Senator Tester Backs Wall Street on Brown-Kaufman “Too Big to Fail” Amendment

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

  1. Big Swede

    Didn’t Greece think it was too big to fail?

  2. Again, I think it is long overdue: Democrats and progressives need to come to grips with the nature of power. It is money, for sure, but it is far more than money too.

    JC-Assume I wanted you to do something that you felt was wrong and that you did not want to do. By what means could I force your hand? A mere bribe would not do it.

    What hold does power have on these people that they so willingly givein?

  3. JC

    “What hold does power have on these people that they so willingly givein?”

    That is the question that Tester’s constituents and the media should be putting to him.

    This vote against Brown-Kaufman is egregious enough for this independent to not vote for him again. Not that there weren’t plenty of others, but this one is big.

    Many people had put out the notion that the Brown-Kaufman vote would be a test of loyalties: Wall Street or with the people.

    Jon has just shown his cards. Will anyone take notice?

    • I should just make my point rather than try to lead you to it: Infatuation with a politician, followed by abandonment after finding out that he exhibits human weakness, is merely the political form of serial monogamy.

      So the question is not whether Jon let us down (and whether we should now punish him), but rather about the system itself. Jon made a rational choice based on at least two factors: 1) He will be financially rewarded for his vote in the form of campaign contributions (and the absence of contributions to potential opponents and scurrilous advertising by corporations freed by Citizens United), and 2) the knowledge that no matter how bad he behaves, you will have no choice but to support him or someone worse. The two-party system locks us into bad versus worse.

      Given such a choice, how many politicians will behave differently? It is indeed a rare individual that can cast an honorable vote in the face of such rewards and punishments, and few of them survive. So cast him off, find another, and deal with the problem again down the road. But that is no solution.

      Most politicians are ordinary people, some say even less than ordinary as they are willing to sell their integrity for low rewards compared to those offered in the business world. So the answer does not lie in our political system of voting for third-rate people.

      The answer lies outside the political system, in focusing the energies of neighborhoods and social groups. FDR only became FDR because he feared a revolution.

      Unfortunately, we have little social cohesion anymore, as each of us is atomized by television and radio and Internet. We don’t meet face-to-face, or if we do, it is like the Teabaggers -merely manipulation by higher-up forces.

      So the problem is social atomization, failure to recognize common problems and solutions,and inability to focus the immense power of public opinion on office holders. I have no solution. I only know that the answer is not to elect a better Tester, or better Baucus or Schweitzer.

      • JC

        I get that you have moved to decrying that electoral politics is a worthless process–at least at the national level.

        It’s fine to retreat and cast stones at any who observe or comment on the sad state of Congress and the presidency, Mark. But if all here at 4&20 were to follow your advice and do likewise, half of the mission of this blog would be gone, and it would be a “Journal about Montana Politics and Culture.”

        I have no infatuation with Tester. Never did. I thought it more important to take down Burns than to sit out another election by using a protest vote on a third party, or a no-show vote by sitting home.

        Did you vote for Jon? Or did you follow your own advice and look “outside the political system”? If all the people who truly wanted a revolution were to abstain from political participation, then the only people who would vote would be idiots.

        And you know what kind of idiots they want to elect. Do you really want a country full of teabagger politicians? Or are you apolitical enough to not care? Are you ready for the chaos a revolution would bring? Or do you really just prefer anarchism?

      • You have managed to evade every point I raised and instead resort to attacking me for failure to participate in the two-party system. That’s pointless.

        Here are the points you need to address:

        1. Tester is responding to a system of incentives that will reward him for doing the wrong thing, and fail to punish him at the same time. Abandoning him, going on a search for another to take his place, which is all you did when you replaced Burns with him, is futile. The problem is institutional, and embedded in the two-party system. Participation in that system will not solve the problems it engenders.

        2. FDR only became FDR because a large segment of people in the power structure rightly perceived that the country was about to collapse into anarchy. “He” could have been anyone. He, like JFK,LBJ and Nixon before him, responded to the pressures brought about not by the parties, but by broad national movements.

        3. We are atomized by media.

        Please address these problems and leave me out of it.

        • JC

          “Please address these problems and leave me out of it.”

          Um… I’m not at your beck and call, here.

          And I can and will ask you a question to see if your answer reveals any hypocrisy in your comments.

          Did you vote for Jon Tester? Give me an honest answer, and I might give you one.

        • Whether or not I voted for Jon Tester does not matter. You are trying to pigeonhole me on extraneouos matters, a very Wulfgar-like tactic. I will answer at the end.

