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Republicans Filibuster Our Financial Future

Republicans Filibuster Our Financial Future

Monday night, Senate Republicans proved beyond any doubt that when it comes to the economy, they stand with Wall Street and against everybody else. Joined by lone Democrat Sen. Ben Nelson (D-NE), Republicans successfully filibustered the procedural technicality of opening debateon Wall Street reform. It’s an unmistakable ploy to kill the bill and collect campaign cash from bigwig bankers. The coming weeks won’t be pretty.

Republicans are going to be battered by this filibuster. Financial reform is popular, and nobody on Capitol Hill wants to be seen as the agents of Wall Street in Washington come November. Republicans are hoping to rhetorically counter Obama’s proposals, negotiate a fatally weakened reform package, and then vote with Democrats for reform-in-name-only before the elections. But the U.S. financial system is broken and voters know it needs strong medicine.

In a speech last week before Cooper Union Hall in New York City, Obama laid out what’s at stake in the reform fight. Our biggest banks don’t fear failure because they know the government will bail them out in a crisis. As a result, they take massive risks that endanger the economy. Our current regulators ignored predatory lending in order to protect Wall Street profits. To top it off, the risky, multi-trillion-dollar market for derivatives—the financial weapons of mass destruction that brought down AIG—remains beyond the scope of regulatory authority altogether.

Without major changes, the U.S. economy is doomed to repeat the destruction of the past two years. Epic bailouts, consumer predation and heavy job losses will become the new national norm, not just the conditions of a single, terrible crisis. Last night’s Republican-plus-Nelson filibuster was an effort to preserve an unacceptable status quo.

Phony populism

As Matthew Rothschild emphasizes in a podcast for The Progressive, Wall Street Republicans have been spreading all kinds of crazy lies about Obama’s reform legislation. While the legislation that cleared the Senate Banking Committee in March isn’t perfect, it isn’t a massive bailout for Wall Street, either. But Senate Minority Leader Mitch McConnell (R-KY) has been making the rounds calling it just that, in a dishonest effort to kill the bill. This is phony populism. McConnell says he’s against bailouts, but his goal is to prevent reform from overturning the current system, which, as we saw in 2008, has bailouts baked in.

While Obama did a good job identifying what’s wrong on Wall Street, the solutions he proposed are either too weak to end abuses, or simply not included in the Wall Street reform bill in its current form. Obama’s initial proposal for a new Consumer Financial Protection Agency was great, but Sen. Chris Dodd (D-CT) watered down in the Senate Banking Committee to appease Republicans. The same thing happened to Obama’s proposal to fix the wild market for derivatives, the financial weapons of mass destruction that brought down AIG.

How to make reform a reality

As Sarah Ludwig of the Neighborhood Economic Development Advocacy Program (NEDAP) emphasizes in an interview with GRITtv’s Laura Flanders, most of the reforms currently under consideration are a “good first step.” That is to say they are useful and productive—but not enough to fundamentally change the way Wall Street does business.

Fortunately, there are several amendments that can fix these shortcomings, most notably the SAFE Banking Act, introduced by Sens. Sherrod Brown (D-OH) and Ted Kaufman (D-DE). As Peter Rothbergemphasizes for The Nation, the amendment would force our largest banks to split up into institutions that could fail without jeopardizing the broader economy. It would also place a hard cap on the total amount that banks could bet in the financial markets.

Those amendments, of course, can only be added to the bill if Republicans allow debate on financial reform to begin. Progressives should be fighting hard to make sure that the break-up-the-banks measure is included in the bill that the Senate eventually votes on. And as Rothberg notes, there will be plenty of opportunities to do so this week. Protests calling for Major Wall Street reform have been organized all over the country. On Tuesday, protesters will speak out against predatory banking behemoth Wells Fargo in San Francisco. On Wednesday, they will target too-big-to-fail titan Bank of America in Charlotte, N.C. On Thursday, reformers will march straight into the lion’s den on Wall Street itself to demand change. It’s called the Showdown in America, and you can find out more here.

It’s only just begun—but how did we get here in the first place?

But whatever happens with this bill, the fight to rein in Wall Street is just beginning. As Robert Kuttner emphasizes for AlterNet, President Franklin Delano Roosevelt had no shortage of verve for Wall Street reform, but it still took him seven years to enact all of the New Deal banking laws. And asSimon Johnson and James Kwak detail for The American Prospect, reining in Wall Street means overturning the ideology that has dominated the halls of power in Washington, D.C. for three decades.

