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Franken, Feingold sign on to big-bank-busting measure, bringing total to 11 Senators

Okay, I've got more signs for you that Senate liberals may be gaining momentum with their efforts to toughen up financial reg reform.

Senators Al Franken and Russ Feingold have signed on to an amendment to FinReg -- being pushed hard by liberal Senators -- to break up the country's biggest banks by capping their desposits and limiting other liabilities.

That brings the total number of Senators backing this approach -- which is not supported by the White House -- to 11. It's still unclear whether the amendment will get a vote, but the mounting support could up the pressure for one.

Senator Franken's office confirms to me that he's now on board with the proposal. Feingold gave a speech on the Senate floor moments ago coming out in support of it, too.

This approach, which is the handiwork of senators Sherrod Brown and Ted Kaufman, is a serious challenge to Wall Street and represents an ambitious effort to rein in the power of the biggest banks and limit their destructive potential.

As The Times reported today, it's been gaining steam, and Dick Durbin, the number two in the Senate leadership, now backs it.

Ordinarily, this type of push from Senate liberals wouldn't concern the White House and Dem leadership: Witness the fate of the public option. But the dynamics of the financial reg reform debate are different. Public anger at Wall Street and the big banks is running high. Liberals are insisting that Dems need to embrace this approach, lest they squander an opportunity to convert the unusual levels of populist rage into real and far-reaching reform.

Should be interesting to see where this goes next.

By Greg Sargent  |  May 6, 2010; 1:11 PM ET
Categories:  Financial reform , Senate Dems  
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Comments

Greg, is there any information you can share as to WHY the WH opposes this legislation? Same for the 'Audit the Fed' amendment.

All I've seen so far, in terms of a rationale for their opposition, is that they oppose these amendments because the WH would be under pressure by the finance industry to veto the bill. That seems to me a given no matter what the amendment. Any real, hard info on why they've taken these positions? Imho, the explanations so far are lacking and I can't seem to find any elaboration.

Posted by: Ethan2010 | May 6, 2010 1:22 PM | Report abuse

Very good question, Ethan...I'll see what I can find out. Can you let me know if you find a good explanation?

Posted by: Greg Sargent | May 6, 2010 1:25 PM | Report abuse

Thanks. Will do.

Posted by: Ethan2010 | May 6, 2010 1:26 PM | Report abuse

Ethan: Yeah, I'm wondering about that, too. I understand the difference of opinion regarding who should set monetary policy but why in the world would the WH oppose efforts to disclose where the bailout money went? And why isn't breaking up the Too-Big-To-Fail banks appropriate? It seems sensible to me and it's been done in other industries under the anti-trust laws.

Posted by: wbgonne | May 6, 2010 1:29 PM | Report abuse

"Liberals are insisting that Dems need to embrace this approach, lest they squander an opportunity to convert the unusual levels of populist rage into real and far-reaching reform."

They also need to make Republicans pay a price for this, and with the media helpfully trumpeting every Republican meme out there, the deck (as always) is stacked against Democrats.

The fact that "this is a bailout for big banks" lasted as long as it has is proof of how lazy and crazy mainstream media is.

Posted by: CTVoter | May 6, 2010 1:31 PM | Report abuse

I think it has something to do with Geithner and the Fed.

http://www.corbettreport.com/articles/20090825_geithner_audit.htm

Sanders:

“What are the real reasons” they oppose the bill? Sanders asks. “I don’t know. The bottom line is: it’s fun to do things in secret.”

http://blogs.abcnews.com/politicalpunch/2010/05/sanders-white-house-lobbies-against-amendment-to-audit-fed-with-bogus-arguments.html

Just bizarre.

If Geithner is politically toxic, then audit the Fed and if they find anything on him, Obama can take responsibility and fire him on the spot. I don't get what's so hard about that.

