Last year's Dodd-Frank financial reform bill didn't directly fix the too-big-to-fail problem that necessitated the 2008 bailouts. Instead, it allowed the big banks to grow even bigger, but gave regulators new authority to require the big banks to report more information to the government and force them to follow stricter rules. It also gave regulators new guidelines to consider when deciding whether or not to allow bank mergers that could create new too-big-to-fail entities. Basically, the bill took a noncommittal approach to addressing issues of bank size and interconnectedness. Congress punted the big decisions off to regulators and made it possible for regulators to take drastic action, but gave them a lot of leeway to maintain the status quo if they so choose.
These provisions of the bill are about to get their first test. Capital One, currently the ninth largest bank-holding company in the U.S., has reached an agreement with the Ducth ING Groep to purchase their U.S. arm, ING Direct. They are planning to then turn around and leverage assets gained in that deal to purchase HSBC's subprime credit card division. The acquisitions would make Capital One the fifth largest bank in the U.S., right behind such infamous too-big-to-fail giants as Bank of America, Chase, Citigroup, and Wells Fargo. It would mean that financial assets and power in the U.S. would become even more concentrated in a small group of top corporations.Read Full Article
Given how extreme the failure of Wall Street was that caused the 2008 crisis, the financial reform bill passed by Congress last year, Dodd-Frank, is pretty weak tea. It's riddled with giant loopholes, defers many of the biggest decisions to the same regulatory agencies who failed us in the first place, and, most significantly, allows the banks that needed a $4.6 trillion bailout because they were "too big to fail" to become even bigger. Dodd-Frank was largely an exercise in passing a bill for the sake of appearing to have done something. Unfortunately, Congress seem to have fooled a lot of people out there, especially those who work for popular newspapers, into believing that they have fixed the problems.Read Full Article
The banking industry lost a vote on Capitol Hill yesterday for what seems like the first time since the first TARP attempt was rejected in 2008. The question was if the Federal Reserve's new rules limiting how much banks can charge retailers for debit transactions, as mandated by last year's financial regulatory overhaul bill, should go into effect this summer as scheduled or be delayed for a year, giving banks more time to lobby against it. In the end, a majority of the Senate voted in favor of the delay (54-45) but it wasn't enough to overcome a procedural hurdle and it was ultimately rejected.Read Full Article
Last year, the independent, non-partisan Office of Congressional Ethics asked the House Ethics Committee to look into some fishy fundraising activity by three congressmen -- Rep. Joseph Crowley [D, NY-7], Rep. John Campbell [R, CA-48] and Rep. Tom Price [R, GA-6]. The allegation was that they held an unusually high number of campaign fundraising events with Wall Street types in the days leading up to the vote on the Dodd-Frank Wall Street Reform Act and that this may amount to soliciting funds "in a manner which gave the appearance that special treatment or access was being provided to donors or the appearance that the contributions were linked to an official act."
Well, the Ethics Committee has issued their findings, and though they found that staff members were involved in fundraising and fundraising consultants were involved in setting up lobbyist meetings, they didn't see anything wrong with any of it.Read Full Article
The Dodd-Frank financial regulatory reform bill that the Democrats passed last year didn't take an aggressive approach to fixing the too-big-and-interconnected-to-fail problem that necessitated the bank bailouts. The Senate rejected an amendment to the bill that would have broke up the biggest banks and, instead, created a "Systemic Risk Council" to determine which banks are too big and interconnected and make them follow tougher capital and leveraging requirements. It's supposed to keep the giant finance companies on a tight leash and avoid the shocks to the financial markets that would be caused by restricting the growth of a Goldman Sachs or Bank of America.
But it's not guaranteed to work, and I'd say the latest comments from Tim Geither, who is going to chair the council, do not inspire much confidence:Read Full Article
There was something odd about the death of the omnibus appropriations bill last week. The bill would have funded the government at the exact level requested by the Republican leadership and of the oft-criticized earmarks in the bill, the top beneficiaries would have been Republicans. The bill was produced through a long, bipartisan, and mostly agreeable committee process.
So why did the Republicans suddenly turn against it?Read Full Article
The graphic at right shows, in aggregate, the explosion of the Federal Reserve's balance sheet during the financial crisis. Today, thanks to the Dodd-Frank financial reform bill (exact provision here), we get to begin learning which companies benefitted from these subsidies, how much they got, when they got it, and what the Fed got/is expected to get in return. The law also asks for "the specific rationale for each such facility or program." Click through for links to dig in yourself or to find the best breaking analysis.Read Full Article
Incoming Financial Services Chairman Rep. Spencer Bachus [R, AL-6] is using the leverage he gained Tuesday night to try to weaken how regulators implement the already-weak derivatives reform provisions in the Dodd-Frank Act.Read Full Article
About a week after the Dodd-Frank financial reform bill was signed into law, government transparency watchdogs found a heinous provision in the bill that seemed to allow the Securities and Exchange Commission (SEC) to deny Freedom of Information (FOIA) requests for information pertaining to an "examination, surveillance, or risk assessment” of banks and other financial comapnies. A group of groups wrote to the bills' sponsors, Sen. Chris Dodd [D, CT] and Rep. Barney Frank [D, MA-4], saying that the provision was "undermining the bill’s overarching goals of more transparency and accountability" and asking that they pass another bill to remove it.Read Full Article
A central part of the new financial regulation reform law is the creation of the new Consumer Financial Protection Bureau (CFPB), which seeks to make sure that consumers are protected against the predatory behavior of banks and credit card companies. Who runs this agency will be a big factor on how strict or how lenient the CFPB’s policies and practices will be.Read Full Article
This probably won't come as a surprise to many of you, but in the 383,013-word, 2,253-page Dodd-Frank financial reform bill, Congress and the President seems to have enacted a provision that, according to a cadre of government transparency groups, "has the potential to severely hinder the public’s ability to access critical information related to the oversight activities of the Securities and Exchange Commission (SEC), thereby undermining the bill’s overarching goals of more transparency and accountability."Read Full Article
Yesterday, Congress reacted to WikiLeaks' release of classified documents, Democrats made a push to break the Republican filibuster of the DISCLOSE Act, and the heat has gone up on illegal immigration, even as the numbers of immigrants has fallen. Plus, pictured at right, we have explanations of how an ethics trial for Rep. Rangel would work -- see his profile, wiki, official House videos, and latest news coverage from all around the Web. All this and more, click on through.Read Full Article
Congress passes a major financial regulations overhaul and extends unemployment insurance for a fourth time; BP increased its lobbying spending to $1.7 million, and Republicans launch a Tea Party Caucus. All this and more in today's Congress Links.
On the major bill to extend unemployement benefits, H.R. 4213, here are some resources to keep you up-to-date: the most-recent votes available to us, latest news coverage, latest blog coverage, latest user comments, most-helpful user comments, wiki summary... and let us know your questions :: writeus at opencongress d0t org.Read Full Article
UPDATE: The bill has officially been passed. It now gets sent to President Obama, who is expected to sign it into law this afternoon. Original post below...
As expected, the Senate this afternoon voted 60-38 to end debate on the landmark Dodd-Frank Wall Street Reform and Consumer Protections Act. The vote on final passage of the bill, whiconly requires a simply majority of 51 "ayes," is expected later this afternoon.
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As Congress returns from their week-long vacation this afternoon, all the big items on the Democrats' legislative agenda remain stuck in the Senate where the Democrats are one vote short of overcoming Republican filibusters due to the passing of Sen. Robert Byrd [D, WV].Read Full Article