FOR IMMEDIATE RELEASE
DATE: May 3, 2010
As the first full week of debate begins on Financial Reform, danger lies ahead for the bill. The big banks, and their friends on the Hill, will do everything in their power to try to weaken or kill this bill. The big banks are spending $1.4 million a day fighting against this bill. They have already spent $1 million for every Member of Congress and have over 1,500 lobbyists, including 70 former Members of Congress, working day and night to make sure their profits are protected.
Below is a guide to three major areas and what they may try to do to weaken the bill over the next few weeks.
Consumer Protection:
They are going to try to preserve the failed status quo by leaving the same regulators who are captives of the industry, and failed us the last time, in charge either by giving them veto authority over the new agency’s decisions, or by leaving them in charge entirely.
They are also going to try to protect abusive lenders by creating loopholes and exceptions, like for auto dealers, no matter what shady financial deals they routinely offer consumers. Senator Brownback will introduce an amendment to exclude auto dealers.
Lastly, they are going to try to get in the way of consumer protection that works by keeping the States (and in particular State Attorney Generals) from cracking down on lenders that break the law.
Derivatives:
Ninety percent of the 600 trillion dollar derivatives market is unregulated, and 90% of it is controlled by the 5 biggest Wall Street banks and financial companies. Unregulated derivatives are “financial weapons of mass destruction,” and were a major cause of the financial crisis, but the banks will be fighting to preserve the status quo, which earns them tens of billions of dollars a year. They are going to try to undermine the rules with loopholes and exemptions. There will be many different attempts to exempt particular groups, or loosen individual definitions – all of which will in fact be efforts by the biggest banks to build in ways to skirt the rules and maintain the situation that caused the crisis.
Too big to fail:
Banks like making money by gambling with regular people’s money — and they will fight to get rid of the Volcker rule, that says they have to separate regular day to day banking — with insured deposits – from playing games with money to make profits, and bonuses, for themselves.
They will also fight to strip the bill of key provisions needed to hold the biggest Wall Street players accountable, including language that requires oversight of the large complex nonbank financial firms – like Goldman, AIG and Lehman, and language requiring the Federal Reserve to impose tougher rules against excessive risk taking and speculation on the very biggest financial companies.
AFR will fight the big banks at every turn. The American public is sick of getting the raw end of banking deals. As we saw last week as more than ten thousand people marched on Wall Street, the American public expects the Senate to pass strong and meaningful reform.
If you would like to speak to an AFR expert on these issues, or any issue around the financial reform bill, please contact us.