At a time when grassroots Democrats are more active and ready to go than they have been doing for years — with President Donald Trump and his peers in the GOP vying for a fight — a group of Senate Democrats has joined Republicans. Used to be. If you believe it, deregulate the banks.
Yes, rather than act on gun control, the Senate will likely this week approve a rollback of rules adopted in response to the 2008 financial crisis. Nearly a dozen Democrats are backing the effort, along with nearly every Republican, and the GOP is fishing for even more votes from the blue side of the aisle in hopes of turning a win into a win.
Let’s be clear: It’s no surprise that a government controlled entirely by the GOP wants to ease bank rules. But that the Democrats are lending them a helping hand is terrible policy and terrible politics.
Supporting Democrats are arguing that it is for the benefit of small, community banks, which are politically sympathetic and generally do not cause global financial panic. don’t buy it While there are portions of the bill that would reduce reporting requirements for smaller banks, it also includes larger benefits for larger financial institutions.
For example, the bill would increase the amount of assets a bank would have to qualify for increased regulation from the Federal Reserve from $50 billion to $250 billion. The move would exempt 25 of the country’s 38 largest banks from strong supervision. The bill also includes an exemption from capital standards – essentially the amount that banks are required to have on hand in case they go south – which benefits some of the larger financial firms, and lobbying to get even more involved. Still working.
This is just the tip of the iceberg when it comes to the damage caused by this bill. Read this excerpt from David Deion on The Intercept for all the old details.
This is a very dangerous policy as well as very bad politics. As senators such as Bernie Sanders, I-VT, and Elizabeth Warren, D-Mass., have shown, energy and vitality are in preventing financial shenanigans, not encouraging them, when it comes to the Democratic base. Poles bear that sentiment. There’s no reason what’s considered the top tier 2020 Democratic candidate doesn’t want to touch this bank bill with a 100-foot pole.
political cartoon on economy
So what’s the deal with the Democrats who signed it? Some, such as Delaware Sense. Chris Koons and Thomas Carper are from bank-friendly states, and they have local political reasons, I think, for what they’re doing. But the rest are mostly from President Donald Trump’s victories in 2016, and are operating under the impression that he needs to display bipartisan sociability on something to survive his next re-election campaign.
However, I suspect that voters in Montana, North Dakota or Missouri are more likely to support censors John Tester, Heidi Heitkamp or Claire McCaskill because they supported the bank regulation bill. These are places where Sanders did very well against 2016 Democratic nominee Hillary Clinton, so it’s not like the Democrats are battling for a pro-corporate candidate who sings cumbaya with the GOP.
In fact, they are the places where a genuine populist candidate might do better than the standard-issue, centrist-approved Democrat, at which Washington advisers are given a chance.
So perhaps a simplistic explanation is that supporting the bill is only about the money. Senators in question have seen a boom in financial industry donations, and while I generally dismiss the popular view of campaign contributions as an outright quid pro quo for legislative favors, it certainly stinks at most. Is.
Meanwhile, there are Democratic senators from purple states, like Virginia’s Tim Kaine and Mark Warner or Colorado’s Michael Bennett, for whom supporting the bill is unforgivable, spewing whatever they say about community lenders.
For Republicans, deregulating banks is standard operating procedure for which they generally do not pay a political price. It should be a different story on the left. If you live in a state where a Senate Democrat thinks the world needs fewer rules for big banks, maybe take a long, hard look at the primary challenger?
Again, proponents would say that the law we’re discussing here is about freeing community banks from the shackles of government regulation so they can lend more to Main Street. But the bank with more than $200 billion in assets isn’t directly out of “It’s a Wonderful Life.” It is unacceptable for regulators to reduce their ability to exercise control, and sets the country on the road to a 2008 redux.
Ten years ago, we learned what happens when the threads of the regulatory system are pulled out a little at a time. No one wants to live those dark days again. But it seems that many Democrats have very short memories.