Since the Reagan era, politicians from both political parties have sincerely believed that what is good for Wall Street is good for America. The subprime mortgage monstrosity and Great Crash of 2008 put cracks in the foundation of that ideology. But the process of demolishing it may very well take longer than the legislative cycle that will end with the November elections.

Even if we do get a strong bill—one that breaks up the biggest banks, bans them from placing risky bets in the derivatives and securities markets and establishes a new Consumer Financial Protection Agency—other important aspects of the financial sector will need to be addressed in other legislation. Hedge funds, whose pivotal role in the crisis is only now being identified, will need to be reined in. Rating agencies, who actively fueled the subprime bubble, and whose business models are founded on conflicts of interest, must be restructured. The future of Fannie Mae and Freddie Mac must be decided. Families across the country still need foreclosure relief.

We need a strong Wall Street reform bill. There is no excuse for any politician from either party to be standing with bigwig bankers against the rest of the country. And with two-thirds of the nation supporting reform, any political party that throws in its lot with Wall Street will pay a major price come November. No amount of Wall Street campaign cash can counter the voter outrage over bank bailouts and bonuses. There’s no way to know when Republicans will come to their senses, but whatever happens this week, there will still be much work to do this year and the next.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint.   This is a project of The Media Consortium, a network of leading independent media outlets.

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by Zach Carter, Media Consortium Blogger

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45 comments

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8:17PM PST on Feb 1, 2011

Sure they have a will - to help giant banks and corporations take over the country. They have succeeded.

12:12AM PDT on May 2, 2010

Are there no Republicans who have a will of their own.
Like a flock of sheep they are!
And Ben Nelson, where do you come in.
Let the financial regulators or your income tax officers, scrutinise his bank account!

10:06AM PDT on Apr 29, 2010

The filibuster is a stupid idea. Maybe it made sense in a pre-information age world, but not now. I say all dissenters must write essays, with plenty of citations. An independent fact-checking organization can weed out the untenable ideas and present the good ideas to our legislators in a single document that does not identify the source of the ideas. To insure that our reps actually read everything they vote on, they should be filmed reading. Falsifying information, poor grammar, and incorrect math should be considered grounds for removal from office.

7:08AM PDT on Apr 29, 2010

I think it comical the blatent ignorance to the fact that many who worked for Goldman Sacs and other FAT CAT BANKERS hold positions in Obamas cab as well as some of the arcitects of bailout had interest in Citi. Get your facts straight people-both sides are in the pocket of big banks it's just easier to believe that the party of no is the only one accepting money...This is priceless!!!!

6:43PM PDT on Apr 28, 2010

Sigh.

There's no way i'm the only one that just feels like "opting out" sometimes.

Grow my own food for my family, maybe trade some of it for stuff that I can't grow myself.

Barter and trade as much as possible. Get out of the cash game. Get out of the paying taxes game. Get out of the debt game.

Of course, I live in a condo *smack* reality.

6:22PM PDT on Apr 28, 2010

This is truly remarkable that the Republican Party have joined forces to fillibuster when they know what has happened. It is in the midst of the great partisan rebellion by the Tea Party to oppose any kind of reform that can bring stability to the banking system, but the Republicans chose to fight reform. Using the support of the self-inflicted hatred from the far right mentality, the totality of the Tea Party uses it's strategy that "free market" should be unencumbered by regulation that will only put a stranglehold on a "free system". What? It's enough that the plundering went on because of the deregulated "free market" system that destroyed any sense of ethics and morality into an already battered system. Even Ben Stein, an avid Republican conservative stated on CBS's Sunday Morning Show, that Obama was following the right track. That was refreshing and at least some conservatives feel no different in this issue than liberals. In any case, I find it hard to believe the Republican Congress has acted irresponsibly, but I might add, they have shown there true colors as cohorts Wall St.

In as much as we the devastating affects of the financial meltdown and this recession, the one thing that America has been unable to do is to label these activities by Goldman Sachs and freemarketeers as criminals. The American historians and experts in the field have given us the inside workings of these financial institutions. Now it is time to indict and prosecute!

4:53PM PDT on Apr 28, 2010

thank you

4:04PM PDT on Apr 28, 2010

If my Republican congressmen stand with the Banks, I will not be voting for them in November.

2:45PM PDT on Apr 28, 2010

Maybe the small everyday person can make a difference by voting. I understand that you don't have to. So if everyone in America did, I wonder what the outcome would be. At least you'd feel in control of the choice, that's if the electronic ballets don't stuff up again like they did with Bush.

1:42PM PDT on Apr 28, 2010

If Republicans want to filibuster, they should be made to stand up and filibuster, with C-SPAN cameras blazing.

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