Bill Knight column for Thursday, Friday or Saturday, June 15, 16 or 17
That crisis, tied to previous bank deregulation, resulted in a colossal housing crisis, millions of people's life savings wiped out, and hundreds of thousands of jobs lost by the time George W. Bush left office in 2009. The worst banking offenders didn’t go to prison; executives at the largest financial firms who gambled away people's savings were treated better than people paying their mortgages.
The CHOICE Act was approved on a party-line vote, 233-186, with U.S. Rep. Walter Jones (R-N.C.) the only Republican to oppose it.
The bill now goes to the Senate, where the GOP-run Banking Committee opened hearings on the issue. Most Senate Democrats, led by Elizabeth Warren (D-Mass.), oppose dismantling the banking regulation and consumer protections Congress put in place in 2010’s Dodd-Frank law, named for ex-Senate Banking chair Christopher Dodd (D-Ct.) and former House Financial Services chair Barney Frank (D-Mass.)
In addition to removing most controls on Big Banks, the new measure also weakens the Consumer Finance Protection Bureau, which since being founded in 2011 has returned almost $12 million to 29 million consumers defrauded by Big Banks, shady for-profit colleges, and debt collectors.
Further, the CHOICE Act – U.S. Rep. Maxine Waters (D-Calif.) calls it the “Wrong Choice Act” – would eliminate the “fiduciary rule” designed to order brokers and bankers to put their pension clients’ interests first, and totally drop regulations on payday lenders.
GOP supporters say the bill would encourage lending and spark economic growth, and it could require banks to increase their financial cushions to cover their losses without using taxpayer funds.
Opponents say it’s an undeserved gift to Wall Street, which escaped real accountability for its role in the Great Recession.
“The bill is a parade of anti-family, anti-consumer provisions – one terrible proposal after another,” said Liz Ryan Murray, policy director for the People’s Action Institute. “It throws up ridiculous barriers to keep regulators from doing their job, basically gives Big Banks the power to ignore oversight, [and] takes away the Volcker Rule, which stopped banks from gambling in the market with federally guaranteed deposits.”
Labor and consumer groups delivered petitions with more than 222,000 signatures opposing it to Capitol Hill, where Republicans ignored them.
“All we’re doing is spending our time taking away protections for the American people and their futures,” said U.S. Rep. Steny Hoyer (D-Md.). “Have we learned nothing?”
The action is reminiscent of a comment U.S. Sen. Dick Durbin made in 2011 on Elmhurst/Chicago radio station WJJG-AM 1530, where he said, “Many of the banks created are still the most powerful lobby on Capitol Hill, and they frankly own the place.”
Lisa Donner, director of Americans for Financial Reform, summarized the possible costs.
“This legislation takes the worst ideas concocted by Wall Street and predatory lenders, and combines them into one toxic package,” she said. “The bill is crammed with deregulatory gifts to the entire industry, including megabanks that want to return to the excessive borrowing and risky practices that led to the financial crisis.”
An old friend – who helped negotiate the landmark Household Finance Corp. national settlement of $484 million for predatory lending – warned of consequences.
“I shudder to think what will happen if the Bureau’s authority is significantly degraded,” said Dave Huey, retired Assistant Attorney General in Washington state. “It will be ‘Katy, bar the door!’ for consumers. If Dodd-Frank is repealed or significantly altered, [the predators] are back in business. Willie Sutton said he robbed banks because that’s where the money is. The same principle applies.”
[PICTURED: Mike Konopacki cartoon from Huck/Konopacki Cartoons.]