Outline · [ Standard ] · Linear+ Banking Reform, UPDATE: Bill passes U.S. Senate

[stlbaseball15]

Geithner bullish on Wall St. bill

By Glenn Thrush for POLITICO
April 18, 2010

Treasury Secretary Timothy Geithner expressed confidence on Sunday that he can muster enough GOP votes to pass a robust financial regulatory reform bill soon – despite a pledge of united opposition from all 41 Senate Republicans.

“I’m very confident you’ll see some Republicans vote for this,” said Geithner, speaking on NBC’s “Meet the Press” program that aired Sunday morning.

“I believe that we are very close on this. That we agree on the vast bulk of the things necessary to end too big to fail [and] protect taxpayers in the future,” he said.

Geithner’s confidence – buoyed by private talks with Senate Republicans – came after Minority Leader Mitch McConnell (R-Ky.) secured commitments from every Republican senator in his conference to block the first procedural motion needed to send President Obama’s Wall Street reform bill.

“The bill is not a good bill, period,” said Sen. Scott Brown (R-Mass.), a GOP bellwether on the issue. Brown said he would join a filibuster on the bill unless Democrats make improvements to it.

Speaking on CBS’s “Face the Nation,” Brown charged that President Barack Obama is politicizing the debate and said the parties need to keep negotiating to “do better.”

The opposition, if it holds, means Senate Majority Leader Harry Reid (D-Nev.) lacks the 60th vote needed to begin debate on the bill as it is currently written.

“I thought [President Obama] wanted us to have a bipartisan bill,” said McConnell on CNN’s “State of the Union,” which aired on Sunday. “That's what I would like to have.’

Republicans are toeing a narrow path between their Wall Street donors and their tea party grass roots – holding out for pro-business changes in the bill while trying to project a commitment to Main Street populism.

As he tries to slow down the race to pass the centerpiece of Democrats’ election year agenda, McConnell finds himself increasingly on the defensive – over reports he met privately with a group of hedge fund managers in New York to discuss fundraising and regulatory issues.

CNN’s Candy Crowley pressed McConnell – whose presence at the meeting prompted mockery from the White House — what was discussed at the meeting.

“Well, we certainly didn't talk about blocking the bill,” said McConnell. “I don't know anybody who's in favor of blocking this bill. I also met recently with the Kentucky bankers who are also opposed to this bill. The community banks, the little guys on Main Street. We're all meeting with a lot of people. This is the current subject. For the president to politicize this in the same speech in which he said we ought to de-politicize it is really quite amusing, the same day the Democratic National Committee is putting up Web ads trying to attack Republicans on this issue.”

Despite the public acrimony, administration officials expressed confidence they could pick off one or two Republicans to proceed by making relatively minor changes to the bill – and hammering the GOP as the party of the reviled lords of finance.


It’s unclear what Senate Democrats would be willing to give up. Republicans will push for Democrats to drop a $50 billion industry-financed fund to wind down failing firms, which the administration has described as not “essential” to the legislation. But if Senate Democrats make that concession, or any others, they will press Republicans for hard commitments to vote for the bill.

Sen. Susan Collins (R-Maine) had been the lone GOP holdout in an effort by McConnell to line up opposition to the bill. But she agreed Friday to sign on to a letter that called for Democrats to put a bipartisan bill on the floor. The letter stopped short of stating that the Republican conference would back a filibuster of the measure.

But in a statement released through the minority leader’s office, Collins affirmed that she would vote against bringing the bill to the Senate floor.

Geithner, speaking on Sunday, emphasized that both parties are close to agreement on systems to wind down failing “Too Big to Fail” firms – but said they remain far apart on consumer protections and regulating the shadow banking industry.

The issue generating the most immediate controversy, however, is the administration’s proposed $50 billion bank-funded “risk pool,” which would be used as an emergency fund if banks foundered again. Late last week, Treasury department officials suggested that the pool could be removed if it obstructed a larger deal.

McConnell has attacked the provision, arguing on Sunday that the poll was a “bailout fund that sort of guarantees in perpetuity that we will be intervening once again” – a stance Obama criticized as “cynical and deceptive” in his weekly radio address.

Geithner took his own shot at the Kentucky Republican, telling Gregory that McConnell’s bailout claim was “absolutely not true,” adding that “some of his members say it was a bit over-the-top” – a reference to comments last week by Sen. Bob Corker (R-Tenn.).

“The president’s own secretary of the treasury, toward the end of the week, confirmed that they’d not have it in there,” McConnell said. “I think we’re all in agreement that the bill that I was referring to, except maybe the president hasn’t talked to his own secretary of the treasury, has a bailout fund in it.”

