“Banking specialists who favor more stringent Wall Street rules expressed some concerns… ‘A derivatives exposure that looks small in normal times can become enormous in times of financial stress,” said Marcus Stanley, policy director at Americans for Financial Reform. “This rule may not contain adequate protections against that kind of risk.’”
“I think you need an all-of-the-above approach: you use the law that bears Barney Frank’s name, which requires the breakup of any bank that is too big to fail without harming the economy; you pass new legislation, the 21st Century Glass Steagall Act, which is a bipartisan piece of legislation – Senator Warren’s on it, and Senator McCain is on it. And then you need to involve the public and the grass roots in order to build this new voice that’s going to hold these people accountable.” — AFR’s Alexis Goldstein
AFR is calling on financial regulators to provide the public with more transparency on the implementation of the Volcker Rule, the historic prohibition on bank proprietary trading incorporated into the Dodd-Frank Act.
“Right now any bank over $50 billion dollars in size automatically becomes a SIFI [systematically important financial institution]. Richard Shelby, the [Senate Banking Committee] chair… originally called for raising that threshold to $500 billion. But Republicans also want to weaken the ability to designate non-banks as SIFIs. As Marcus Stanley of Americans for Financial Reform told me, ‘The FSOC designation procedure is already lengthy and time-consuming and includes numerous procedural protections for firms under consideration. These bills are designed to make it essentially unworkable.'”
The House of Representatives passed two ill-advised financial deregulation bills on November 18th. Both are giveaways to some of the country’s biggest banks. Both, if they ever became law, would mark a dangerous retreat from the financial reforms put in place after the financial crisis.
“These deregulatory measures are on the committee’s docket only as a result of massive lobbying by large financial institutions seeking a license to continue playing the kinds of heads-they-win-tails-we-lose games that were at heart of the financial crisis. Lawmakers need to decide whether to let the financial industry have its way or stand up for the public interest.”
AFR’s Marcus Stanley: “Why are we thinking that the [financial] industry and the industry lobby knows better than the regulators? To say that Dodd-Frank is some straitjacket ignores the [truth] that regulators have lots of chances to adjust [its implementation].”
“Bonds seem to trade in smaller transaction sizes than they once did… That is perceived as a sign of illiquidity… A better indication, according to a presentation by Marcus Stanley, policy director of Americans for Financial Reform, would be total trading in the corporate market, which in fact has slightly increased since the financial crisis.”
“‘Fixing much of this could have been done 10 years ago by higher capital requirements, which we failed to do, but we need to move more in that direction,” [Sherrod] Brown, now the ranking Democrat on the Senate Banking Committee, said at a press conference this month with Americans for Financial Reform.'”
Senators Elizabeth Warren (D-Mass.), John McCain (R-Ariz.), Maria Cantwell (D-Wash.), and Angus King (I.-Me.) have reintroduced their “21st Century Glass-Steagall Act,” which would restore the historic division between traditional (or commercial) banking world and the casino world of trading and speculating. Five years after passage of the Dodd-Frank Act, the case for this bipartisan legislation is stronger than ever.