Before you know it, what once was an attempt at genuine reform creeps back toward business as usual.
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.
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.
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.”
Page 2 of 2 - All of which makes it darkly amusing to read in the April 5 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.”
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, recently, The Wall Street Journal reported on how a movement to challenge big banks at the local level has gained momentum around the country. 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, Mo., passed a resolution directing the city manager to do business only with banks that are responsive to the community. And 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 under way in other cities.
They’re turning up the heat. You can, too.
Bill Moyers is managing editor and Michael Winship, a native of Canandaigua, is senior writer of the weekly public affairs program “Moyers & Company,” airing on public television. Check local airtimes or comment at www.BillMoyers.com.