Derivatives Lobby Corrupts Congress
A must read column from Bloomberg’s Dawn Kopecki, Matthew Leising and Shannon D. Harrington last week looks at yet another wayn the financial services industry is blunting attempted reforms: the so called “New Democrats.”
While anti-regulation bankers have long had friendly relations with the GOP (i.e., as in Bought and Paid For), Bloomberg argues that New Democrats have made changes to regulatory bills at the behest of banks:
“The battle over derivatives legislation is a test for the Obama administration’s efforts to tighten financial regulation to prevent a repeat of the financial crisis that shook the global economy — a crisis exacerbated by derivatives trading.
Frank, a Massachusetts Democrat who rose through the ranks in Congress fighting homelessness and advocating for gay and consumer rights, found his handiwork panned by administration officials after he released draft legislation last week that they criticized as too friendly to business. Frank’s bill allows for no change in how standardized over-the-counter derivatives are traded as long as they are reported to regulators.
Commodity Futures Trading Commission Chairman Gary Gensler and Henry T.C. Hu of the Securities and Exchange Commission said Frank’s “discussion draft” created too many loopholes and had the potential to exclude all hedge funds and corporate end-users from oversight . . .
With 68 of the Democrats’ 256 votes in the House, the New Democrats have become a growing force within their party. Democrats hold a 38-member voting majority over Republicans and cannot pass financial legislation without coalition support.
While the concerns were raised through both Republicans and Democrats, “the New Democrats have played a central role here both in terms of interacting with the end-users but also being able to take that concern to Chairman Frank,” Pickel said. A half dozen New Democrats pressed Treasury Secretary Timothy Geithner to expand the administration’s exemption for end-users in an Oct. 1 meeting.”
Its ironic that the one thing there is bipartisan support for involves acquiesing to those who oppose Derivatives reform.
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Source:
Derivatives Lobby Links With New Democrats to Blunt Obama Plan
Dawn Kopecki, Matthew Leising and Shannon D. Harrington
Bloomberg, Oct. 9 2009
http://www.bloomberg.com/apps/news?pid=20601109&sid=a3CxbMYYXpt8
October 12th, 2009 at 9:16 am
The more things “Change”, the more they stay the same. Meet the new boss, same as the old boss.
October 12th, 2009 at 9:41 am
ironic ? … No, Barry. I rather think it is nauseating.
October 12th, 2009 at 10:08 am
how can you corrupt the already corrupt?
October 12th, 2009 at 10:08 am
The vampire squid clones and is capable of regeneration.
October 12th, 2009 at 10:50 am
[...] Derivatives Lobby Corrupts Congress By Barry Ritholtz – October 12th, 2009, 9:00AM [...]
October 12th, 2009 at 10:55 am
NOW can we all agree on public financing of elections? or do we have to wait until the banksters actually stand on the senate floor and veto legislation.
October 12th, 2009 at 10:57 am
http://www.youtube.com/watch?v=hYIC0eZYEtI&NR=1
(advisory: R rated for language)
October 12th, 2009 at 11:00 am
@DeDude: It will never happen. It would be a “violation of First Amendment Rights” you know.
October 12th, 2009 at 11:22 am
i’m not sure at this point what would cause real meaningful reform when practically everyone in the senate is part of the self serving structure. protesting by violence seems to of been relegated to the history books and to me that’s a shame. nothing like a protest with burning cars and other damage to show the disgust of the public who are being played for fools daily.
October 12th, 2009 at 12:00 pm
re: “Public Campaign Financing”
I hate to say it, but, it isn’t ‘private contributions’ that is the problem. The problem is that there is so much that they can buy.
We’ve, obviously, forgotten that the Federal Government was intended to be Limited in Size, and Scope.
for a refresher, see: http://www.law.cornell.edu/constitution/constitution.billofrights.html
esp. Amendments IX and X
and, further: http://www.law.cornell.edu/constitution/constitution.overview.html
LSS: the FedGov’s ‘powers’ are explicitly enumerated and, further, proscribed. That the SCOTUS has, also, been hijacked is a different problem..
