The Best Congress the Banks’ Money Can Buy

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Here we go again. Another round of the game we call Congressional Creep. After months of haggling and debate, Congress finally passes reform legislation to fix a serious rupture in the body politic, and the President signs it into law. But the fight’s just begun, because the special interests immediately set out to win back what they lost when the reform became law.

They spread money like manure on the campaign trails of key members of Congress. They unleash hordes of lobbyists on Capitol Hill, cozy up to columnists and editorial writers, spend millions on lawyers who relentlessly pick at the law, trying to rewrite or water down the regulations required for enforcement. Before you know it, what once was an attempt at genuine reform creeps back toward business as usual.

It’s happening right now with the Dodd-Frank Wall Street Reform and Consumer Protection Act — passed two years ago in the wake of our disastrous financial meltdown.  Just last week, for example, both parties in the House overwhelmingly approved two bills that already would change Dodd-Frank’s rules on derivatives — those convoluted trading deals recently described by the chairman of the Commodity Futures Trading Commission as “the largest dark pool in our financial markets.”

Especially vulnerable is a key provision of Dodd-Frank known as the Volcker Rule, so named by President Obama after the former Federal Reserve Chairman Paul Volcker. It’s an attempt to keep the banks in which you deposit your money from gambling your savings on the bank’s own, sometime risky investments.

It will come as no surprise that the financial sector hates the Volcker Rule and is fighting back hard.

On March 26, Robert Schmidt and Phil Mattingly at Bloomberg News published an extensive account on the coordinated campaign being waged by the banking industry to persuade regulators to scale back reform. Headlined “Bank Lobby’s Onslaught Shifts Debate on Volcker Rule,” their report chronicles the many ways in which banks are turning up the heat, enlisting the help of clients, customers, and other companies, among others.  “Some banks recommended consultants and law firms,” they write, “… to help clients write letters arguing that the proposed language defines proprietary trading too broadly. Partnering with trade associations, the banks also commissioned studies, tested messages with focus groups, distributed talking points and set up a phone hotline for Capitol Hill staffers.”

The banks found another ally in the U.S. Chamber of Commerce, the biggest pro-business lobby in America, which helped put together a coalition of companies, including Boeing, DuPont, Caterpillar and Macy’s department stores.

In one instance, the banking behemoth Credit Suisse got an assist from a man named Robert Auwaerter, who oversees hundreds of billions as the fellow in charge of the fixed income group at Vanguard Group, a mutual fund company. He came to a briefing Credit Suisse held for three congressmen who belong to the New Democrats, a group of House members known “for their centrist and pro-business leanings.”

Auwaerter led the 90-minute meeting and said the three Democrats “were really receptive to our comments.”  We’ll just bet. According to the Bloomberg News reporters, one of them, Joe Crowley of New York, “pushed back at one point, telling the group that he’d recently marched in a Lunar New Year parade in Queens with Thomas DiNapoli, the New York State Comptroller who oversees a state retirement fund of about $140 billion. Why wasn’t DiNapoli complaining about Volcker?

“The asset managers told Crowley they have a closer view of how the markets work than the pension funds that hire them. The proposed rule, they said, would slow bond trading, making it harder for them to execute their strategies. They predicted that would mean lower returns for funds like DiNapoli’s, as well as for 401(k) plans and individual investors.

“Less than two weeks after the Credit Suisse visit, 26 New Democrats signed a letter to regulators noting that ‘millions of public school teachers, police officers and private employees depend on liquid markets and low transaction costs’ to retire with ‘dignity and ease.’”

In other words, fellow members and regulators, lighten up on the Volcker Rule! A thick wallet helps, of course — lobbyists for the financial sector spent nearly half a billion dollars last year. And the congressional newspaper The Hill reports, “Members of Congress pressuring regulators to go easy on the ‘Volcker Rule’ received roughly four times as much on average in contributions from the financial industry than lawmakers pushing for a stronger rule since the 2010 election cycle, according to Public Citizen, a left-leaning group advocating for strict implementation.