          I meant leave me “personally” out of it, as I do not matter in the larger scheme. I am trying to get you to address the inherent defects in the two-party structure, where we are always left to choose among the lesser of evils. That is no way to go through life. I also broached on the effect of mass movements, mentioning FDR and the fact that he only acted as he did for fear of collapse. And I asked you to address the problem of an atomized public.

          In response, you’ve come after me on other matters, seeking to expose my “hypocrisy”. You are being extremely defensive. I’m not sure why, as you’ve stated that you have not bought in to Tester as others have.

          You are bucking like a caged stallion. What, pray tell, is your problem?

          And, before we end this, I must add that with Burns in office, due to solid and organized opposition, he would never have gotten away with Tester’s wilderness/logging bill. Replacing Burns in that regard was harmful to us. That is triangulation.

          Jon Tester was promoted as a progressive alternative in the primary to the DLC-backed John Morrison, and pulled off an upset. I voted for him in the primary and the the general. Again, this has no bearing on anything.

          • Shorter MarkT:

            What I think has no bearing on anything.

            Duly noted.

          • JC

            “I am trying to get you to address the inherent defects in the two-party structure”

            But my blog isn’t about the defects of the two party system. It’s about the hypocrisy of Jon Tester.

            Just thought maybe his remaining supporters and dems would like to know what some of his one-time supporters think of him.

            Just because the system has defects doesn’t mean I have to retreat to defending the system or lambast it in order to comment on its players and their follies.

          • If, in the end, you think that the system only needs better people in it, then you are beyond reach anyway.

            • JC

              If you think that I’m ok with the system as it is, then you haven’t been paying any attention to what I have written over the years.

            • I don’t get the impression, especially with this post, that you truly understand the systemic nature of the problem. It cannot be remedied by replacement of cogs.

              • JC

                Well of course you don’t get the impression… I didn’t write the post you wanted me to.

                Where have I called for the replacement of cogs? I haven’t. I simply pointed out hypocrisy.

                All of the rest is of your own imagination.

              • It is not hypocrisy! He did exactly what the system demands knowing that he be 1)rewarded with campaign cash, 2) that said cash will not go to a potential opponent, and that 3) his base, having no place else to go, will not punish him.

                Would you please bear down on this? You’re like Jello.

      • JC

        Oh, and to jog your memory with my question to you about Tester and Burns, maybe this will jog your memory:

        “The investigation of Burns is over – he’s not vindicated nor is he innocent. He’s just gone. No matter how good or bad Jon Tester turns out to be, I’m happy about that.”

        Or that:

        “I’m cheering for Jon, and I want him to be different.”

        How about this on election day in 2006:

        “But it’s a good day, with many victories to cheer. Tester is ahead by 1,735 with only Meagher County not reporting.”

        Or lastly, but not leastly:

        “Feels Good… I think Conrad Burns is a disgrace, and will vote for Tester.”

        So were you an idiot then? Or are you an idiot now for being a hypocrit? Will the Real Mark T. please stand up? Or do you really just live in a glass house?

        • Big Swede

          Ouch, that’s going to leave a mark JC.

        • ~thunderous applause!~

          • Sitting in the bushes, are we? Is your pea shooter loaded?

            • Weren’t you going to go back to find a bunch of things I wrote that you claim I wrote and can’t find? Then didn’t you claim you won’t do, and then can’t do it, and now it’s beneath you? JC did it to you. That alone deserves thunderous applause.

            • No, I never intended to do such a thing. You suggested I do it, but I have a functioning memory. And, as you said, you were perfectly capable or amending your words, so why would I bother? Not that I was going to bother anyway. As I said … functioning memory.

        • I also supported Obama. As I said, I do not matter. I am as susceptible to chicanery and lies as anyone. I only say this: I learn form my mistakes.

          In the case of Obama, within a couple of days of his election, he had appointed the sociopath conservative Rahm Emanuel to guard his perimeter, and I knew I had made a huge mistake.

          It took longer, but remember this about Tester: He’s just an ordinary man. He is succumbing to incredible pressure. Only an exceptional person can resist that pressure. As I explained above, he knows that he will be punished for doing the right thing, and rewarded for doing the wrong thing.

          Again, it’s an institutional problem. Please address my specific questions.

          • Again, it’s an institutional problem. Please address my specific questions.

            Then address mine, Mark. I’ve only been asking for years since our first argument concerning Nader.

            What would you do, what would you be willing to do, to change the institution? You claim that voting out of party will be “sufficient”, “fun” and “necessary”. Those are all your words, Mark, not mine. But notice, as I have pointed out to you before, they don’t change the institution. They allow you to act like a special snowflake while talking down to us pleebs. But you’ve never answered the big question concerning the problem that you have: it doesn’t give you what you want. If you can find enough like minded (good luck) then you simply will have replaced one cog in the machine, with a cog that will look exactly the same. As Cyndi says: Money changes everything, and not one damned idea you’ve had to date avoids that niggling little hypocritical oversight you’ve bought yourself.