As the regulatory endgame neared, former President Bill Clinton, who oversaw the repeal of the Glass-Steagall banking law a decade ago, expressed rare public regret over the impact deregulation had on the trading of derivatives, which contributed to the near-meltdown of global financial markets.

Clinton, speaking on ABC’s “This Week,” said he should have pushed harder for better oversight, adding, “that was a mistake I made.”

Carrie Budoff Brown and Jake Sherman contributed to this report.
http://www.politico.com/news/stories/0410/35960.html

Republicans keep saying that it was political suicide for the Democrats to vote for giving insurance to 32 million people who couldn't afford it. If they think healthcare votes are bad, how can they possibly believe that voting to protect the most hated and commonly reviled people in the country is a good political stance to take? They are completely in bed with bailed out banks who negligently blew apart the global economy, forced the job-loss of millions of Americans, and obsconded with the ill-gotten proceeds, all while on the Republican's watch. The Recession and its cause was the number one issue at the polls in 2008 and it will be again in 2010. Both parties would be foolish to ignore it.

[cdoyal]

If they think healthcare votes are bad, how can they possibly believe that voting to protect the most hated and commonly reviled people in the country is a good political stance to take? They are completely in bed with bailed out banks who negligently blew apart the global economy, forced the job-loss of millions of Americans, and obsconded with the ill-gotten proceeds, all while on the Republican's watch.

No, the most hated and reviled people in the country are members of Congress.

I have to say that I admire your ability to come up with some GREAT spin on current events. I read each of your pontifications with eagerness because I never know how far you'll take something with absolutely no regard for the truth. It makes for some pretty funny reading and is the source of a lot of yucks around the water cooler. Keep it up!

From the LA Times:
"Since 1989, the company's (Goldman Sachs) employees have contributed $31.6 million to federal political candidates, more than any financial firm, the nonpartisan Center for Responsive Politics said. About two-thirds of that money has gone to Democrats, including nearly $1 million to Obama during his 2008 presidential campaign, the company's top recipient during that election cycle."

[stlbaseball15]

Probably about as funny to you as your inability to see who your party actually represents is to me. And you can save your breath on not being a republican. I've heard that joke before as well.

You can put thoughts on Goldman in the thread with Goldman in the title.

[cdoyal]

Probably about as funny to you as your inability to see who your party actually represents is to me. And you can save your breath on not being a republican. I've heard that joke before as well.

You can put thoughts on Goldman in the thread with Goldman in the title.

1. I am a proud Republican and have never denied it.
2. Several news sources recently reported Democrats received more money from Wall St. than Republicans so my post is entirely appropriate here. The White House recently went as far as to say their strategy is to continue to demonize Wall St. in the 2010 election. I think even the NY Times got a laugh out of that hipocracy.
3. I'll post where I like, thank you very much.

[stlbaseball15]

One need look no further than legislative actions to determine who supports who. Many democrats are shills for wall street just like all of their republican colleagues. I certainly can't deny that, nor do I wish to. All the more reason to support common sense reforms of the banking system because there is an army of sellouts on both sides of the aisle ready to block it for financial gain.

[stlbaseball15]

April 23, 2010

Don’t Cry for Wall Street

By PAUL KRUGMAN
For The New York Times

On Thursday, President Obama went to Manhattan, where he urged an audience drawn largely from Wall Street to back financial reform. “I believe,” he declared, “that these reforms are, in the end, not only in the best interest of our country, but in the best interest of the financial sector.”

Well, I wish he hadn’t said that — and not just because he really needs, as a political matter, to take a populist stance, to put some public distance between himself and the bankers. The fact is that Mr. Obama should be trying to do what’s right for the country — full stop. If doing so hurts the bankers, that’s O.K.

More than that, reform actually should hurt the bankers. A growing body of analysis suggests that an oversized financial industry is hurting the broader economy. Shrinking that oversized industry won’t make Wall Street happy, but what’s bad for Wall Street would be good for America.

Now, the reforms currently on the table — which I support — might end up being good for the financial industry as well as for the rest of us. But that’s because they only deal with part of the problem: they would make finance safer, but they might not make it smaller.

What’s the matter with finance? Start with the fact that the modern financial industry generates huge profits and paychecks, yet delivers few tangible benefits.

Remember the 1987 movie “Wall Street,” in which Gordon Gekko declared: Greed is good? By today’s standards, Gekko was a piker. In the years leading up to the 2008 crisis, the financial industry accounted for a third of total domestic profits — about twice its share two decades earlier.