Posted by: Ethan2010 | May 6, 2010 1:41 PM | Report abuse

This amendment and audit the Fed are both populist issues that should get an up or down vote IMO. I hope breaking up the big banks doesn't go the way Dorgan's drug re-importaion amendment went last year. Behind the scenes killing it because of the Pharma deal with the WH was very nearly the last straw for me. If that happens I will be absolutely disillusioned. I'm patient but not that patient. Bring it up for a vote and let's see the yeahs and nays.

Posted by: lmsinca | May 6, 2010 1:43 PM | Report abuse

So, has the Kill the Bill campaign over at FDL started yet?

I'm surprised NR hasn't popped in yet to convince everyone of what a sell out Obama is on this entire process.

As far as auditing the Fed...it's just me speculating but with all the QE that has been going on with things like them purchasing over a trillion in MBS in the hopes to keep interest rates low (which worked) and stabilize the housing market (which has worked in most markets as of now) which will in effect begin to increase the value of the trillions in derivatives out there based on MBS's(which must be happening) their negative balance sheets might cause a financial panic and destroy the U.S. credit rating if the engine were ever lifted and the world looked inside.

Posted by: mikefromArlington | May 6, 2010 1:49 PM | Report abuse

Here's part of what David D. has to say.

"But now some Democrats are emboldened, though whether they can round up the required votes, or even get a vote on some of these amendments, is another matter. A New Way Forward is conducting a whip count on the Brown/Kaufman Safe Banking Act, and they count 10 yes and 8 lean yes, including Republican Jim Bunning. Four Democrats – Kent Conrad, Mark Warner, Bill Nelson and Mark Begich – are thus far opposed, and I’d expect a couple more."

Posted by: lmsinca | May 6, 2010 2:07 PM | Report abuse

@Mike: their negative balance sheets might cause a financial panic and destroy the U.S. credit rating if the engine were ever lifted and the world looked inside.

In the name of transparency, don't investors have a right to know which financial firms borrowed how much at 0% interest from the fed? Don't taxpayers have a right to know where their money is going? I for one would rather lend at 0% to green energy companies than to wall st banks. If these institutions are as weak as you imply, isn't keeping this a secret just setting us up for another big failure in the future and aiding in misleading investors?

Posted by: srw3 | May 6, 2010 2:09 PM | Report abuse

And more from David D. Feingold is threatening to filibuster unless these three provisions are included.

"Democrats, with 59 votes, already need the support of at least one Republican to move forward at the end of the process with the bill. It’s likely that Ben Nelson won’t support the final bill, and now Feingold is the first to make the threat from the left to vote against ending debate without real changes to how Wall Street does business."

"After saying that regulators have failed taxpayers over the last 30 years, Feingold laid out three specific amendments that would be needed in a final bill:"

• The McCain-Cantwell amendment to reinstate Glass-Steagall protections

• The Brown-Kaufman Safe Banking Act to put a strict cap on size and leverage

• The Dorgan amendment, which is a variant of the Brown-Kaufman Safe Banking Act. It would “require a break up of those activities in the largest financial institutions in the country that represent an unacceptable risk the American economy,” according to Dorgan.

Posted by: lmsinca | May 6, 2010 2:11 PM | Report abuse

mike, I hope you're not suggesting Dems should give up without a fight. Let's see the votes.

"The New York Times has taken notice, reporting Thursday that "the confluence of a high-stakes election year and a pervasive anti-Wall Street sentiment after the recession has given liberals unusual muscle in the debate. It has also raised the prospect that they could succeed in reshaping the bill."

Posted by: lmsinca | May 6, 2010 2:17 PM | Report abuse

Another article on why the Fed doesn't want to be audited. Has a lot to do with what MikefromA said.

http://www.salon.com/news/opinion/feature/2010/05/01/trillion_dollar_fraud/

Still, I can't help but think that there has to be a solution that would avoid that panic while giving taxpayers and businesses transparency on what exactly is going on over at the Fed. Interesting stuff. Let's keep digging!

Posted by: Ethan2010 | May 6, 2010 2:18 PM | Report abuse

The proposal should at the very least get a vote.

If "auditing the Fed" gets a vote then "break up the big banks" should get a vote as well.

