The last day was a long one in the House-Senate conference committee on financial reform. The conferees had been at it since 9:00 a.m. and were rumpled and weary. Big bank lobbyists packed the conference room and trailed out into the hallways. As the clocked ticked into the wee hours, the chances for meaningful financial reform dimmed. At issue was the strong and controversial crack-down on derivatives trading authored by Senate Agriculture Committee Chair Blanche Lincoln (D-Arkansas).
News Articles By Mary Bottari
Today, U.S. Senator Blanche Lincoln (D-Arkansas) was dragged into a meeting with Senate Majority Leader Harry Reid (D-Nevada), Senate Banking Chairman Chris Dodd (D-Conn.), Speaker Nancy Pelosi (D-Calif.) and House Financial Services Chairman Barney Frank (D-Massachusetts). It was a pile-on to ask her to agree to weaken her strong derivatives reforms to accommodate Wall Street. Lincoln made it clear she was not pleased with the pressure. "There are some that are not as interested in being as aggressive in making sure that the possibilities of this financial crisis don’t happen again,” the Arkansas Democrat told Roll Call after the meeting. The issue of derivatives will be taken up tomorrow in the House-Senate Conference Committee which is pounding out the difference between the two bills. Will they adopt the Senate version (which covers 90% of derivatives, with a narrow exemption for legitimate end-users like municipal gas companies) or the House version (which is riddled with loopholes and covers only 60% of derivatives trading)?
As the fight on Capitol Hill for financial reform enters its final stages, it is worth asking what will be done to protect states and localities from the Wall Street con. On Thursday, the House-Senate conference committee on financial reform will take up the controversial section of the bill dealing with derivatives reform. Not a local issue right? Wrong. Service Employees International Union's (SEIU) Big Banks campaign has uncovered about 71 states and localities which have bought into dangerous derivatives and swaps deals to finance local priorities.
This information was not easy to uncover, and the total number of munis holding these little ticking time bombs is not known. For the big banks, these deals are off book and off record, and politicians of course don't like to brag about getting swindled. It is only when these deal explode and there is a huge shortfall that the public begins to be aware. Sometimes even that is not enough, and some districts are in denial about the problems posed by their investment portfolio.
The long awaited House-Senate Financial Reform Conference Committee got underway this week. Thanks to the efforts of Public Citizen, Campaign for America's Future, CMD and others, these committee meetings will be live on C-Span 3, and all amendments will be made available in advance. At BanksterUSA we are working hard to make sure that the strong derivatives language currently in the Senate version of the bill is not weakened (Sec. 716 authored by Senator Blanche Lincoln, D-Arkansas). We are keeping a whip count on the conferees and we could use your help! A whip count helps us pool intelligence on what the members are saying to their constituents. If you make a call you can post a comment to our whip list letting us know what you heard. It is grassroots activism at its best.
To the surprise of many, Blanche Lincoln won her Arkansas Senate runoff. She did so as a modern-day William Jennings Bryan standing up for farmers and pushing a strong Wall Street reform proposal to help farmers and protect taxpayers. It is worth reviewing the promises made on the campaign trail and the lessons the race holds for candidates in 2010. In a conservative state, Lincoln ran hard on her record as Agriculture Committee chair, her critical health care vote and on her strong proposal to crack down on Wall Street derivatives trading. "I am Blanche Lincoln and I grew up in an Arkansas family where I was taught to solve problems ... that's why I cast the deciding vote to pass health care reform ... And it's why I am taking on Wall Street with the toughest reform bill of anyone in either party ... and it's going to pass," she reassures with a nod. This is a winning message in a tight race.
Reckless swaps and derivatives trading played a critical role in the financial crisis, inflating the domestic housing bubble and turning it into a global economic catastrophe. As the House and Senate conference committee begins final work on the financial services reform bill, it is critically important that we wall off the casino from the taxpayer guarantee. If big banks want to gamble they need to do so with their own money. Nobel prize-winning economist Joseph Stiglitz makes the case for strong provisions in the Senate derivatives chapter plainly: "If [Congress] fails to pass strict oversight of dangerous over-the-counter derivatives and swaps the U.S. economy will continue to be vulnerable to significant financial risk."
To urge the House and Senate conferees to take action visit BanksterUSA.
When the Senate bank reform legislation passed in May, Senate Majority Leader Harry Reid (D-Nevada) said it sent the message to Wall Street that they can no longer "recklessly gamble away other people's money." The bill told Main Street, "you no longer have to fear that your savings, your retirement or your home are at the mercy of greedy gamblers in big banks. And it says to them, 'never again will you be asked to bail out those big banks when they lose their risky bets,' " according to Reid.
Reid was correct. The bill the Senate passed did protect the taxpayers from reckless gambling by the big banks, largely due to the last-minute inclusion of strong derivatives reforms authored by Senator Blanche Lincoln (D-Arkansas). So why is it that Senate and House leadership are now busy behind these scenes trying to kill the best provisions in their own banking reform legislation?
America's Future Now! -- the biggest progressive conference of the year organized by Campaign for America’s Future -- convenes June 7-9 in Washington, DC. Join Lisa Graves, Mary Bottari, and Dave Johnson from the Center for Media and Democracy as well as House Speaker Nancy Pelosi, Rep. Alan Grayson, Arianna Huffington, Markos Moulitsas, Van Jones, Gov. Howard Dean, Rep. Donna Edwards, Rep. Jan Schakowsky, Richard Trumka, Andy Stern, Bob Herbert, Juan Cole, Digby, Deepak Bhargava, James Rucker, Drew Westen, Katrina vanden Heuvel, Robert Kuttner, Lizz Winstead and thousands more.
Progressives must lead to make sure 2010 is not the year of the Tea Party. Jobs, financial reform, clean energy, clean elections, fair workplaces, civil liberties, health care and human rights are at all stake. Let's show Washington that progressives now how to fight!
Even though the bank reform bill working its way through Congress is far from perfect, there are some strong provisions well worth fighting for as the bill moves to a House-Senate conference committee.
Two recent articles illustrate the pros and cons of this behemoth bill. New York Times reporter Gretchen Morgenson, does a great job reminding us that the original Glass-Steagall legislation was only 34 pages long and it was key to keeping our financial system stable for 60 years. She points out that the two bills that the Senate and the House have now passed are a whopping 3,000 pages combined:
Yet despite all that verbiage, there are flaws in both bills that would let Wall Street continue devising financial black boxes that have the potential to go nuclear. And even if the best of both bills becomes law, investors, taxpayers and the economy will remain vulnerable to banking crises.
At the end of last week, the U.S. Senate passed a financial reform bill that was far stronger than what had been proposed by the Obama administration and passed by the House. Now it's time to hold President Obama's feet to the fire to ensure the strongest possible bill.