These profits were justified, we were told, because the industry was doing great things for the economy. It was channeling capital to productive uses; it was spreading risk; it was enhancing financial stability. None of those were true. Capital was channeled not to job-creating innovators, but into an unsustainable housing bubble; risk was concentrated, not spread; and when the housing bubble burst, the supposedly stable financial system imploded, with the worst global slump since the Great Depression as collateral damage.

So why were bankers raking it in? My take, reflecting the efforts of financial economists to make sense of the catastrophe, is that it was mainly about gambling with other people’s money. The financial industry took big, risky bets with borrowed funds — bets that paid high returns until they went bad — but was able to borrow cheaply because investors didn’t understand how fragile the industry was.

And what about the much-touted benefits of financial innovation? I’m with the economists Andrei Shleifer and Robert Vishny, who argue in a recent paper that a lot of that innovation was about creating the illusion of safety, providing investors with “false substitutes” for old-fashioned assets like bank deposits. Eventually the illusion failed — and the result was a disastrous financial crisis.

In his Thursday speech, by the way, Mr. Obama insisted — twice — that financial reform won’t stifle innovation. Too bad.

And here’s the thing: after taking a big hit in the immediate aftermath of the crisis, financial-industry profits are soaring again. It seems all too likely that the industry will soon go back to playing the same games that got us into this mess in the first place.

So what should be done? As I said, I support the reform proposals of the Obama administration and its Congressional allies. Among other things, it would be a shame to see the antireform campaign by Republican leaders — a campaign marked by breathtaking dishonesty and hypocrisy — succeed.

But these reforms should be only the first step. We also need to cut finance down to size.

And it’s not just critical outsiders saying this (not that there’s anything wrong with critical outsiders, who have been much more right than supposedly knowledgeable insiders; see Greenspan, Alan). An intriguing proposal is about to be unveiled from, of all places, the International Monetary Fund. In a leaked paper prepared for a meeting this weekend, the fund calls for a Financial Activity Tax — yes, FAT — levied on financial-industry profits and remuneration.

Such a tax, the fund argues, could “mitigate excessive risk-taking.” It could also “tend to reduce the size of the financial sector,” which the fund presents as a good thing.

Now, the I.M.F. proposal is actually quite mild. Nonetheless, if it moves toward reality, Wall Street will howl.

But the fact is that we’ve been devoting far too large a share of our wealth, far too much of the nation’s talent, to the business of devising and peddling complex financial schemes — schemes that have a tendency to blow up the economy. Ending this state of affairs will hurt the financial industry. So?

[stlbaseball15]

Two days in a row the Republicans have now filibustered against the start of debate on Financial Reform. Apparently, they believe that all debate should happen "behind closed doors" with no illusion of transparency. They don't want to have to stand up on the floor and say what they actually think about this legislation for us lowly Citizens to hear and see on C-SPAN.

The point they supposedly disagree on is a $50 billion fund that the big banks pay into to finance the bankruptcy process should one of them go belly up. I don't really understand this one: the GOP says that this is a "perpetual bailout fund" even though the banks themselves pay into it. The only other alternative is for the taxpayers to be liable for the bankruptcy costs. So, in effect, the either dense or disingenuous Republican Senators are arguing against bailouts why also not so secretly arguing for them at the same time.

[stlbaseball15]

The Senate has just passed an amendment by the socialist Bernie Sanders that will allow an audit of the Federal Reserve's secret loan activities from 2007 to the present. This is a very historic event.

[stlbaseball15]

The Wall Street Reform Bill has passed the Senate!

Two left democrats voted nay, while four republicans assented. I am confident about the bill, yet I really wish the Glass-Steagall Act would be restored (this is the reason for the two dem nays). It is likely this could be done in the conference process, however.

Any thoughts? Does anybody here care about regulating the banks that recklessly destroyed the global economy just a year and a half ago?

[dviv17]

The Wall Street Reform Bill has passed the Senate!

Two left democrats voted nay, while four republicans assented. I am confident about the bill, yet I really wish the Glass-Steagall Act would be restored (this is the reason for the two dem nays). It is likely this could be done in the conference process, however.

Any thoughts? Does anybody here care about regulating the banks that recklessly destroyed the global economy just a year and a half ago?

It's definitely a step in the right direction, the massive deregulation Reagan and Bush instituted has hurt this country more than most will accept.

[Beavers98]

Banks need to be regulated or allowed to fail....You can't be "bailed out" and still have free will....Something about having your cake and eating it too...