Posted by: maritza1 | May 6, 2010 2:27 PM | Report abuse

Ethan & Mike: That rationale makes some sense. However, I would like to hear the WH say that is the reason. Second, the money was paid out more than a year ago. Whatever happened is (presumably) in the past. Most important, even if that is the reason I think our right to know where our money went outweighs the risks from disclosure.

Posted by: wbgonne | May 6, 2010 2:33 PM | Report abuse

It seems to me breaking up the big banks and limiting their size should be a no brainer.

It's under the same concept of our anti monopoly laws. That great Republican trust buster Teddy Roosevelt would have zero problem grasping the need for this.

I'm with lmsinca...the W.H. deal with Big Pharma to get HCR passed was bad enough...the W.H. deal selling out the P.O. folks was bad enough...IF the W.H. let's Wall Street get them to knock down the "too big to fail" amendments then just like lmsinca I'm going to be really disillusioned and cynical, believing that the corporatists have truly won and our government is now an oligarchy not a democracy!

Posted by: rukidding7 | May 6, 2010 2:35 PM | Report abuse

I swear I didn't lift my idea off Talbot from Salon. :)

He sums it all up in this phrase:

"We all want stability in our financial system, but we also want transparency in our government."

What I'm saying I guess is there might be a balance and after having gone through what we just went through a year and a half ago, I'm not quite sure 100% transparency would be in the best interest of stability.

Imagine if my theory is true. Imagine knowing a secret that's so devastating it could bring down global financial systems and destroy the dollar as we know it.

Imagine the pressure of knowing it and keeping it.

Posted by: mikefromArlington | May 6, 2010 2:44 PM | Report abuse

Imagine if my aunt bad balls, I'd imagine she'd be my uncle.

Posted by: obrier2 | May 6, 2010 2:51 PM | Report abuse

This from HuffPo. Reid also stated that he had not been lobbied by the WH to oppose either amendment. Encouraging I'd say.

"Harry Reid will make sure that an amendment to break up megabanks and cap their size comes up for a vote, the Senate majority leader said. He added that he was leaning heavily toward voting for the amendment, cosponsored by Sens. Sherrod Brown (D-Ohio) and Ted Kaufman (D-Del.)."

"Reid will also support an amendment from Sen. Bernie Sanders (I-Vt.) that will authorize an audit of the Federal Reserve, he said."

"On Wednesday, Reid was noncommittal when asked by reporters at a briefing about the two major amendments. In an interview in his office with the Huffington Post on Thursday, Reid went further when asked if he'd considered the amendments since the briefing."

"I'll probably vote for it," Reid said. Does that mean it'll come up for a vote?

"Oh, it's going to come up. I'll make sure it comes up," said Reid of the Brown-Kaufman amendment. "Unless my staff convinces me differently. But what I know about it, I'll vote for it."

Posted by: lmsinca | May 6, 2010 2:52 PM | Report abuse

All, fun stuff from Schumer on McCain and the AZ immigration law:

http://voices.washingtonpost.com/plum-line/2010/05/schumer_calls_mccains_bluff_on.html

Posted by: Greg Sargent | May 6, 2010 2:55 PM | Report abuse

fyi....are you all watching the DOW?

At one point today it was down over 800 points I believe.

European credit markets froze ala what happened here after Lehmans failure.

This crisis is hardly over.

Posted by: mikefromArlington | May 6, 2010 2:57 PM | Report abuse

From what I hear/read, much of the rapid loss in the Dow and S&P was due to quant funds having all their algorithms go off at once in the same way. It suggests to me the need for a tranmsaction tax ASAP. Rapid, massive, computer-driven trading is killing the market for regular investors. At the very least the gov't should make something off of all this gambling.

Posted by: Mimikatz | May 6, 2010 5:27 PM | Report abuse

It is not just the White House that opposes the size-limitation legislation. Paul Krugman argues that the practices rather than the size of the institutions are what actually matter. In this he differs with Paul Volker, it appears.

AdAbsurdum

Posted by: bvision | May 6, 2010 5:39 PM | Report abuse

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