          • If I can draw an analogy here (a form of reasoning in which one thing is inferred to be similar to another thing in a certain respect, on the basis of the known similarity between the things in other respects, you are saying something similar to this:

            City hall is corrupt. I know this, and so don’t vote for anyone in city hall. I work on the outside, difficult to do as the corrupt city hall controls most media outlets and intimidates people who oppose them.

            You, on the other hand, vote for corrupt people in city hall, and mock those who oppose them. You take some kind of weird satisfaction, perhaps satisfying some interior deficiency of ego, in doing this.

            End of analogy.

            Please address the three issues I raised with JC.

          • Please address the three issues I raised with JC.

            Uh … No. I’m not your toady. Especially since you’ve completely missed everything I just wrote while painting your own fantasy of what I believe. Many have said this, and you ignore us all. You address you own problems, Mark.

            Quit expecting others to do it for you.

          • Since when does answering a simple question make on a toady?

            More likely, addressing the issues I raise forces you to confront your internal contradictions. And you are not known to do that.

  4. JayByrd

    Tester is a great disappointment.
    I didn’t like the Wall Street and GM bailout either, but they were necessary.
    Our economy was headed into a bottomless pit — a place Tester and the Republicans would rather have had us go. Utah just dumped their senator because he voted for the bailout — I guess all the Mormons are upset they didn’t get their End Times.

    • Lizard

      i don’t buy the necessary crap about the bailout. what’s happened has been a massive shift of toxicity. the fed’s quantitative easing program has allowed the banks to purge their balance sheets of the derivative contagion they created, but that doesn’t mean the problem has been taken care of. there are now guaranteed dips and crashes ahead of us because, as tester has shown us, not many politicians will be able to muster the political courage necessary to do what needs to be done.

      here’s what should have happened when it became clear how insolvent the big banks were: bankruptcy. put the banks into receivership and sell off their assets, or put them in a public trust. unfortunately the markets are too rigged to allow that to happen; the primary reason lehman was allowed to fail was to create an atmosphere of panic to justify the initial hundred billion dollar infusion of liquidity.

      it’s a shell game, and the american public is a bunch of suckers. i have much more respect for a country like greece, because it’s people are refusing to accept the harsh austerity measures the country’s elites are trying to push on them for their own short-sighted economic greed.

      people here should pay attention to what’s happening in europe. our own harsh austerity measures are coming, which is what obama was signaling with his domestic spending freeze. social security and other entitlement programs will get put on the chopping block as obama ramps up military spending.

      • Big Swede

        Didn’t Gates just propose cutting the Pentagon’s budget, Liz?

        Didn’t Bama kill the F-22 Hornet a year ago?

        In fact, as James Jay Carafano points out, Obama “is cutting the defense budget, both in real dollar terms and as a percent of the economy… The average Pentagon budget for the period covering fiscal years 2011 through 2028 will be $50 billion less in real dollars than its current estimate for this fiscal year,” Carafano notes.

        • Not enough, not even close. It’s symbolic, and will merely be used as a perceive tool to justify far more draconian cuts in social spending.

          We could easily cut the weapons and attack budget (aka “defense”) by 90%, and the world would heave a sigh of relief. The real bad guys would have their allowance cut off.

        • Lizard

          swede, are you saying obama has decreased defense spending? could you provide a source? that would be great.

  5. the FBI report on the Goldman Sachs computer programmer arrest

    Click to access aleynikovChar.pdf


  6. moorcat

    I am curious if Tester gave any reason for his “no” vote. I was unable to find one online but my webskills (and frankly my online time) are pretty limited right now.

    I ask because there could easily have been another reason for him to have voted “no” on that bill having nothing to do with his belief that the larger banks need to be limited in size. While it does look like his vote is hypocritical, I will reserve judgement until I know why he voted against it. I certainly don’t know enough about the amendment to make any kind of definitive judgement one way or the other.

    As far as Tester, in General, I still think he is head and shoulders better than Burns was. Until someone better runs, he will have to do. I do not regret my vote for Tester because the alternative was a corrupt and failing lobbiest slave. Since it is far too soon to know who will be running against Tester in the future, it is far to soon to say whether I would vote for or against him.

    I do think, though, that since he has made the statements he has about limiting the size of banks, he should at least come forward and explain his vote. He was the one that ran on a platform of transperancy and “No more business as usual” in Washington.


    • i think what you are looking for does not exist in the wild moorcat- you are looking for a credentialed and cerified journalist, tv reporter, or radio reporter who is willing to stick their neck out and ask tough questions of our politicians here in montana…..

      there was once a john adams in great falls who actually had the timerity to ask some tough questions of max baucus during the health care pretend to reform bill but no one has heard from him since….

      when you pick off the brave ones, the cowards are easy to control.

