At the Hampton Happening, Terence O'Rourke, Democratic candidate for the United States Congress seat in the New Hampshire First, built a case carefully that the vote to repeal the Dodd Frank Act was far from an obscure and technical correction to a banking bill. It actually was the expression of a rapacious sect which may well destroy our economy.
Once having established that fact, the corollary was that knowing this about that bill did not require clairvoyance or great insight or special genius; any Democratic senator should have been able to see that clearly.
Once he had established A/ The bill was a disaster B/ Knowing that was easy, then the next judgment about why Democratic senators would have voted for this horror show became hard to avoid.
If there was every reason to vote against it, and if the banking lobby had contributed half a million dollars to each senator over the previous 5 years, what other explanation could there be, other than that our two Democratic senators were bought?
There were two dozen citizens in the room, many of whom had not just voted for both the senators but who had worked to elect both senators, had knocked on doors, thrown house parties, manned telephone banks for them. And they asked each other: What other reason, other than the money, could these Senators, who we thought we knew, have had?
Say it ain't so, Maggie.
Say it ain't so, Jeanne.
How did O'Rourke manage to convince this jury of citizens?
He started with the Great Depression, a catastrophe which has been explained in many ways, from Milton Friedman to Krugman, but prominent among the explanations was that Wall Street banks gripped by greed and rapaciousness, engaged in an orgy of misbehavior and when they failed, the brought the economy down with them.
In response to that, Congress passed the Glass-Steagall Act to separate banks which held the savings of common folk from the wild and reckless speculator banks.
But sometime during the Clinton years, Democrats caved to Republicans, who were always whining about unleashing the stallions of innovation and energy in the markets, and Glass-Steagall was repealed.
And sure as night follows day, the scoundrels exploded out from under their gated communities and you had community banks, savings and loans swept up in a frenzy of lending along with Wall Street banks.
All sorts of reckless schemes erupted, spread like a contagion throughout the financial world and as was documented by books and movies like "The Big Short" you soon had things we never heard of, still don't understand, like credit default swaps and other vehicles of mayhem setting up the nation for a trip over the economic cliff.
So came forth Dodd Frank, to prevent that from happening again.
O'Rourke walked the assembled citizens through all this in step by step detail, explaining what credit default swaps were and a whole host of other things, during which Mad Dog's mind wandered, but he got the point: This was madness, and it happened because the government and the ratings groups like Moody's were asleep at the wheel. And because those regulators were looking forward to the time they could leave those jobs, join Lehman Brothers and cash in themselves.
O'Rourke did it, step by step, with everything but that woman in the bubble bath.
Now we all could see the folly, the disregard for lives and fortunes of the unsuspecting, the sheer recklessness against which we have only our public officials to protect us.
But then an email from Senator Shaheen got read: She claimed she was as appalled as anyone by those Wall Streeters, but she was trying to protect Main Street, namely "Community Banks" which had got swept up into this effort at clamping down on the bad guys.
That's when O'Rourke pounced: Those Community Banks are not innocent good guys, he said and he named the New Hampshire "Community Banks." Every one of those Community Banks has just one wish and goal, to become a too big to fail powerful Wall Street Bank or to be bought up by Goldman Sacks. Just as every small start up really wants to hit the pay day of being bought up by somebody with deep pockets--Nantucket Nectars wants to sell out to Ocean Spray--the Community banks controlling only $5 billion want to combined, get bought or otherwise elevated into a too big to fail bank of $30 or even $250 billion.
And when you see those Open Secrets tables, showing the contributions from the banks to the senators, you try to imagine how they were not bought.
You say, "Well, they got even more money from Emily's List than they got from the banking lobby and we don't complain about that because Emily's List is out there to promote women's rights." Sometimes money is given because of what a senator has already done, because of what she stands for.
But sometimes, the money is given to change what the senator might do some day.
If you say, "Here's $250,000 if you vote against Dodd Frank," that's a bribe.
But if you say, "Here's $250,000. We are your friends," that's not a bribe, it's just I'm your Godfather and one day, I may call upon you for a service, and then you will remember who is your Godfather.
