The Financial Regulation story thus far

PHOTO: Wall Street Bull

Congressional Democrats are working on regulations that should help reduce the chance of another financial collapse like we went through in 2008. One of the ideas on the table will setup a fund paid for by banks that will be ready in case the regulations fail and banks need future bailouts.

The current FDIC Chairwoman, Sheila Blair says the ideas will do the trick and make future bailouts impossible:

Would this bill perpetuate bailouts?
SHEILA BAIR: The status quo is bailouts. That’s what we have now. If you don’t do anything, you are going to keep having bailouts. Bankruptcy doesn’t work — we saw that with Lehman Brothers.

But does this bill stop them from happening?
BAIR: It makes them impossible and it should. We worked really hard to squeeze bailout language out of this bill.

Needless to say, Republicans are opposed (it’s a Democratic idea after all) and are willing to – as always – to employ bald-faced lies to achieve a political victory:

The Senate Republican leader, Mitch McConnell of Kentucky, criticized the Democrats’ plans to regulate Wall Street […] “We cannot allow endless taxpayer-funded bailouts,” Mr. McConnell said in a floor speech. “That’s why we must not pass the financial reform bill that’s about to hit the floor. The fact is this bill wouldn’t solve the problems that led to the financial crisis. It would make them worse.”

I have to give credit to Mitch McConnel. It takes some balls to come out and say 2+2=5. (It also takes some stones to pretend like he’s a big opponent of bailouts when he supported them in 2008.)

Leaving that aside, let’s rewind back to February and explore the source of this lie, Republican strategist Frank Luntz:

In a 17-page memo titled, “The Language of Financial Reform,” Luntz urged opponents of reform to frame the final product as filled with bank bailouts, lobbyist loopholes, and additional layers of complicated government bureaucracy.

Sounds familiar right?

But why are Republicans so willing to defend the status quo which as well all know allowed the collapse and bailouts of 2008? It’s about the campaign money! Mitch McConnel, the leading Senate Republican, and John Boehner, the leading House Republican have gone to Wall Street banks and pledged to defeat Obama’s plans for regulations in return to campaign contributions. Read it and weep.

Flickr photo of Wall Street Bull by Christopher Chan

4 Comments

  1. Funny how it is opposition to Obama and not opposition to the scams run by Wall Street…..personally, I do not like the bill because of several factors (which I will post tomorrow) mainly it does not go far enough and does not fully protect the consumer…just to be brief…..

  2. Ian

    I’ve got a pic of the opposite side of that bull if you prefer.

  3. It’s so sad to me that there are still people who believe anything the Republicans say. They do nothing but lie. Over and over and over again.

  4. It almost seems Orwellian to me; to enact reform against bailouts is to support endless bailouts. Well, we know who butters McConnell’s bread.