      • Lizard

        there are plenty of good journalists out there, like for instance glenn greenwald and his recent peek at why kagan is a bullshitselection by obama.

        • I was referring to in state media, liz.

          John adams was the only montana reporter I could think of who was asking tough questions, and he has been muzzled since.

          • klemz

            You can’t muzzle John. I think he’s just preoccupied with the Packers right now. Who gives a crap about Tester when your 3-4 is missing a starting outside linebacker and the goddamn GM won’t spend any money or use a draft pick.

  7. Lizard

    schweitzy on rachel tonight? yeah, good stuff. “…you educate, medicate, and incarcerate…” now that’s a helluva philosophy. doin’ montana proud, brian.

  8. Lizard

    in trying to understand tester’s vote, it might be illuminating to consider the possibility that the flash crash was an act of financial terrorism aimed at scaring legislators from enacting anything that may threaten the stranglehold the banks have on our government.

  9. Outstanding analysis. Either Tester doesn’t understand the issue, or he’s getting exceedingly poor advice. We have five or six giant banks — see Johnson’s and Kwak’s “13 Bankers” for the details — that are so big they’ll always be bailed out if they get into trouble. The only way to prevent that is to break them up into smaller pieces, the same way Standard Oil was split into pieces a century ago. This is so obvious that one should not need to be whacked on the noggin with a two-by-four to wake up to the fact.

    During the Great Depression, thousands of small banks failed. Many simply were too small to succeed under any circumstances. That problem is largely solved. But the problem of too big to fail still awaits a cure.

    How would Dennis MacDonald, Tyler Gernant, and the two running-to-make-a-point candidates, Sam Rankin and Melinda Gopher, have voted on Brown-Kaufman?

  10. Lizard

    i came across the best distillation of what the banksters have so far gotten away with, from a great site called zerohedge.

    1. Enable trillions of dollars in mortgages guaranteed to default by packaging unlimited quantities of them into mortgage-backed securities (MBS), creating umlimited demand for fraudulently originated loans.

    2. Sell these MBS as “safe” to credulous investors, institutions, town councils in Norway, etc., i.e. “the bezzle” on a global scale.

    3. Make huge “side bets” against these doomed mortgages so when they default then the short-side bets generate billions in profits.

    4. Leverage each $1 of actual capital into $100 of high-risk bets.

    5. Hide the utterly fraudulent bets offshore and/or off-balance sheet (not that the regulators you had muzzled would have noticed anyway).

    6. When the longside bets go bad, transfer hundreds of billions of dollars in Federal guarantees, bailouts and backstops into the private hands which made the risky bets, either via direct payments or via proxies like AIG. Enable these private Power Elites to borrow hundreds of billions more from the Treasury/Fed at zero interest.

    7. Deposit these funds at the Federal Reserve, where they earn 3-4%. Reap billions in guaranteed income by borrowing Federal money for free and getting paid interest by the Fed.

    8. As profits pile up, start buying boatloads of short-term U.S. Treasuries. Now the taxpayers who absorbed the trillions in private losses and who transferred trillions in subsidies, backstops, guarantees, bailouts and loans to private banks and corporations, are now paying interest on the Treasuries their own money purchased for the banks/corporations.

    9. Slowly acquire trillions of dollars in Treasuries–not difficult to do as the Federal government is borrowing $1.5 trillion a year.

    10. Stop buying Treasuries and dump a boatload onto the market, forcing interest rates to rise as supply of new T-Bills exceeds demand (at least temporarily). Repeat as necessary to double and then triple interest rates paid on Treasuries.

    11. Buy hundreds of billions in long-term Treasuries at high rates of interest. As interest rates rise, interest payments dwarf all other Federal spending, forcing extreme cuts in all other government spending.

    12. Enjoy the hundreds of billions of dollars in interest payments being paid by taxpayers on Treasuries that were purchased with their money but which are safely in private hands.

  1. 1 ‘Two-step’ Tester Dances with Lobbyists over Wall Street FinReg « 4&20 blackbirds

    […] that Montana’s junior Senator, Jon Tester, has been resorting to some two-stepping to add to his double-speak with his newest routine with Wall Street Lobbyists. Despite Jon’s contentions that he is […]

  2. 2 Jon Tester’s Grandstanding Omits Reality He’s a Willing Tool of the Banks | Reptile Dysfunction

    […] opportunities to reign in the banks, what did Tester do? He once again sided with the banks by killing the Brown-Kaufman amendment 6 years ago. Here is what that amendment would have […]

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