Nothing Fosters More Congressional Bipartisanship Than Carrying Out the Wishes of Big Banks

By Robert Reich, Robert Reich's Facebook Page

25 November 17

ho says bipartisanship is dead? Consider the agreement reached between 9 Senate Democrats and the top Republican on the Senate Banking Committee to roll back several key financial regulations, including sections of the Dodd-Frank Act.

1. Banks with less than $10 billion in assets would be allowed to sell high-risk mortgages without the disclosure and ability-to-pay rules in place across the industry.

2. They’d also be free from several reporting requirements, the Volcker rule restrictions on market trading with their own deposits, and numerous capital standards.

3. The bill raises the threshold for “systemically important financial institutions" from $50 billion to $250 billion in assets, thereby freeing dozens of banks from enhanced Federal Reserve supervision and larger capital requirements.

4. There’s also an exemption from mortgage rules for manufactured homes like trailers, the largest producer of which is Clayton Homes, a division of Warren Buffett’s conglomerate Berkshire Hathaway. Congress has already exempted auto dealers from many lending regulations.

5. Another measure would allow hedge funds to create investment vehicles that share a name with an affiliated bank. It’s a marketing effort to give funds credibility; the biggest advocate for the change was BlackRock, the largest asset manager in the world.

Consumer protections in the bill are relatively modest. With the scandals at Wells Fargo and Equifax, Congress doesn't need to do favors for banks in order to pass robust new consumer protections.

Four Banking Committee Democrats — Joe Donnelly, D-Ind., Heidi Heitkamp, D-N.D., Jon Tester, D-Mont., and Mark Warner, D-Va. — negotiated the bill with committee chair Mike Crapo, R-Idaho. Tim Kaine, last year’s vice presidential nominee, signed on as an original co-sponsor along with Joe Manchin D-W.Va., Claire McCaskill, D-Mo., Gary Peters D-Mich., and Angus King, I-Maine.

Why would Senate Democrats ever agree to this banking bonanza? Five of these senators face re-election next year and come from states won decisively by President Donald Trump. The rest either don’t know how bad the bill is or depend on campaign donations from Wall Street.

Nothing fosters more bipartisanship in Congress than following the wishes of the banking industry.

What do you think?