When someone objected: "I'd rather have a Democrat in that seat than Kelly Ayotte or Scott Brown," O'Rourke replied that's a false choice. You could have another Democrat, a Paul Wellstone.
We don't have to settle for the bought and sold.
That is the sort of thinking which lost Democrats the last election and which made them vulnerable to the Trump tsunami: We have to be sophisticated, nuanced, practical, real politic, willing to compromise.
And that begat Trump.
Once having established that fact, the corollary was that knowing this about that bill did not require clairvoyance or great insight or special genius; any Democratic senator should have been able to see that clearly.
 |
| O'Rourke |
Once he had established A/ The bill was a disaster B/ Knowing that was easy, then the next judgment about why Democratic senators would have voted for this horror show became hard to avoid.
If there was every reason to vote against it, and if the banking lobby had contributed half a million dollars to each senator over the previous 5 years, what other explanation could there be, other than that our two Democratic senators were bought?
There were two dozen citizens in the room, many of whom had not just voted for both the senators but who had worked to elect both senators, had knocked on doors, thrown house parties, manned telephone banks for them. And they asked each other: What other reason, other than the money, could these Senators, who we thought we knew, have had?
Say it ain't so, Maggie.
Say it ain't so, Jeanne.
How did O'Rourke manage to convince this jury of citizens?
 |
| Sell out? |
He started with the Great Depression, a catastrophe which has been explained in many ways, from Milton Friedman to Krugman, but prominent among the explanations was that Wall Street banks gripped by greed and rapaciousness, engaged in an orgy of misbehavior and when they failed, the brought the economy down with them.
In response to that, Congress passed the Glass-Steagall Act to separate banks which held the savings of common folk from the wild and reckless speculator banks.
 |
| Proud to be Bought and Sold |
And sure as night follows day, the scoundrels exploded out from under their gated communities and you had community banks, savings and loans swept up in a frenzy of lending along with Wall Street banks.
All sorts of reckless schemes erupted, spread like a contagion throughout the financial world and as was documented by books and movies like "The Big Short" you soon had things we never heard of, still don't understand, like credit default swaps and other vehicles of mayhem setting up the nation for a trip over the economic cliff.
So came forth Dodd Frank, to prevent that from happening again.
O'Rourke walked the assembled citizens through all this in step by step detail, explaining what credit default swaps were and a whole host of other things, during which Mad Dog's mind wandered, but he got the point: This was madness, and it happened because the government and the ratings groups like Moody's were asleep at the wheel. And because those regulators were looking forward to the time they could leave those jobs, join Lehman Brothers and cash in themselves.
O'Rourke did it, step by step, with everything but that woman in the bubble bath.
Now we all could see the folly, the disregard for lives and fortunes of the unsuspecting, the sheer recklessness against which we have only our public officials to protect us.
But then an email from Senator Shaheen got read: She claimed she was as appalled as anyone by those Wall Streeters, but she was trying to protect Main Street, namely "Community Banks" which had got swept up into this effort at clamping down on the bad guys.
That's when O'Rourke pounced: Those Community Banks are not innocent good guys, he said and he named the New Hampshire "Community Banks." Every one of those Community Banks has just one wish and goal, to become a too big to fail powerful Wall Street Bank or to be bought up by Goldman Sacks. Just as every small start up really wants to hit the pay day of being bought up by somebody with deep pockets--Nantucket Nectars wants to sell out to Ocean Spray--the Community banks controlling only $5 billion want to combined, get bought or otherwise elevated into a too big to fail bank of $30 or even $250 billion.
 |
| Paul Wellstone |
You say, "Well, they got even more money from Emily's List than they got from the banking lobby and we don't complain about that because Emily's List is out there to promote women's rights." Sometimes money is given because of what a senator has already done, because of what she stands for.
But sometimes, the money is given to change what the senator might do some day.
If you say, "Here's $250,000 if you vote against Dodd Frank," that's a bribe.
But if you say, "Here's $250,000. We are your friends," that's not a bribe, it's just I'm your Godfather and one day, I may call upon you for a service, and then you will remember who is your Godfather.
