would prohibit Goldman Sachs-style conflicts of interest, with firms betting against securities they sold to clients.

Merkley-Levin would force commercial banks to sell off their internal betting divisions, and to re-focus on core banking functions. It would make banks be banks.

If enough people weigh in right now, this far-reaching amendment may meet a better fate than Brown-Kaufman. Go here for talking points, and a “citizen whip chart,” where you can enter information about what your senator says he or she is planning to do on this vital matter.

Although the defeat of Brown-Kaufman was crushing, it was nonetheless an indicator of the strength of the populist call to break up the banks and reduce Wall Street power. A sign of Wall Street’s ongoing dominance on Capitol Hill had been its success in defining the call to “break up the banks” as outside the bounds of legitimate debate. Wall Street succeeded in the House, which did not seriously consider proposals to break up the banks. But it could not block the issue from an airing in the Senate; and once aired, the break-up-the-banks proposal gained substantial support, notwithstanding opposition from the White House and the chair of the Banking Committee, Chris Dodd.

The defeat of Brown-Kaufman does not mean the issue will go away. Wall Street hopes that it will be able to weather the storm from this round of legislation, and escape further scrutiny and control. But as the recent Securities and Exchange Commission charges against Goldman Sachs reveal, there are still a lot of buried bodies to be uncovered. The growing tide of scandal may well lead to subsequent rounds of reform, with momentum building to break up the banks that are clinging desperately to their hold on Capitol Hill.

In the meantime, opportunities for real reform remain on the table right now. A host of named and anonymous industry lobbyists recently admitted to the Washington Post that they fear they are losing control of the Senate debate. “You’ve got an environment, six months before an election, where politicians are acting like politicians,” Sam Geduldig, a financial lobbyist and former Republican staffer, told the Post. “They are viewing any vote as a potential campaign ad. And that might not be good for any of us.”

Well, not good for any of the industry lobbyists, perhaps. But ideal for democracy, and the democratic imperative to exert control over Wall Street.

Robert Weissman is president of Public Citizen.

Readers, you can help us stop Goldman and other Wall Street banks from getting government support for their risky trades.

The Merkley-Levin amendment – cosponsored by Sens. Jeff Merkley (D-Ore.) and Carl Levin (D-Mich.) – to the Wall Street reform bill would stop government-backed banks from engaging in risky trading. It would also stop big banks from making Goldman-Sachs-style bets against their own clients.

Here’s how you can help. We’ve set up a public “whip chart” where you can see where your senators stand on this issue. We’re asking you to make a quick call to your senators’ offices to find out whether they support, oppose or are undecided on the Merkley-Levin amendment (there’s a short script on this page). After you make the call, you can use the page to report your senators’ postions. 

You calls will help persuade senators to represent you, not the big banks. And we’ll use your feedback to help us target particular senators and get enough votes to pass the amendment. By asking your senators to go on record, you can help pass the Merkley-Levin amendment – and shine a spotlight on senators who are working against the public interest by opposing it.

We are committed to strengthening the financial reform bill that will rein in Wall Street’s deceptive and predatory practices while laying the groundwork for a strong, sustainable economy for our communities. Thank you for your help!

Last week, Senators Byrd and Rockefeller introduced two amendments that would require corporations with high-risk workplaces to disclose health and safety violations in reports filed with the Securities and Exchange Commission (SEC).

One of the amendments, led by Sen. Byrd, would require disclosure about all high-risk workplaces including violations, pending lawsuits concerning health and safety violations, and negative trends in health or safety conditions.  The other, led by Sen. Rockefeller, would require disclosure from mining companies about serious violations that posed an imminent hazard, or required mine workers to be removed from areas of mines.  Both amendments would require this information be included in reports filed with the SEC.

These amendments would bring much-needed attention to worker safety issues and could potentially create pressure for companies to improve worker health and safety compliance.  Companies that pay penalties for health and safety violations as “the cost of doing business” would be exposed in their SEC filings.

This information would provide investors and analysts with new information that could be used to gauge corporate responsibility.  Companies that repeatedly put their workers in harm’s way would be required to tell their shareholders.

Senate Majority Leader Harry Reid said last week that it was his goal to finish the financial reform bill this week. Reports suggest he may try to get it done by Friday.  But these amendments would be a powerful addition to the financial reform effort and would bring accountability to corporations that put their workers in danger.

Lena Pons is a policy analyst with Public Citizen.