“When it is all added up, opponents of a tough Volcker Rule received over 35 times as much from the financial industry — $66.7 million — than advocates for a strong stance, who received $1.9 million.”

All of which makes it darkly amusing to read in the April 4 edition of the financial newspaper The American Banker that, in the words of  Roger Beverage, president and CEO of the Oklahoma Bankers  Association, “Congress isn’t afraid of bankers. They don’t think we’ll do anything to kick them out of office. We are trying to change that perception.”

Which is why Beverage and his colleague are creating the industry’s first super PAC.  They’re calling it – we’re not making this up – “Friends of Traditional Banking,” a smokescreen of a sobriquet if we ever heard one, vaguely reminiscent of the Chicago mobsters in Billy Wilder’s Some Like It Hot who dub themselves “Friends of Italian Opera.”

Matt Packard, the super PAC’s chairman, told The American Banker, “If someone says I am going to give your opponent $5,000 or $10,000, you might say, ‘Yea, okay.’ But if you say the bankers are going to put in $100,000 or $500,000 or $1 million into your opponent’s campaign, that starts to draw some attention.” Don Childears, president and CEO of the Colorado Bankers Association chimed in, “It would be nice to sit on the sidelines or sit on our hands and say, ‘Oh we don’t get involved in that stuff,’ but that just means you get run over. We need to get more deeply involved as an industry in supporting friends and trying to replace enemies.”

All of which demonstrates, as per Bloomberg News, “that four years after Wall Street helped cause the worst economic downturn since the Great Depression and prompted a $700 billion taxpayer bailout, its lobby is regaining its power to blunt or deflect efforts to rein in the banks.”

Nonetheless, just last week, The Wall Street Journal reported on how a movement to challenge big banks at the local level has gained momentum around the country. Activists want to restructure Wall Street from the bottom up.  As a result, the Los Angeles City Council is considering an ordinance that would gather foreclosure and other data on banks that do business with the city. Officials in Kansas, City, Missouri, passed a resolution directing the city manager to do business only with banks that are responsive to the community.  And here in New York City, legislation is pending to require banks to reinvest in local neighborhoods if they want to hold city deposits.  Similar actions are underway in other cities.

They’re turning up the heat. You can, too.

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  • Paul E. Kramer

    We used to use a simple phrase to descibe this. Rip off.

  • Windsriders

    The bankers need a SuperPac. Zeus, where’s
    that Thunderbolt?

    One banker has said:” …’Oh we don’t
    get involved in that stuff,’ … We need to get more deeply involved as an
    industry in supporting friends and trying to replace enemies.”

    How sickening. Oh, those poor neglected
    bankers. They just can’t get enough. They haven’t ripped us off enough. They
    are not listened to enough, although as is stated in this excellent article:
    “…members of Congress pressuring regulators to go easy on the ‘Volcker
    Rule’ received roughly four times as much on average in contributions from the
    financial industry than lawmakers pushing for a stronger rule…”

    We absolutely need to restructure Wall Street
    from the bottom up. I am really glad that the Los Angeles City Council is
    considering an ordinance that would gather foreclosure and other data on banks
    that do business with the city. and it is wonderful to hear that officials in
    Kansas, City passed a resolution directing the city manager to do business only
    with banks that are responsive to the community.

    I don’t at present know of any banks that are
    responsive to the needs of their communities.

    However, perhaps its the best time now to
    consider the creation of public banks, which are totally responsive to the
    needs of their communitiy, such as the Bank of North Dakota. This is the kind
    of bank that the 99% need: a bank created for and by the people – the 99%.

    Apr. 6

  • Mikelibera

    Someone better do something about the Banksters or the US will become a plutocracy controlled by the BIG money interests in the same way Mexico is run by the Drug Cartels.

  • Chrehn

    Check out

  • maxpayne

    Almost there Moyers but you forgot one thing. Banks have the Fed Reserve on their side to print out money out of thin air and modern digital technology makes it easier. Until that comes to a halt, Congress and what remains of this crumbling empire will be owned lock, stock, and barrel by the bankster goons. The documentary film “Zeitgeist: Addendum” gives the full details about the Fed Reserve. You should be able to find it on youtube since it’s free to watch unless I’m mistaken.

