Congress to mark 10th anniversary of Wall Street meltdown by rolling back laws intended to prevent another crisis
Just 10 years after Wall Street’s meltdown that helped cause a global financial crisis, Congress is on track to completely deregulate the protections put in place to stop another crisis.
According to Politico, both parties with ties to big banks are part of the team of legislators attempting to give financial safeguards the boot.
Democrats like Sens. Heidi Heitkamp (D-ND) and Jon Tester (D-MT) are from red states and up for reelection in 2018, and both claim regulations in the Dodd-Frank Act hurt small banks trying to help rural America. The law was one of former President Barack Obama’s signature achievements passed in 2010 that politicians with political donations from the same big banks are trying to overturn.
Democrats in red states can use the legislation as a way of showing they’re working across the aisle and avoiding the ire of an industry willing to spend millions in political donations. Thanks to 12 Democrats, the law is close to having enough support to avoid a filibuster.
Meanwhile, Sens. Elizabeth Warren (D-MA) and Sherrod Brown (D-OH) argue deregulations are putting customers back in a position to cause another financial meltdown.
“I’m amazed that, on the 10th anniversary of the 2008 financial crisis, some Democrats are supporting the Trump administration and Senate Republicans on a bill to roll back the financial rules we put in place,” Warren said in an interview.
Brown is leading the charge against the legislation as a top Democrat in the Banking Committee. He claimed that Democrats are “overwhelmingly against it” and that he’s “talked to damn near everybody about this.”
The claim that the bill will help rural America and small lenders, isn’t exactly accurate, according to Brown.
“The public doesn’t want us to lay down for the banks,” he said. “The public doesn’t have collective amnesia about what happened 10 years ago like senators do.”
Smaller regional banks have been lobbying to fix the legislation for years, arguing that it penalized them when the Wall Street banks were the culprits of the financial crisis. Currently the law sets higher regulations on institutions lending more than $50 billion. The new law would raise that cap to $250 billion.
Brown tried to reach an agreement last year with Senate Banking Chairman Mike Crapo (R-ID), but it never happened.
Warren said the issue is “whether or not senators are on the side of protecting the economy and taxpayers or on the side of giant banks.”
“Remember Countrywide?” she recalled, referring to the home mortgage lender that was using adjustable-rate mortgages that would randomly increase monthly payments. “It was about $200 billion, which is smaller than some of the banks that will be deregulated by this bill. The heart of this bill is to take 30 of the 40 biggest banks in this country off the watch-list so that they can load up on risks again and if things go wrong put the American taxpayer back on the hook.”
Activists are mobilizing to stop the bill and make it politically difficult for Democrats who refuse to stand up for consumer protections.
At the same time, the White House is working to delegitimize the Consumer Financial Protection Bureau by cutting it’s budget severely. Warren’s former agency that sparked her political career aimed to investigate corporations that skirt laws or hurt consumers.
“We have enough votes right now to pass it,” Heitkamp said. “I know there are people who would like to see 70-75 votes. Maybe we can’t get there, but we’ll continue to have the discussion.”
“Why is it a bad bill? Why is it dangerous?” Tester asked in an interview. “We give relief to community banks. This should have been done years ago. … This is going to allow for access to capital in rural areas like Montana. I don’t get it.”