Republicans are trying to ram through Congress a bill that would allow big banks to engage in the exact same practices that caused the Great Recession of 2008. They’re hoping to pass it quickly and quietly while the nation’s attention is turned to the presidential race.
They call it the “Financial Choice Act of 2016,” H.R. 5983. In essence, according to Rep. Maxine Waters, D.-Calif., it would “put the banks in the driver’s seat [by] allowing financial institutions to choose their own regulatory regime.” Waters is the ranking Democratic member of the House Financial Services Committee, which has been captured by the right wing Republicans who are spearheading the bill.
If the so-called “Choice” Act passes, there would be nothing to prevent financial institutions from once again controlling our entire economy. It would allow banks, once again, to become “to big to fail.” Once again, American taxpayers could be forced to bail out banks on the brink of disaster because if they went down, so would the entire economy.
The Republican bill would gut the Dodd-Frank Act and other safeguards put in place in 2010 to help prevent another recession like that of 2008, which was caused by the greed of big banks.
The Dodd-Frank Act is officially titled the Wall Street Reform and Consumer Protection Act of 2010. Rep. Barney Frank and Sen.Chris Dodd were its main sponsors. Among other things, it created the Consumer Financial Protection Bureau (CFPB), which recently slapped the Wells Fargo Bank with a $100 million fine for opening hundreds of thousands of credit card and deposit accounts in the names of customers without authorization from those customers. The customers only became aware of these accounts when they were charged various fees.
It would appear that the Republicans are pushing their bill at this time to punish the CFPB for taking action against Wells Fargo.
On the whole, the Dodd Frank bill is actually pretty weak. It is less a law than a mandate for regulators to create rules (243 rules, to be exact) that would curb banks from conducting business in a way that “could pose a threat to the financial stability of the United States.”
However, that phrase is not defined. That’s left up to regulators, most of whom come from big financial institutions and return to big financial institutions when their stint as regulators is over.
As a result, even with Dodd-Frank, most financial institutions have been pretty much left alone to run amuck.
Since the crash of 2008, three out of the four largest financial institutions (JP Morgan Chase, Bank of America and Wells Fargo) are nearly 80 percent bigger than before they were bailed out. Furthermore, the six largest banks in this country issue more than two-thirds of all credit cards and more than 35 percent of all mortgages. Their assets are equivalent to nearly 60 percent of our Gross Domestic Product.
But that’s not good enough for the right wingers pushing the “Choice” bill. For fear that some day, somehow, some regulator might actually live up to the promise of Dodd-Frank, they want to gut it altogether.
Instead of regulators choosing which bank cases to pursue, the Choice bill would allow the financial institutions to choose their regulators.
If passed, the Choice Act would also do away with the Volcker Rule in Dodd-Frank. This is the rule that prevents banks from taking the money deposited by small depositors and risking it in shaky financial schemes.
The Act would also kill a new rule promulgated by the Securities and Exchange Commission that would require corporations to release information comparing the compensation of their CEOs to the paychecks of their workers.
It would also repeal a rule recently put in place by the Department of Labor (DOL) that requires stockbrokers and other financial professionals who provide retirement investment advice to put their clients’ best interests ahead of their own financial interests.
The Workers’ Rights Boards of St. Louis and Kansas City, Missouri, both sponsored by Jobs with Justice, have weighed in against this repeal.
“In repealing the DOL fiduciary rule, the [Choice] bill would roll back the most significant improvement in protections for average investors in several decades,” wrote Rev. Audrey Holles and Ruth Ehresmann, co-chairs of the St. Louis board and Dr. Bob Minor and Rev. Donna Simon, the Kansas City co-chairs.
“The rule helps all Americans – who increasingly are responsible for making their own decisions about how best to invest their retirement savings – keep more of their hard-earned savings so they can enjoy a more financially secure and independent retirement,” their letter concludes.
The AFL-CIO has also taken a stand against the bill. In a letter to Jeb Hensarling, R.-Texas, chair of the House Financial Services Committee, William Samuel, the AFL-CO director of government affairs, writes:
“The Financial Choice Act will sabotage the ability of financial regulators to rein in abusive practices by Wall Street. … The Act will also overturn the longstanding Supreme Court precedent that courts should defer to the subject-matter expertise of regulatory agencies, in effect, vastly increasing the number of lawsuits brought by financial entities that oppose new rules and regulations. It will subject financial regulators to political pressure by forcing them to rely on Congressional appropriations instead of independent funding.”
The bill flew through the Financial Services Committee September 13 on an almost completely party line vote of 30 to 26. The only Republican to vote against it was Representative Bruce Poliquin of Maine.
House Republicans are eager to rush H.R. 5983 to the floor of the House for a vote, and then to the Senate for passage while the nation’s attention is on the presidential election.
“Let us be clear about who would benefit from the Republicans’ ‘Wrong Choice,'” Representative Waters said. “[It will be] Wall Street and other special interests who have been fighting against financial reform since before it was enacted.”
Additional information was supplied by PAI.
Photo: Propublica.org
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