When Americans went to the polls last Tuesday, they were in a mood for change. Throw the bums out! And there was a "change"—Republicans gained control of the House of Representatives. A subtlety lost upon most voters is that there is a seniority system in Congress which upholds the status quo, regardless of who most of them vote for.
Over at Baseline Scenario, former IMF chief economist Simon Johnson and Yale's James Kwak continue to push for financial reform. One might think they would have given up at this point, but that's not their style. They continue to fight the good fight despite overwhelming evidence of incurable political corruption. Kwak is disturbed at a new development following the mid-term election—
Spencer Bachus, the likely new chair of the House Financial Services Committee, has announced that he is planning to use whatever powers he can to gut the Dodd-Frank financial reform bill. Why? According to the Financial Times, Bachus “expressed concern that shareholders of Goldman Sachs and JPMorgan Chase will be hurt because the banks will be less profitable.”
So one major effect of the Tea Party movement will be to further enrich Wall Street banks and the bankers who work there. (Which, I guess, is consistent with the common Tea Party insistence on reducing taxes for the rich.)
Is this what you voted for?
Well, no, James—that's not what I voted for because I didn't vote. And why didn't I vote? Because the system is rigged, hopeless, beyond the pale! A more apropos question might be: When you voted, assuming you did, James, what did you think you were voting for?
Before introducing Congressman Spencer Bachus, let's get a little more background from the Financial Times.
In a letter sent to the Financial Stability Oversight Council, Mr Bachus says that a ban on proprietary trading – known as the Volcker rule – that was included in the new Dodd-Frank financial reform law will “impose substantial costs on the American economy and market participants” with “doubtful” benefits. “Depending on how US regulators choose to implement it, the Volcker rule may spark a mass exodus of clients from US banks to banks based abroad,” he said in the letter obtained by the Financial Times. He highlighted UK-based institutions as possible beneficiaries...
The proprietary trading ban, named after Paul Volcker, the former Federal Reserve chairman who proposed it, was opposed by most Republicans when it was passed by Congress in June. It also restricts banks’ investments in hedge funds and private equity firms.
Regulators have a great deal of latitude in defining how strict the ban should be. Mr Volcker and some Democratic senators are urging a broadly defined ban but the elections gave Mr Bachus new clout in his push for a looser approach.
The Financial Stability Oversight Council, whose members include Tim Geithner, Treasury secretary, and Ben Bernanke, Fed chairman, is this week asking for public comments on how the rules should be written.
I don't have time to get into it today—what's the point?—so take my word for it: a strong Volcker rule would be a good thing. When it passed the Dodd-Frank legislation, the Congress carried out it's hidden agenda to protect the banks by passing on to regulators the responsibility for implementing some form of the Volcker rule. These regulators, who are themselves vulnerable to influence, will ask for public comments and study the issue for a few years before they announce how the rule will be defined.
Paul Volker is so frustrated with the reform "process" at this point that he lost his grip when he spoke at the 13th International Banking Conference in Chicago earlier this year—
[Volcker] praised the new financial overhaul law, but said the system remained at risk because it is subject to future “judgments” of individual regulators, who he said would be relentlessly lobbied by banks and politicians to soften the rules...
On Banking — Investment banks became “trading machines instead of investment banks [leading to] encroachment on the territory of commercial banks, and commercial banks encroached on the territory of others in a way that couldn’t easily be managed by the old supervisory system.”
On the Financial system — “The financial system is broken"
And now we can introduce Spencer Bachus (R, Ala), who is one those bankers or politicians who will relentlessly lobby individual regulators to soften the rules. However, Bachus is not just another politician with seniority in the House. As things stand, he is likely to be the new chair of the House Financial Services Committee. Regarding the banks, there is no more powerful post in Congress.
The best part of doing a post like this one is going over to opensecrets.org and searching for the Congressman in question. Spencer Bachus did not disappoint.
Bachus raised $1,317,687 during the 2009-10 election cycle. And where did he get the money?
Industry Total Indivs PACs Insurance $177,000 $5,000 $172,000 Securities & Investment $118,900 $19,500 $99,400 Real Estate $116,000 $32,000 $84,000 Commercial Banks $71,000 $11,500 $59,500 Finance/Credit Companies $66,500 $2,500 $64,000
Bachus' major contributors were from finance, insurance and real estate. The common acronym for this constellation of interests is FIRE, which might be used in a noun phrase like the FIRE economy that brought this country to its knees. We might even refer to him as the FIRE Congressman, although his contituents in Alabama's 6th district are laboring under the illusion that Spencer represents them.
Thus it is no wonder that Spencer Bachus "is planning to use whatever powers he can to gut the Dodd-Frank financial reform bill." It comes as no surprise that Spencer "expressed concern that shareholders of Goldman Sachs and JPMorgan Chase will be hurt because the banks will be less profitable." We are not stunned to learn, as Baseline Scenario's James Kwak apparently is, that "one major effect of the Tea Party movement will be to further enrich Wall Street banks."
Meet Spencer Bachus, corruption incarnate. Will Americans ever get a clue? What will it take?
You have to hand it to the republicans, to the man or woman, they have courage and conviction. They are for the rich and proud of it.
Contrast that resolve to my dumbocrats, professing a love and affinity for the common man, while joining in with the repubs, and trying to latch onto the same corporate hind teats, drinking down the money milk of politics.
What a disgusting sight!
I predict that when Obummer gets back from his "let's hightail it out of here before blame goes around for the election debacle" Asia tour, if he doesn't come up with something quick for Main Street, he's out, finished, assigned to the dustbin of history.
The regular folks out here, jobless or about to be, are not going to tolerate this status quo much longer.
As the song goes,"po folks gonna rise up take what's their's."
Posted by: Morongobillsbackporch.blogspot.com | 11/08/2010 at 01:52 PM