Help Us With the Bankster Scorecard

BanksterUSA.orgThe Democrats have rounded-up the 60 votes needed to pass the bank reform bill. We want to hear from you about what you think of the bill on the verge of passage and what grade you would give it. Conceptually, the bill breaks down into three main parts.

1. Consumer Protection -- The section dealing with the Consumer Financial Protection Bureau is very strong. The Bureau has independent regulatory and enforcement authority over a wide array of consumer financial products such as credit cards, mortgages, and even payday loans. Unfortunately, auto dealers escaped its jurisdiction, but there is no doubt the CFPB will be a new cop on the block policing the safety and soundness of common consumer products. Consumer advocate Elizabeth Warren, who first floated the idea of a CFPB two years ago, is happy with the final result. What grade would you give this section of the bill?

2. Ending the Casino -- Warren Buffet's famous "weapons of financial mass destruction," also known as over the counter derivatives, will be holstered. In a big win for reformers, large Wall Street firms engaged in speculative food and energy derivatives trading will be forced to spin off their derivatives desks into a separately capitalized affiliate, making speculation in these markets much more costly. In addition, all trades will be cleared by regulators and exchange-traded where pricing and positions will be transparent. Capital requirements and margin requirements will apply, putting real money behind the bets. Position limits will apply, making it more difficult for a few players to dominate the market. Though we lost the battle to apply this "spin off" provision to all derivatives trading, the fact that energy and food is covered is a big win for American consumers and small African nations. Former Commodity Futures Trading Commission (CFTC} Chair Brooksley Born, who tried to get derivatives regulated way back in 1999, is happy with this section of the bill. What grade would you give this section of the bill?

3. "Too Big to Fail" -- It is with the big-picture structural issues that the bill falls short. It is true that the new bill will apply tighter capital and leveraging requirements, but these decisions are left to future regulators and international negotiations in Basel, Switzerland. Reformers succeeded in getting a strengthened "Volcker Rule" into the bill, banning proprietary trading and conflict-of-interest trading, but it was weakened by a hedge fund loophole. Reformers succeeded in getting a pretty solid audit of the Federal Reserve, but the bill will not end "too big to fail" because taxpayers are still on the hook for big bank failures. Big banks were not forced to prepay into a fund for future bailouts, and taxpayer subsidies for the big banks were not ended. Too-big-to-fail institutions were not shrunk in size (either with a size cap or a comprehensive derivatives spin-off proposal). Glass-Steagall was not restored. Destructive "naked" credit default swaps were not banned. At the end of the day, Treasury Secretary Tim Geithner is happy with this result. What grade would you give this section of the bill?

If these were separate bills, they would amount to three easy votes. But because they are lumped together, things get a bit complicated. Tell us what you think by adding your comments to this piece and we will issue a Bankster scorecard next week!

Mary Bottari

Mary Bottari is the Deputy Director of the Center for Media and Democracy. She helped launch CMD's award-winning ALEC Exposed investigation and has spearheaded CMD's work on the financial crisis and the painfully slow recovery. Previously, Mary worked for ten years at the consumer group Public Citizen and served as a senior analyst on trade, financial services, toxics regulation, and food safety. She worked in Washington for U.S. Senator Russ Feingold and in the Wisconsin State Senate.


1. Consumer protection sounds great: A minus. 2. Ending the casino could have gone farther, but it's good anyway: B. 3. Too-big-to-fail is a little disappointing, but it's an improvement over what we have now: C plus.

We have three solutions for America. In addition to our solutions associated with 1) federal income tax cuts for the middle class and small businesses (and raising taxes on the privileged class) and 2) wrapping up the U.S. counterinsurgencies in SW Asia---our third solution 3) focuses on repealing laws that conflict with the Constitution. Included in the latter would be the repeal of the Gramm-Leach-Bliley Act of 1999 (which itself repealed the most important provisions of the Glass-Steagall Act of 1933), i.e., more or less allowing deposit banks to gamble with their depositors' money. According to Item 3 in the article, above, "...Glass-Steagall was not restored..." by the legislation being discussed here. We've also been tracking Messrs. Gramm, Leach and Bliley. After all, they went on with their lives, while millions of other Americans have been unable to. Just about everybody knows that Mr. Gramm was let go as Mr. McCain's campaign advisor on the economy, and that he was engaged by the banking industry upon leaving the senate. We're still looking around for Mr. Bliley. We know that Mr. Leach is chairman of the NEH, having supported Mr. Obama at the democrat national convention in 2008 (although he was a republican congressman for decades). Mr. Leach is paid $165,300/year. Although the G-L-B Act of 1999 does not necessarily conflict with the Constitution, it conflicts with anti-stupidity. We like to call it the Congressional Stupidity Act of 1999. It was sent to Mr. Clinton in veto-proof form. He could have refused to sign it as an act of symbolism for anti-stupidity. However, we guess that his "moral support" for the bill was a form of payback to the senate, the majority of whom failed to convict him after the house of representatives impeached him. OKJack™Group™ Middle & Working Class Disabled American Veterans We Paid the Dues that Aren’t Required!™

The cost of financial reform is too high. Our politicians are extorting deals from each other that are not sustainable and will be a heavy burden for the middle class and poor in particular. I believe Elizabeth Warren and Paul Volcker had some great ideas. Unfortunately, they are far too watered down. In fact, healthcare reform, credit card reform and financial reform fall far short of what is necessary. Energy reform probably will not fare better. We need to get lobbyists out of the way, elect politicians who have the courage to do what is right for the country and stop spinning the truth to the American people. In my opinion, we are on a collision course to disaster and I suspect a class war will result.

