Will the Banks' Word Be Law? Wall Street Drafts Reform Rollback Bills

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Citibank
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A dispatch from the Dodd-Frank wars in our nation's capital: Big banks seeking to roll back financial reform have returned to lawmakers' good graces -- not just Republicans, who opposed the regulatory bill in the first place, but many Democrats, too.

The New York Times reports that a bill recently approved by the House Financial Services Committee, despite opposition from the Treasury Department, "was essentially Citigroup's (C)":

In a sign of Wall Street's resurgent influence in Washington, Citigroup's recommendations were reflected in more than 70 lines of the House committee's 85-line bill. Two crucial paragraphs, prepared by Citigroup in conjunction with other Wall Street banks, were copied nearly word for word. (Lawmakers changed two words to make them plural.)

Citigroup was the megabank that received the most taxpayer assistance during the financial crisis, a fact perhaps related to the very same lobbying practices now being used to rein in regulation: According to Reuters, a study published by the National Bureau of Economic Research in 2011 found that "The more aggressively a bank lobbied before the financial crisis, the worse its loans performed during the economic downturn -- and the more bailout dollars it received." Now, despite its former status as the basket case of Wall Street, Citigroup and its hired guns are welcome on Capitol Hill, weighing in on and even drafting bills -- like one the House committee signed off on earlier this month, exempting several classes of derivatives from a rule intended to prevent government insurance from backstopping risky trades.

In addition to crafting new legislation, bank lobbyists have for the last three years been targeting the regulatory entities tasked with figuring out how to implement the exiting law. The campaign against Dodd-Frank, in other words, is a pincer movement, coordinated and methodical. Its success so far is striking: Of the 398 rules the legislation requires, only 153 have been finalized, according to the Times.

Republicans, as mentioned, never liked Dodd-Frank, but House Democrats seem to have undergone a shift on the issue. While Rep. Maxine Waters (D-Calif.), the ranking Democrat on the House Financial Services Committee, opposed the change to derivatives regulation, most other Democrats on the committee supported it. One self-evident reason why: That committee is an obvious focus for Wall Street's political operations when it comes to campaign contributions. One of its members, and a magnet for bank money, was quite open about this to the Times, offering one of the more remarkable quotes by a denizen of Congress in recent memory:

"I won't dispute for one second the problems of a system that demands immense amount of fund-raisers by its legislators," said Representative Jim Himes, a third-term Democrat of Connecticut, who supported the recent industry-backed bills and leads the party's fund-raising efforts in the House. A member of the Financial Services Committee and a former banker at Goldman Sachs, he is one of the top recipients of Wall Street donations. "It's appalling, it's disgusting, it's wasteful and it opens the possibility of conflicts of interest and corruption. It's unfortunately the world we live in."

The Occupiers and the good governance advocates will have to find new rhetoric: fatalism aside, theirs has been appropriated by an embodiment of what they denounce.


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HenryHunter012

HenryHunter012

May 27 2013 at 3:44 PM Report abuse -1 rate up rate down Reply
Bill

This is for all of the republicans out there who are against welfare except for welfare that benefits them. Like the loans to all the banks and GM and Chrysler etc. Now I worked from age 14 to 72 to not be on the receiving end of those bailouts but now I refuse to pay anymore. I will never pay back the monies on my credit cards which I stopped paying and you can call me all you like but you will not get a penny out of me anymore. See I too know how to work the system. This country has gone to hell and no one wants to do anything about it but scream and holler. Go pound sand or get off your behinds and actually do something. Once you quit working and start collecting welfare the fools with all the money who have no one to do their work will have to pay all the taxes. Maybe at that point they will wake up to the realities of life. If not great we still get fed by them and don't have to do a thing to receive it.

May 27 2013 at 11:05 AM Report abuse +1 rate up rate down Reply
Bill

When a member of congress tells us it's probably a conflick of interest and it's still acceptable we as a Nation are in serious trouble.

May 27 2013 at 10:51 AM Report abuse rate up rate down Reply
CaptainWhat

This is 100% the no dofferent than 'dictating' that they be allowed to place a wolf in the henhouse to watch the fox guard the chickens ... Until we completely remove ALL $/power/trade for favors "influencimg" form ALL eletions/political endeavors and limit them euqallt to ALL individual citizens, nothing will improves except the levels of 'cirruption.' - And for those who would argue "donations of $ = Freedom of speech in supporting MY candidate/Issue - let me say - FIRST deny that one giving more than another CAN cause influence and ineqaulity in awareness about any givin candadate to ALL the peo-ple - AND that limiting the amount of $ type freedom of speech does NOT limit how much time and energy and physical work you can give a given candidate ...

May 26 2013 at 10:27 AM Report abuse rate up rate down Reply
ralonne

I won't dispute for one second the problems of a system that demands immense amount of fund-raisers by its legislators," said Representative Jim Himes, a third-term Democrat of Connecticut, who supported the recent industry-backed bills and leads the party's fund-raising efforts in the House. A member of the Financial Services Committee and a former banker at Goldman Sachs, he is one of the top recipients of Wall Street donations. "It's appalling, it's disgusting, it's wasteful and it opens the possibility of conflicts of interest and corruption. It's unfortunately the world we live in."

Look who this is: A REPUBLICAN.

May 26 2013 at 10:20 AM Report abuse rate up rate down Reply
1 reply to ralonne's comment
ralonne

Oops - I meant to type A DEMOCRAT! It's apparent that both sides of the aisle are equally corrupt. Time to vote out all incumbent senators and representatives and replace them with people who will actually work for the good of America in general and not just themselves.

May 26 2013 at 10:22 AM Report abuse rate up rate down Reply
pointbreak101

The "system" is beyond broke. It's hopelessly broke.

May 26 2013 at 9:09 AM Report abuse +1 rate up rate down Reply
whscms

Congress will support whomever greases the members palms

May 26 2013 at 8:47 AM Report abuse +2 rate up rate down Reply
whaase8838

Anytime the "Rat" is put in charge of the "Cheese", and pays (major political contributions) to be kept in power of it, the system is bound to fail!

May 26 2013 at 12:54 AM Report abuse +2 rate up rate down Reply
Jim

We need to sweep out all the political aristocrats and replace them with working people. Those who are there now are only interested in extending and keeping their power.

May 25 2013 at 10:21 PM Report abuse +2 rate up rate down Reply
dfoster

"If you want to know the truth, follow the money. (Watergate) Still true.

May 25 2013 at 8:01 PM Report abuse +1 rate up rate down Reply