  • Edie

    another great show with Paul Volcker explaining why too big to fail bankers like Jamie Daimond on JPMorgan Chase  shown complaining about the new rule on a clip is that they want their risk taking speculation with depositers funds and want the government to bail them out when they lose money on their gambles. The Volcker rule regulates that this won’t happen if they  expect the govetnment to bail them out again. Volcker is right that these too big to fail financial insitutions should not be allowed to be a bank where they get govenment insurance. we need to put pressure on Congress to get these financial speculation businesses out of being banks. Contact Congress  about this .    thanks for introducing us to Carney Ross and his refreshing ideas and book.                         

  • Anonymous

    “Retirement with dignity and ease” is surrender under current conditions: Then you’re a sitting duck. Lax rules would allow diversion of retirement benefits so that the retirees’ ease and dignity might dissolve almost immediately. Only an insider Oligarch can have any confidence in secure retirement, and if we get justice, even that may be out the window.

  • Bcameron43

    Last night’s show was wonderful! Just the type of guests I want to see to try and fix this mess.

  • Anonymous

    Carne Ross’ comments give me hope.  The Occupy Movement, a name which I hope is interim,  is an example of  mitosis.  In the past, third parties have fallen because the major parties absorbed enough of third party ideas to render those parties irrelevant.  The Occupy Movement has excised itself from the body that contains it, at least in thought.  If the Occupy Movement sets up a banking system, then that is the start of something real.  Revolution — dare I call it that? — requires financing.  I’m all in favor of new, electronic currency, like Internet  credits that can be accumulated via a barter system.  I’ve always viewed my employment as a barter system, but my employers always had the better part of that bargain.

  • Anonymous

     I loved Volcker’s laugh.

  • Anonymous

    Mr. Moyers — your broadcast is a public service.  Instead of pledge drives, would a single payer system for public broadcasting serve the people better?

  • Anonymous

    One of the few shows on commercial television that comes close the the quality of PBS is “CBS This Morning”.  I don’t always catch it, but, whenever I do, I’m impressed.  The quality of the interviewing on Moyers & Company and The News Hour continues to impress me.  I want to end the commercial encroachment and funding uncertainty — pledge drive — and propose that the Occupy Movement take a peek, at least, at the issue of complete and robust funding of public media.  I am not saying that PBS should be the only player, but its track record would certainly enable it to get all the funding it needed if we had a way of funding public broadcasting — a public service.

  • Modymo

    What more is it going to take to get the hard working, tax paying. middle class citizens of America to finally rise up against our corrupt financial/business industries and our corrupt government.  If not now, when???

    I am not worried for myself, since I am a retired senior, still able to eke out an existence, and probably won’t be here to see the devestating results of our mass inertia.  The majority of our citizens seem to be lazy, self indulgent, Godless slugs.  They fill their minds with mindless so-called reality TV shows, and fill their guts with convenience and fast foods   Frozen pre-made breakfasts?  How lazy can one be?

     What is to become of my children and grandchildren?  GOD SAVE AMERICA. 

    If traditional Americans do not take action IMMEDIATELY, we will have noone to blame but ourselves when we become the lower class slaves. 

    Our country which was founded on Christian values, is no longer allowed to use the name of God in our schools.  Christian holy days such as Christmas and Easter are no longer allowed to display any religious symbols.  Christmas is Santa Claus and Easter is the Easter Bunny, (rite of Spring). 

    Michigan, once the home of our dynamic Aut Industry is now a hotbed of Muslimism.

    We have a president who besides having no qualifications for that office, disrespects and disregards traditional American values, and bows to foreign Muslim dignitaries, and is stirring up racism that has not been seen since the 1960’s.



  • Pat

    The idea that anyone’s job, including the President’s, and Congress, is worth more than a citizen’s (including a child’s) life, and liberty is simply radical and offensive by definition, whether the issue is gun rights, corporate dominance, or other threats from special interests which flourish while others are harmed. their pursuits of happiness are not more important than human and civil rights. Americans need to stop acting as if they are.