"The banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place." - Sen. Dick Durbin [D, IL].
In a few weeks, the banks' "ownership" of Congress will be put to the test. The Senate is going to take up comprehensive financial regulatory reform legislation in May -- this is the main bill the banks are spending their political capital on to fight, and the Senate is where they are hoping to use their influence and make it friendlier to their business.Read Full Article
Sen. Richard Shelby [R, AL], who just two weeks ago said that "safety and soundness [of banks] trumps...the consumer finance whatever," is all of a sudden championing a stand-alone Consumer Financial Protection Agency (CFPA), the Washington Post reports:
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Staff members for Sen. Richard C. Shelby (Ala.), the ranking Republican on the Senate banking committee, sent a proposal to their Democratic counterparts last week that would create an independent consumer financial protection agency, according to sources familiar with the negotiations.
Derivatives, those obscure financial products built off the value of other assets, have their historical roots in agriculture. Farmers and investors would place bets against the harvest as a way to hedge against the uncertainty involved in making your living off of raising food. The derivatives market is now a several hundred trillion dollar, highly complex financial market, but the congressional agricultural committees still hold legacy jurisdiction over regulating it.
TNR's Noam Scheiber has a great piece on the state of financial reform in the Senate, describing an emerging strategy to put some relatively strong consumer protections in the bill while giving Wall Street much of what they want in areas that the public isn't paying attention to. Derivatives reform -- or the lack therof -- is likely going to be the area where Wall Street gets their biggest win, and the Senate Agriculture Committee is set up to be the driving forces behind delivering it.Read Full Article
When financial reform negotiations broke down a couple weeks ago, Sen. Bob Corker [R, TN] (pictured at right) was the one to stand up and say that a bipartisan bill was still possible. Last week, when the Republicans refused to participate in the mark-up of the bill, Corker called it "a very large strategic mistake," adding that financial reform "is an issue that almost every American wants to see passed." But today he announced that he "absolutely cannot support" the bil.
Senate Democrats, as we know, need to pick off at least one Republican, in addition to holding their own party together, to overcome an inevitable Republican filibuster. They have basically three options -- find a Republican other than Corker who may be willing to vote for the bill, negotiate down some of the provisions to a point that Republicans can support it, or call the Republicans' bluff and just bring the bill to a vote.Read Full Article
Some of the most absurd lending and borrowing happens in the payday loan industry. According to the Center for Responsible Lending (.pdf), the average payday loan borrower pays $800 for each $325 they borrow. That's an absolutely absurd interest rate, but according to the New York Times, the senators who are designing financial reform legislation are going to include a special carve-out so the industry can keep on dealing in these abusive loans:Read Full Article
Republicans and a handful of pro-business Democrats are standing in opposition to an independent consumer financial watchdog agency – a central pillar of President Obama's financial regulation agendaRead Full Article
Senate Banking Committee Chairman Chris Dodd's [D, CT] latest version of financial reform legislation includes a partially independent Consumer Financial Protection Agency. Financial reform advocates seem to think it's good enough. HuffPo has the details.Read Full Article
President Obama's 2011 budget dropped today and grabbed most of the headlines, but it wasn't the only thing happening on Capitol Hill. Here's what you might have missed: The Washington Post chronicles the slow death of the Consumer Financial Protection Agency. What once was a key component of President Obama's plan to regulate the financial industry has slowly lost more and more of its teeth as the proposal works its way through the legislative process. The House already passed a version of th...Read Full Article