I am writing you to express my strong opposition to the $19 billion bank tax that was included in the financial reform bill during the conference committee. This tax was not in the Senate version of the bill, which I supported. If the final version of this bill contains these higher taxes, I will not support it.
Chris Dodd and Barney Frank are experienced wheeler-dealers and savvy backroom players, so it’s no surprise there’s a lot of clever wheeling and dealing in the financial regulation bill they pushed through conference committee last week. But around 3:00 a.m. Friday morning, they may have made a mistake.
The financial regulation bill, which passed out of conference last week, may have trouble making its way to the president's desk. When the Senate reached cloture on the bill with 60 votes the first time around, it had the support of Robert Byrd, who passed away today, and Scott Brown, who is now threatening to vote against the conference report because of "$18 billion in new assessments and fees were added in the wee hours of the morning by the conference committee."
Today, a conference committee begins hashing out differences between the House and Senate visions for financial regulatory reform. As Congress begins deliberations on another sweeping overhaul of a complex national system with broad, international implications, one would hope they are well informed about the bills over which they'll be haggling.
But just a week ago, a member of the Financial Crisis Inquiry Commission told billionaire investor Warren Buffett that "no one" has read the text of the financial regulatory reform bills, "including some of the co-sponsors."
The bad news is that there is a lot of bad news. BP, known to our president as British Petroleum (which infuriates our British friends who say that name was abandoned long ago and Obama is merely trying to rubbish their country), is destroying the ecology of the Gulf of Mexico, and wrecking the economies of the states that abut it.
The 2000s saw a massive housing bubble that, when popped, gave us the financial crisis and Great Recession. For decades, the federal government incentivized home-ownership and encouraged banks to write mortgages for people who might otherwise have been unable to afford them. The ability of these new homeowners to make payments rested on the continued rise of home values and a thriving economy.
Citigroup Inc Chief Executive Officer Vikram Pandit has written President Barack Obama endorsing “strong regulatory reform” for U.S. banks. What’s more, Pandit wrote, “You can count on me and the entire Citi organization to support” Obama’s reform efforts.
Of course, the U.S. government owns 27% of Citi, so one shouldn’t be surprised at this. And even without the direct ownership, Citi has no more interest than other big coprorations heavily dependent on government regulation and increasingly at the mercy of discretionary, not to say arbitrary, government action, in antagonizing the Obama administration or Democrats in Congress—especially since the administration and the congressional Democrats have shown a willingness to go after those standing in their way.
It's hard to feel sorry for Goldman Sachs. The investment bank has tremendous wealth and political power. I support efforts to break up such institutions, and I find it interesting that Democrats with ties to the big banks are often the same ones who argue that bank-busting won't solve anything. Nevertheless, the recent campaign against Goldman is an astonishing display of political gamesmanship. It's a clear effort to blame the financial crisis solely on the big banks.
The debate over financial reform has devolved with record speed. As the two parties argue over which is more pro-Wall Street, the actual substance of the Senate legislation, aka the Dodd bill, has remained in the background. Maybe this isn't surprising, since the issue is so complex and no one really knows what's going on. Correction, Larry Lindsey knows what's going on, and he's written an analysis of the Dodd bill you ought to read.
The White House and Congress are moving ahead with their plans to reform the financial system. At issue is the Dodd bill's resolution authority to break down large and complex financial institutions on the verge of insolvency. Mitch McConnell says the authority, which would include a $50 billion fund to pay for the resolution process, would incentivize Too Big to Fail and lead to more bailouts. President Obama says that's baloney.