by Pam Martens and Russ Martens, Wall St On Parade:
A Wall Street cartel of lobbying groups has launched their fiercest anti-regulation battle with Congress since it was in the midst of writing the Dodd-Frank financial reform legislation of 2010. That legislation hoped to address the worst Wall Street abuses and corruption that brought on the crash of 2008 – the most devastating financial meltdown since 1929 and the Great Depression. (See our report: Meet the Banking Cartel that Is Planting the Seeds for the Next Banking Panic and Bailout.)
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One tentacle of the cartel is the Financial Services Forum, whose total membership consists of the CEOs of the eight Wall Street mega banks: Jamie Dimon of JPMorgan Chase; Brian Moynihan of Bank of America; Charles Scharf of Wells Fargo; Jane Fraser of Citigroup; David Solomon, Goldman Sachs; James Gorman, Morgan Stanley; Robin Vince, Bank of New York Mellon; and Ronald O’Hanley, of State Street.
The Financial Services Forum has the Big Law firm of Akin Gump on its payroll to regularly lobby Congress to get its way; it is currently running deceptive ads during national television news programs in an effort to gut proposed new rules for higher capital at the mega banks that engage in high risk trading activities; and it has its own Political Action Committee (PAC) to funnel campaign contributions to members of Congress to get them to see things its way. Of late, it has been sluicing money to Democrats sitting on the Senate Banking Committee and House Financial Services Committee which have oversight of the Wall Street mega banks and their regulators. (Other tentacles of the cartel that are also funneling money to these exact same members of Congress are the Bank Policy Institute and Securities and Financial Markets Association, more commonly known as SIFMA.)
Now, coincidentally, or not, some of the recipients of this cash have shown up in a video ad attacking the very rules that their Democratic colleagues are struggling hard to get approved. The clips in the video come from recent Congressional hearings on the proposed capital rules.
Senator Jon Tester, Democrat from Montana, states in the ad that he is concerned about the impact on small businesses. Senator David Scott, Democrat from Georgia, states that he is worried about the proposal’s impact on hedges for farmers. Senator Mark Warner, Democrat from Virginia, states he is concerned this could trigger the “perfect storm,” coming at a time of rising “geopolitical risks.” (In fact, a time of rising geopolitical risks following the largest bank runs since 2008 this past spring is exactly when casino trading banks should be holding more capital against their riskiest exposures.)
Senator Chris Van Hollen, Democrat from Maryland, only mentions in the video clip that he is concerned about the treatment of clean energy tax credits in the proposed regulation – which has nothing to do with the increase in capital requirements. We reached out to a spokesperson at Senator Van Hollen’s office for a comment on this video ad. We were told the following:
“Senator Van Hollen supports enhanced capital requirements. As he made clear in the hearing, he simply wants to ensure that the final rule does not result in unintended consequences that harm our clean energy investments. The inclusion of his remarks in this ad – which is designed to discredit the broader effort on capital requirements – is an outrageous misrepresentation of his views.”
Democratic House Reps from the House Financial Services Committee are also featured in the ad, with clips of their statements from a recent hearing, that make it appear they are questioning the need for higher capital at the mega banks. Those House Reps include: Bill Foster (D-IL); Jim Himes (D-CT); Sean Casten (D-IL); and House Rep Gregory Meeks (D-NY).
The most shocking clip in the video comes from House Rep Brad Sherman, a Democrat from California, who has typically in the past been able to see through the subterfuge from high-powered Wall Street lobbyists. But in this instance, he delivered their talking points like a paid shill.
According to Federal Election Committee data tracked at OpenSecrets.org, Sherman’s 2022 political campaign coffers included $278,650 from the “Securities and Investment” industry – his largest donor base. Sherman is up for reelection next year. On September 27 of this year, SIFMA wrote out a check for $5,000 to Sherman’s campaign coffers, earmarked for next year’s primary, according to the Federal Election Commission database. Sherman’s office did not respond to our request for a comment on him appearing to shill for Wall Street mega banks in their ad.
When it comes to knowledge of the dangerous underpinnings and history of the Wall Street mega banks, the two most knowledgeable individuals on the Senate Banking Committee are former Harvard Law Professor Senator Elizabeth Warren (D-MA) and Senator Sherrod Brown (D-OH), the Chair of the Committee.
Senator Elizabeth Warren cut to the chase on the proposed increase in capital for the mega banks during the Senate Banking Committee’s hearing with regulators on November 14. Warren stated the following:
“Last spring, the second and third and fourth biggest bank failures in the United States’ history occurred. Those failures cost the FDIC over $30 billion. In other words, the investors and executives took on big risks, they made big money and then they left the U.S. government on the hook when they couldn’t cover the outstanding deposits.
“That’s not supposed to happen. After the crash of 2008, regulators were supposed to put in place rules to require big banks to have enough capital to cover financial shocks so that taxpayers won’t have to do that. And now here we are, fifteen years later, and regulators are finally, finally, near the finish line.
“In July, they put out proposed rules for stronger capital requirements, including the so-called Basel III Endgame rules. But Wall Street executives don’t want to have to put up more capital.
“Higher capital standards make banks safer but they also nip into profits and make it harder for CEOs to pull in multi-million-dollar bonuses. So the CEOs and their big-time investors have hired an army of lobbyists to stop the new capital standards from ever seeing the light of day.
“Their leading argument right now is that higher capital requirements would hurt lending to small businesses all across America. I think we’ve heard some of that this morning.”
Senator Warren then turns to one of the federal bank regulators appearing at the hearing, the Vice Chair for Supervision at the Federal Reserve, Michael Barr, and asks him: “How many insured depository institutions would the rule apply to.” Barr responds that the proposed new capital rules would apply to just 37 banks. Warren continues:
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