We were given a Republic to keep problems Localized and Managable; Centralization is our Ill, not the assemblage endeavoring to survive it.
http://www.thefreedictionary.com/assemblage
October 12th, 2009 at 12:04 pm
Mannwich, we actually have had it partially in presidential elections where there were a public match. It’s just that the money got so big that there was a political advantage to become 100% industry funded. The government is big enough to outbid private funding, when the thing we are bidding on is our own democracy. We could even finance it in part with a tax on lobbying and campaign contributions from companies (does a rate of 75% sound to high).
October 12th, 2009 at 12:10 pm
Sorry Mark, the hand that feeds you owns you. If that hand is private contributions, those private contributors are the owners. The size of “we the people’s” federal government is a completely different issue. When the constitution was written most of what federal government is doing today couldn’t even be imagined.
October 12th, 2009 at 12:53 pm
It’s as simple as this: Quoting Dick Durbin: “They own this place.”
The banks own Congress.
Not going to be easy to regulate anything
October 12th, 2009 at 1:02 pm
The current Congress “overlorded” by Reid and Pelosi is far too busy re-making the world in its image, and not worrying about the “big picture”. They are not going to miss out on their opportunity to spend money we don’t have after re-taking the Congress in 2006.
The Commodity Futures Modernization Act needs to be repealed now in light of its failures. I would argue it’s worse to make the mistake of keeping it in tact after the world has fallen apart and the emperor has clearly been seen to have no clothes.
It’s all about the delta (change). You are held to greater accountability when you have more light and this Congress has plenty of light.
Perhaps the day will come fairly soon Barry when the current Congress bumps former Senator Phil Gramm off the number two spot of your list of villains and into the number three spot.
October 12th, 2009 at 1:04 pm
DeD,
let’s call this: “the hand that feeds you owns you.”, True.
you’re proposing “Public(Government) Campaign Financing”
what are we to assume of that outcome?
and, with this: “When the constitution was written most of what federal government is doing today couldn’t even be imagined.”, where do you think the term UnConstitutional comes from? any idea of why the 9th & 10th Amendments are/were part of the “Bill of Rights”–necessary for the ratification of the Constitution, to begin with?
past that, why not, you know, spell out where the Vision of the Framers was, so, short-sighted?
October 12th, 2009 at 1:28 pm
Marcy Kaptur mentioned Black Rock on Bill Moyers, they look kind of scary to me.
It appears power is being more and more centralized to very few intitutions, like Black Rock.
http://online.wsj.com/article/SB125495801640171987.html?mod=googlenews_wsj
October 12th, 2009 at 1:50 pm
Mark EH;
If “we the people’s” government is financing campaigns then it is “we the people’s” hand that feeds the legislators, and they may be less inclined to serve those that currently give them the money needed to be reelected (i.e., run a better smear campaign than their opponent).
When the framers made the constitution a war was an affair where regular people could take their hunting riffles to go fight the enemy, so all you needed were some local militias getting together to ensure the defense of the country. In todays reality you need huge amounts of resources to ensure know-how and application of modern technology at a level that matches those of our potential enemies. International terror organizations with potential access to weapons of mass destruction, were also completely beyond what the founders were able to imagine and prepare for.
October 12th, 2009 at 8:05 pm
DeD,
forgetting the fact that the U.S. has been, in fact, the largest Arms dealer, and technology, therefore, peddler for multiple decades, picking ‘to provide for the Common Defense’, as an ex. of the Framers short-sightedness, shows a very specific blindness of your own.
as in, it’s in the Preamble of Document..
“The Constitution of the United States of America
We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.”
http://www.law.cornell.edu/constitution/constitution.preamble.html
October 14th, 2009 at 7:15 am
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