Archive for May 9th, 2010

Senator Tester then: ‘take “too big to fail” out of the equation’

Senator Tester now: “Nay” on Brown-Kaufman “too big to fail” amendment


Well, it was only a matter of time before our junior senator got all caught up in his double-speak. Despite being sent to Washington as a populist alternative to the corruption of Conrad Burns, it seems that Jon Tester doesn’t think that his constituency can see the hypocrisy between his proclamations, and his votes. And his vote against the Brown-Kaufman “too big to fail” amendment speaks volumes.

For those who aren’t following the FinReg bill closely, here’s what Brown-Kaufman would have legislated:

“The amendment, sponsored by Sens. Sherrod Brown (D-Ohio) and Ted Kaufman (D-Del.), would have required megabanks to be broken down in size and capped so that their individual failure would not bring down the entire system.

Under Brown-Kaufman, no bank could hold more than 10 percent of the total amount of insured deposits, and a limit would have been placed on liabilities of a single bank to two percent of GDP.

In practice, the amendment required the six biggest banks — Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley — to significantly scale down their size. It was touted as a way to end Too Big To Fail.”

Matt Taibi at the Rolling Stone had this to say about the Senate’s 33-61 vote:

“Brown/Kaufman was an obvious and logical response to the great cancer of our financial system, the rapid consolidation of power and market share in the hands of a few banks… it seems to me that it failed precisely because it was a real law with no loopholes.”

Last week marked the biggest [failed] opportunity for Congress to reign in Wall Street by passing an amendment to the current reform bill that would have limited the size of Wall Street banks and financial houses.

Here’s Jon Tester then, proclaiming an end to “to big to fail” in the Huffington Post:

“But our entire economy almost collapsed a year-and-a-half ago because there were no referees on Wall Street. And sadly, hardworking, honest taxpayers — and our entire economy — paid the price…

The best way to fix this problem — and to prevent it from happening again — is to rewrite the rules. To require big banks and huge financial institutions to play by those rules. And to take “too big to fail” out of the equation.”

And again in a press release a few weeks ago:

‘”Saying Montanans are “still steaming mad” about the Wall Street bailout, Senator Jon Tester is pushing his colleagues to reform the rules of Wall Street and end the notion of “too big to fail”’

And to quote the Senator in the same press release, “Actions speak louder than words” he followed up by voting against the Brown-Kaufman amendment to reign in “too big to fail”.

Yes Senator, your actions speak louder than your words, and again in your own words, “Montanans are still steaming mad.” Except this time, it is you who are the point of their rage. How can you take on “too big to fail” if you don’t do something about the “too big” part of the problem? You now own the “too big to fail” problem. Or more properly, I should say: Wall Street now owns you.

Nothing in the current version of the FinReg legislation does anything to tackle “too big.” And if nothing is done about it, then “too big to fail” banks will become “too big to save” banks, with fatal consequences to our future economy when they next fail.

Simon Johnson puts the Brown-Kaufman amendment into perspective:

“When you strip away the disinformation, false promises, and wishful thinking, this is where we are on really reigning in the power of the country’s largest – and most dangerous – banks …

The lack of debate over Brown-Kaufman – and its likely demise – is all about money. There is a tsunami of contributions from the financial sector washing over Congress right now. When the dust settles, the pattern will be clear: Wall Street (legally) bought off key senators.

There will be a reckoning, to be sure, at the polls. The supporters of big banks will go down hard in November and in 2012; there are no secrets over this kind of time frame. But by then it will be too late for this cycle of financial reform – and there is no guarantee that the backlash will bring stronger reformers to power (in fact, the White House and the biggest banks would be quite happy to see non-reformers prevail.)”

The Brown-Kaufman amendment was the one strong point of regulation that would cut to the heart of why Wall Street has become immune to the will of the people. Crony capitalism, and corrupt corporatism are the guiding forces in Washington D.C. these days. It is no longer the will of the people–or the best intentions of once-innocent politicians–that governs our nation. It is corporate money and the influence it buys direct from Wall Street that has taken a stranglehold on our political and economic system. We are entering an era of plutonomy, the likes of which this country has never seen. We are being governed from Wall Street.

I’ll leave this with another quote from Simon Johnson:

“To the victors last night in the Senate [the vote against Brown-Kaufman]: congratulations – your opponents have fallen back. Your generals are known to be invincible, your forces are the best, and your resources are without limit.

And so we wait for you again, on a gentle slope and behind a ridge – appropriately enough with our backs to Brussels. Welcome to Waterloo.”

too big to fail

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