After Democrats tried for three days in a row break a filibuster from the GOP over financial reform, Senate GOP leaders finally folded on a filibuster for now – facing the pressure of an unusually determined Democratic leadership eager to paint Republicans as friends of Wall Street. Despite the Obama economic team’s closeness to Wall Street leaders and especially Goldman Sachs, and relatively weak reform bills that passed House and Senate committees, the political chances of reform have been boosted in the last week or so.
What’s still up in the air is how meaningful any reform package needing a few Republican votes will be – and whether there are enough votes for amendments to strengthen current bills. The key amendments break up too big to fail institutions by setting asset limits, co-sponsored by Sen. Ted Kaufman of Delaware, and another measure offered by Sen. Jeff Merkley (D-OR) that would bar financial institutions from “proprietary trading” from their own accounts or betting against their clients’ investments.
Progressives can thank the grilling of Goldman Sachs executives at a Senate hearing Tuesday and the alleged wrongdoing of Goldman Sachs for much of the new outrage and momentum behind reform. The thousands of protesters expected to converge on Wall Street today, supported by labor unions, the 200-group Americans for Financial Reform and organized by National People’s Action, have a new focus for their anger.
The SEC’s civil lawsuit over fraud filed against Goldman Sachs for hoodwinking investors laid bare the machinations of the firm in packaging sure-to-fail securities for one hedge fund investor betting on the collapse of the housing market – and then selling the same “shitty” product, as Sen. Carl Levin quoted a Goldman Sachs trader, to other investors as a gateway to riches. But the arrogant, we-did-nothing-wrong testimony of CEO Lloyd Blankfein and his henchmen helped make the case for reform better than political speeches by President Obama. (See highlights of the hearing.)
As the Washington Post’s Dana Milbank observes:
Lawmakers have been haggling over financial reform for 18 months, but it took Goldman Sachs just one day to get it done.
Of course, the Wall Street giant wasn’t intending to get the financial legislation done. Quite the opposite: Like most in the investment world, Goldman would generally prefer that regulators leave it and its billions of dollars of profits alone. But when Goldman executives faced a Senate panel on Tuesday, their performance was so obnoxious, their contempt for lawmakers so palpable, that their appearance had the effect of dissolving the Republican resistance to what Democrats are now calling “Wall Street reform.”
Sen. Carl Levin (D-Mich.), who chaired Tuesday’s hearing, went to the Senate floor Wednesday morning to denounce the “extreme greed” of Goldman Sachs. “What we’ve got to do is build defenses against these kinds of excesses,” he urged.
Both Republicans and Democrats took turns lambasting the Goldman Sachs executives who figuratively thumbed their noses at Congress. But Republicans continued to block votes on financial reform until Wednesday, and offered their own Wall Street-friendly alternative bill this week that was dismissed by leaders with Americans for Financial Reform as an “insult” and a joke. As Heather Booth told In These Times by email:
They give consumer protection to the very regulators who got us into this mess with no one solely focused on consumer protection.
They create loopholes for the casino economy that leave us open to risky bets without transparency or money to back them up – that got us into this crisis
They don’t have a process for dismantling or liquidating the firms that are so big that they would jeopardize the economy – and we would be back where we were when the crisis began.
If they want a stronger bill, they should support Kaufman and Merkley. If they want any bill at all, they should vote to bring the bill to the floor for a vote and not [support] backroom deals.
Another source of pressure came from labor unions, with the AFL-CIO claiming it organized 400,000 workers to contact Republican Senators over financial reform.
Given the calamity caused by out-of-control financial firms,it’s little wonder that activists will be converging on Wall Street, assembling near City Hall, with a clear, forceful message that they hope will be finally heard in a Congress. Unfortunately , Washington is still overrun by financial lobbyists busy carving out loopholes and an industry that’s spent $500 million to defeat reform. It’s in the fine print where Wall Street can win out - unless the titans of Wall Street are overruled by the voices of Main Street:
Wall Street’s Time is Up:
National People’s Action issues a Call to Action for everyday people – small business owners and union members, homeowners and tenants, faith leaders, the employed and the unemployed – to join together in recognition of our shared fate and our commitment to democracy.
Today at 3:30pm ET, thousands will converge on Wall Street to reclaim America with one simple message: Americans deserve an economy that works for all of us, not just Wall Street!
Wall Street and big banks like Bank of America and Wells Fargo crashed our economy leaving millions without housing, work, and critical services.
Yet it’s not at all clear how much populist energy President Obama will be able rally as for real, as opposed to cosmetic, financial reform. As David Corn of Mother Jones notes:
Last week, President Barack Obama gave a speech in New York and decried Republican lawmakers for making false accusations about the Wall Street reform pending in the Senate and denounced the “battalions of financial industry lobbyists descending on Capitol Hill” to weaken or kill the bill. But, as I noted, Obama “named no names. He did what too many politicians often do when they describe how special interests game Washington; he stayed vague.” In pushing back against Republicans and Wall Streeters, Obama doesn’t make it personal. He doesn’t call out any particular foe of reform. Such reticence limits whatever populist energy he might be able to generate by fighting for financial regulation reform.