When someone objected: "I'd rather have a Democrat in that seat than Kelly Ayotte or Scott Brown," O'Rourke replied that's a false choice. You could have another Democrat, a Paul Wellstone.
We don't have to settle for the bought and sold.
That is the sort of thinking which lost Democrats the last election and which made them vulnerable to the Trump tsunami: We have to be sophisticated, nuanced, practical, real politic, willing to compromise.
And that begat Trump.
Both statements about community banks can be true: they do lots of the local lending and they would love to be bought out. But, until they are, you would like to have them actively supporting local businesses and commerce. The complexity of regulations designed to control the big banks requires too much expense (relatively speaking) for the small banks to manage in a cost effective manner. This was what your two Senators were trying to rectify - it has been talked about in States across the country. Reducing the argument to the simplistic : you are either for banks or against them, ignores reality. Compromise should still have a place in our politics!
ReplyDeleteAnon,
ReplyDeleteWould you object to reinstating Glass-Steagall? Simply allow Community banks which want to become big banks to play by rules which would allow that, but separate out real community banks the old savings and loan banks, to be shielded?
And what constitutes "community vs big?" Is $50 billion to small to burden with regulations? What if 3 $50 billion community banks collapse? Is that not a threat to the economy?
I am really asking.
One thing I understand I do not understand is what is the harm if we restrain community banks from making a huge leap forward in their profits? What is so bad about keeping some businesses just humming along but not expanding?
Mad Dog
The issue is "Too Big to Fail". The deposits in the banks are insured by the FDIC - using your tax dollars. If a small bank fails, the losses can be covered. If a "too big to fail" bank were to fail, it could bring down the whole system - think 2008. That is why the distinction. Requiring all the same paper work from a small bank overwhelms them - unlike giant banks which have plenty of people employed to respond to this stuff. A little flexibility for small banks seems reasonable - which is why your two Senators voted for it - not because they were "Bribed" by the banks. Hard to do the "right thing" in the polarized political environment we have today
ReplyDeleteThis is obviously a complex and technical issue.
ReplyDeleteBut the basic elements are simple enough.
Banks under a certain size were not burdened by Dodd Frank.
(I think it was $5 or $10 billion.)
As long as they stay under that threshold, no regulatory burden.
As I understand Mr. O'Rourke, the problem the banks brought to the senators was, "We want to get big like the big boys, but we don't have to get all the way to the $250 billion at which point we are too big to fail, even at $15 billion we start to have to play by big boy rules.
The issue is, why should they not have to play by big boy rules if they want to become big boys and if they fail they get to have us taxpayers bail them out?
I am trying to parse what I have heard and read. Even Barney Frank, who said he wouldn't undermine Democrats who voted for the bill said he wouldn't have voted for that gutting, although he said it left 95% intact.
He did role his eyes when he said, "Community banks." He said, "Well, that's what they like to call themselves."
O'Rourke also points out if three "small" $50 billion banks fail all at once, then you're talking $150 billion and soon enough, you're talking about real money.
And our senators have issued boilerplate statements and not come back home to face the voters or O'Rourke, or even Soldati, who agrees with O'Rourke.
Is Barney Frank arguing that his bill was perfect the first time through? Most times there are enhancements around the edges, which become more evident after the bill is in place for a while. Might that be what is happening here??
ReplyDeleteHe agrees the bar was set too low and the bill could be changed without substantial harm to the economy.
ReplyDeleteHe was not ready to accuse those Democrats who deserted the party to vote for it of betrayal--far from it. He said better to have Dems voting to gut his bill than to allow Republicans win those seats. O'Rourke says better to have different Dems in those seats, Dems who will vote like Dems.
Agree, this is a tactic. But like Michael in the Godfather, first you settle accounts with your adversaries. Once you've got them whacked, then you go back to your own folks and you clean up--you're gonna have to answer for Sonny, Carlo and Tessio,"Tell Michael, it was just business." You got to remember to clean up those who sold you out to your enemies. Even Fredo. Ruthless.
ReplyDelete