In my last blog, I suggested that anyone with a major interest in the Chris Dodd (D-Conn.) financial regulatory reform bill should keep a close eye on developments or risk losing your provision.
Poor Sen. Blanche Lincoln (D-Ark) had the temerity to be away from DC, running in her state’s Democratic primary—and running for her political life--when Dodd decided to gut her major derivatives regulatory provision, with language introduced minutes before the midnight deadline for filing amendments to the reform legislation. He quietly—and some might suggest sneakily--put his Chairman’s stamp on a provision that turns her aggressive reform language into a two year study by government officials who don’t like what Ms. Lincoln proposed. Wonder how they'll handle that review??
There will be a Senate vote on the language, but Dodd’s “substitute” has the watered down appeal that allows most supporting Senators to pretend they enacted something tough.
“Here Wall Street and big banks, take this. Sorry this platter isn’t shinier. And Blanche, sorry about the back of my hand. You take that!”
Yesterday, a challenged Lincoln was forced into a runoff with her Democrat opponent, so she comes back to DC weakened and understandably looking back at Arkansas. Hopefully, she also is angry!
Dodd, having already given the banks and their investment bank buddies a $50 Billon break by not requiring them to pre-fund a financial bailout component, merely looks forward to retirement and—I am quite sure—a lot of juicy ($$$$$) offers from the major institutions subject to his new legislation.
I hope that “Blanche the Harridan, Blanche the Avenger, “returns to town and kicks the crap out of everyone who wants to “deep six” her provision—including the Administration--and that she gains the support of Sen. Chuck Grassley (R-Iowa), who supported her in committee, with the goal that thoughtful R’s--who admire the common sense Grassley--pull their support from a bill that is seriously listing towards the big guys.
Lincoln’s original language needs to stay in the Dodd bill or in the conference report.
There is no such thing as regulating the big financial institutions “too much!”
Banks will find a way around the toughest laws and regulations. They always do. Don’t worry about “hurting” them. Congress should follow its instincts and add as many tough statutory provisions as possible and then worry about fitting it all together later.
Nobody in Congress should buy the bank ladled poop that US financial institutions won’t be competitive with overseas banks, if they are vigorously overseen by Washington. That’s the same BS that claims the large financial institutions need to pay top dollar squared to keep their talent. If every firm in New York, the financial capital of the world, is paying the about same thing, where will all of this talent go?
The Senate--and the poker playing Barney Frank (D-Mass) waiting in the wings--should not forget the reasons they are fighting for this legislation. Maybe a review of the big financial institutions gargantuan first quarter earnings will stiffen their spines, as well as alert them to who still seems to be holding the cards in this game?