Home Economics Republicans & Wall Street vs. Democrats and Financial Reform

Republicans & Wall Street vs. Democrats and Financial Reform


The Republicans are doing it again. They are trying to use their obstructive tactics to defeat financial reform. And why isn’t someone calling them on it? Does every editor, every newscaster have an axe to grind for the banks and investment firms who literally over several years took several trillion dollars of wealth from the American people? Everyone from a staunch Republican to a committed Democrat must recall that it was the Bush Administration that allowed the housing bubble, the Madoff fraud, the credit default swaps, the near bankruptcy of AIG (which would have stopped everything from all air travel to food shipment), the Bear Stearns failure, the Lehman Brothers collapse and the complete rupture of the entire financial system.

Now, after having visited Wall Street and signed up to try to defeat financial reform, they are lying about the new legislation. They say that they will try to defeat it because they imply that it was the Obama Administration that bailed out the banks the first time and the voters say that they don’t want that to happen again. Of course the fact is that the bail out came a month before President Obama was elected.
It was the Bush Administration that asked the taxpayers to bail out their incompetence. Is anyone surprised? Cheney spent all his time trying to enrich his friends in industry, oil companies and weapons manufacture. Bush spent more time on vacation than any other President, and when he was in office seemed only to care about cutting taxes for his rich friends. He finally asked the taxpayers for $700 billion to bail out the banks. And then he left a Great Recession that cost 8 million jobs and a $1.3 trillion debt on top of an additional $5 trillion that he added to the national debt in only 8 years. Alan Greenspan, Federal Reserve chief under Bush admits now that he was wrong in leaving the entire marketplace to run itself.

That isn’t all. Wall Street firms had sold out the people as securities began to tank. They got out because the securities they were selling were worthless. The result was that the non-bank financial institutions shut down the financial system. Bush and Paulson bailed out the banks. They stayed open, but they had minimal transactions. And what happened then?

That caused the financial panic and resulted in companies’ beginning to lay off workers and other companies’ closing down. This all happened in the last year of the Bush Administration, 2008. The stock market fell from 14,000 in 2006 to a low by March or April of 2009 of 6,500. People were wiped out.

The U.S. Treasury put money in to save those banks and financial firms that totally irresponsibly spent the money of American investors so that the economy could continue.

And what did the Republicans want to do, as jobs were being lost at 500,000, 600,000 and 700,000 per month, breathtaking and terrifying numbers not seen since the Great Depression? They wanted to let the banks fail. They wanted to let the country fail. The Republican elected officials have access to the best economists in the world. Those economists–all of them–said we had better get the financial markets back in business or we would suffer a Depression like that of 1929 to 1941. So, even though they created a system whereby Wall Street could literally bankrupt the country, the Republicans were willing to let it happen.

So, the Obama Administration took office, as over 700,000 people lost work that very month, and despite relentless attacks by every anti-American group from the Chamber of Commerce to Rupert Murdoch’s NewsCorp. The official policy of the Republican Party had already been established. Do nothing to help the people. Let them suffer and they will blame Obama. We Neocon Republicans, with our Right Wing propaganda machine in full force blaming Obama…we will use the suffering we will cause to get reelected.

The Obama Administration put a $787 billion stimulus plan into effect that finally stopped the job losses, and put about 2 million people either to work in a private or government job or helped states to retain hundreds of thousands of employees they were about to lay off, including firemen, teachers and police.
The Republicans not only resisted this, but they got their big financial guns, like the Koch and Scaife and other big money organizations to launch protests against it. They have created a virtual industry called the tea party movement out of their desire to prevent recovery, groups to go around the country holding rallies against the Democratic recovery program. These were meetings against programs to restore the economy, policies without which we would right now be looking at 12-15% unemployment and a guaranteed 10-year deep recession.

So, we don’t want this to happen again. The idiots in the tea parties are arguing that we should never bail out “too big to fail” banks again. This is like saying that we never allow crooks to steal our money again. Duh! We all passed the fourth grade.

Of course now that we have a Democratic President–and because he is African-American–all the racist and white supremacist groups have come out again from under their rocks and are slithering across every town square. And of course, why not? When you can get lazy Democrats to stay home instead of coming to the tea parties and knocking some heads, they have a free rein to deliver their hate speech. Why aren’t these racist, anti-American, NRA-sponsored, paid marchers covered, head to foot in rotten eggs and tomatoes? Why aren’t they all coughing up pepper spray?

Well…anyway…yes, we do need to make sure that we do not bail out big banks. But of course this is not what the tea party members really want. Over 70% of them are self-identified Republicans and the Republicans and the tea party members are spreading the word for Wall Street. They pretend to want reform while declaring that the real reform will be a “bail out of big banks.”

Those are the “talking points” that the Republican Party has put out after Mitch McConnell and John Boehner went to Wall Street to guarantee them that no “punk Senate staffers” would create legislation that would stop them from continuing to loot the American economy. Now Wall Street is making Republicans a “wholly owned subsidiary” just as the health insurance companies did during that battle.

But here is what actually happens in the financial reform bill:

It is the Dodd bill, the Senate Banking Committee Bill and it’s called the “Restoring American Financial Stability Act of 2010.”

First of all, it does not “bail out banks.” On the contrary, its first provision is to show how big banks will be liquidated. And in those cases where the banking community feels that a bank should be helped, there is a $50 billion fund, from private sources, from the banking community itself, that can be used to help close down these banks, sell off assets and let the financial community go right on about its business.

There will be no government funds, however, involved in any of this. No bail outs using federal taxpayer funds.

It also has regulation that makes it more difficult for banks to get too big in the first place. It imposes leverage and other requirements. It also eliminates loopholes and requires transparency in trading derivatives, asset-backed securities and other issues so that no transactions can go on that will be unnoticed by either regulators or others in the marketplace. It incorporates the “Volcker rule” which mandates sound banking practices.

It improves Federal Bank supervision. It improves protections for stockholders and investors and strengthens procedures for enforcement of regulations. It creates a whole new department, a separate entity but housed at the Federal Reserve, the only function of which is to protect the American consumer from financial abuse by banks or credit card companies or other financial institutions.

A new Financial Stability Oversight Council of financial experts will monitor the financial system and will have the authority to impose capital, liquidity, leverage and other requirements on financial institutions. It will even have the authority to break up a financial institution if, even with all these other requirements, it becomes big enough to present a perceived danger to the system.

The act imposes serious regulations on derivatives, hedge funds, insurance, credit rating agencies and brings executive compensation more directly under the control of stockholders. Because of the Madoff problem where major fraud went unnoticed, new procedures at the SEC will guarantee that no matter what political party is in office, the systems for supervising the regulation of securities will be mandatory. In addition, mortgage-backed securities and municipal securities will be much more tightly regulated.

Finally, the Federal Reserve will be strengthened and at the same time made more transparent with audits by the GAO so that it can take on a more significant role in determining the ongoing stability of the financial markets.

So this is it, folks. No bail outs. On the contrary, this will be the end of bail-outs and the orderly transition from “too big to fail” banks, into both very large and medium and small banks that will now be monitored to see that their procedures are appropriate for their size and that, should failure occur for some reason, programs are in place by the financial industry itself…by law…to handle it.

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