It’s Worse Than I Thought
May 1, 2013 § Leave a comment
Last year, in October, I posted some pessimistic comments about the drafting of Dodd-Frank regulations. See The Details Devils. Those regulations involve the jurisdiction of four different federal agencies. They are necessary to implement Dodd-Frank’s purpose: To limit the ability of Wall Street banks to wreak havoc on the economy by creating and marketing risky and deceptively complicated securities. I cited three articles from the New York Times and Bloomberg News describing the bitter multi-agency struggles concerning the effort to separate investment banking from commercial banking, generally known as the Volker Rule.
Since then I have expressed my gloomy opinion that corporate capitalism seems to have overpowered the ability of our government to rein in its most destructive inclinations. See Capitalism and Democracy – Symbiotic Conflict.
Today’s New York Times has a story about the struggle between government regulatory agencies and Wall Street banks concerning proposed Dodd-Frank regulations. See story.
Lastweek I read a lengthy article in The Nation by Gary Rivlin, “How Wall Street De-Fanged Dodd-Frank“. The author, a talented reporter, has described, in detail, how armies of lobbyists and lawyers, financed with unlimited money from Wall Street banks and a consortium of corporate organizations and trade associations, have overwhelmed both the officials charged with drafting and seeking adoption of Dodd-Frank regulations, and the members of congressional committees having oversight of those subjects.
The characters in this melodrama are interesting. One member of the corporate wrecking team is Eugene Scalia, son of Supreme Court Justice Humpty-Dumpty Scalia. His role is to file multiple law suits designed to embroil the regulatory drafting process in litigation for years and thereby thwart Congress’s effort to protect the American economy from a repetition of the 2008 financial debacle. According to Rivlin’s article, he is succeeding swimmingly.
One of the associations funding and sponsoring the lobbyist members of the wrecking crew is our own Kenneth M Bentsen, former member of Congress and now head of the Securities Industry and Financial Marketing Association, nephew of Lloyd Bentsen. We all remember Lloyd. He’s the guy who waged a successful smear campaign against Senator Ralph Yarborough in 1970, later made an unsuccessful run for the presidency, then was rewarded by the Democratic Party with a nomination for Vice President and running mate with Walter Mondale; then, when that didn’t work out, was again rewarded by President Clinton, who appointed him Secretary of the Treasury. Oh yeah, we remember him. Looks like his nephew is carrying on the family tradition.
Why is it, that every time some absolutely putrid, disgraceful process takes place in Washington D.C., some Texas yahoo shows up in the middle of it? When Ken Bentsen was a congressman, I thought he was a new generation of Bentsens; that maybe he was going to renounce the dark side. Guess the money was just too good to pass up.
I won’t try to summarize Gary Rivilin’s article. It is long but I urge you to read it. If, as I have written, there is a war going on between democracy and capitalism, Wall Street banks possess the nuclear bombs. They have already demonstrated that they are irresponsible and reckless custodians of those weapons. We are still living with the resulting economic ruin. Dodd-Frank represents an effort to disarm them. So far, the prospects don’t look promising.