Despite your comments that two of the sections are good, other experts say that the bill is a band-aid for a grievous wound, and will not solve the problems that caused our Capitalist crisis. The rich are getting richer because the poor are paying for their mistakes. That's got to stop or there won't be any republic.

We have a brief follow-up to our remarks of yesterday [basically, that we're so disappointed about the most important missing item (of many) from the legislation being discussed here]. Before we comment, however, here is a continuous excerpt from David M. Herszenhorn's article in the NY Times this morning: NYT THIS MORNING: "Even Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the banking committee who was a main author of the bill, acknowledged that Americans will probably not know for years — perhaps not until the next financial crisis strikes — if the response by Congress this year was sufficient, or falls short despite the best intentions. 'We won’t know the full results of what we have done until the very institutions we have created, the regulations we have suggested and provided for are actually tested,' Mr. Dodd said in a floor speech. 'We can’t legislate wisdom or passion. We can’t legislate competency. All we can do is create the structures and hope that good people will be appointed who will attract other good people — people who will make careers and listen and see to it that never again do we go through what we have gone through.' Passage of the bill would herald the end of more than a generation in which the prevailing posture of Washington toward the financial industry was largely one of hands-off admiration, evidenced by steady deregulation. While the measure DOES NOT FULLY RESTORE THE TOUGHEST RESTRICTIONS IMPOSED AFTER THE GREAT DEPRESSION, it is a clear turning point, highlighting a new distrust of Wall Street, fear of the increasing complexity of technology-driven markets, and renewed reliance on GOVERNMENT TO PROTECT THE LITTLE GUY." (EMPHASIS added) NOTE: Gramm-Leach-Bliley Act of 1999 [passed by Congress in veto-proof form on November 4, 1999 (House 83.2% Yea & Senate 90% Yea) and signed into law by President Bill Clinton on November 12, 1999] conflicts with the anti-stupidity Articles, Sections & Clauses of this Constitution for the United States of America ― Repealed those portions of the Glass-Steagall Act of 1933 that prohibited consolidating the operations of commercial banks (deposit banks), investment banks, securities firms and insurance companies into financial services conglomerates...thereby precipitating the subprime mortgage-backed securities meltdown of 2007-09 and still counting. RHETORICAL QUESTIONS: There are two particular photos that we wish we could include in our comments here...of the signing of the CSA a.k.a. the G-L-B Act. They are two photos that have been circulating on the internet since 1999. In those "deliriously happy" photos (which perhaps this web log's facilitator might wish to publish). 1. If (retiring democrat senator) Mr. Dodd (middle rear, photos) had not voted for the Congressional Stupidity Act (CSA) of 1999 (i.e., G-L-B), would he have been in a better position in 2007-10 to more easily shepherd financial regulatory reform, and actually reverse the anti-Glass-Steagall Act stupidity provisions of G-L-B? 2. If (retired federal reserve chairman) Mr. Greenspan (left front, photos) had not been so supportive of the CSA of 1999 (i.e., G-L-B), would he have been in a better position in 2007-10 to explain why the U.S. economy tanked during the Bush administration (2001-2009)---and how he could have been so very wrong in the first place? 3. If (2007-10 republican house minority leader) Mr. Boehner (far right front, photos) had not voted for the CSA of 1999 (i.e., G-L-B), would he have been in a better position in 2007-10 to more easily explain his voting against financial regulatory reform that in the end apparently does not reverse the anti-Glass-Steagall Act stupidity provisions of G-L-B? CLOSING OBSERVATION ABOUT MR. DODD's APPEARANCE: Well...perhaps Mr. Dodd himself doesn't appear to be "deliriously" happy in 1999 (as Clinton, Greenspan, Gramm, Leach, Boehner et al all appear to be)...but we're willing to bet that Senator Dodd was at least "quietly" happy. OKJack™Group™ Middle & Working Class Disabled American Veterans We Paid the Dues that Aren’t Required!™

The grade i would give was not available....F....SONYMAY/FANNIEMAY were not addressed....and...another addition to the permanent federal bureaucracy was added which the very taxpayers it is supposed to protect will be asked to fund and support in perpetuity. It will mean less personal wealth to risk.....because federal agencies only get bigger, and more matter how they the post office.....IRS.......etc. the new oversite will also raise the cost of doing business...and that will reach the consumer.......again with no chance of the being a real return on the taxpayers required investment in more bureaucracy.

Regarding Elizabeth Warren and Brooksley Born: if these smart and forward-thinking women are happy with parts one and two of the legislation, that's good enough for me. Sadly, the third section, dealing with the size and capital requirements of mega-banks, was, is and, probably, will always be hyper-political. Perhaps in the future, if we are fortunate enough to retain a democratic Congress after the mid-terms, more work can be done in this area. I bank with Sovereign in New England. It is unfortunate and ironic that I can say "I do not trust my (Spanish-owned) bank". The consumer regulation portion of the legislation is of enormous importance to me. I only wish the Obama administration could be better at explaining why these changes in our laws are of significance to all Americans and that obstreperous Republicans ought to be punished for their refusal to participate constructively and honorably in the debate.