David Dayen at the L.A. Times: One thing Democrats and Republicans apparently agree on: Destabilizing the banking sector again


Next week marks the 10th anniversary of the run on Bear Stearns, the investment bank that collapsed under the weight of toxic subprime mortgages. Although JPMorgan Chase snapped up Bear Stearns for pennies on the dollar, this maneuver failed to stop the bleeding from the mortgage meltdown, leading to the biggest economic crisis in nearly a century.

That seems like a terrible political backdrop for the Senate to pass a bill that deregulates the banking sector. But that’s exactly what’s about to happen.

The Economic Growth, Regulatory Relief and Consumer Protection Act, which pro-regulation groups have called the “Bank Lobbyist Act,” advanced in the Senate this week with the support of 50 Republicans, 16 Democrats, and one Democratic-leaning independent. Bipartisanship, it seems, isn’t dead.

We’re witnessing a familiar swing of the pendulum: toward regulation when banks crash the economy, away from regulation when memories fade. The next stop is often financial crisis, and the nonpartisan Congressional Budget Office stated this week that the bipartisan legislation would increase the risk of another one happening.

Pitched as a way to provide regulatory relief for community banks, the bill goes well beyond that; it rolls back key pieces of the Dodd-Frank Act and includes giveaways to large institutions of the same size and scope as the ones that crashed the economy in 2008.

The most important measure in the legislation raises the threshold for enhanced regulatory supervision by the Federal Reserve from $50 billion to $250 billion. The beneficiaries, 25 of the top 38 banks in America, could be called “stadium banks:” not big enough to count as Wall Street mega-banks, but big enough to have a sports stadium named after them.

We’re witnessing a familiar swing of the pendulum: toward regulation when banks crash the economy, away from regulation when memories fade.

To read more go HERE.

David Dayen is a contributing writer to Opinion.

4 Responses

  1. Reblogged this on Deadly Clear.


  2. Memory seems lost to TBTF legislation. Must be all of the GMO crops and Glyphosate we have been eating. (That would be ROUNDUP )


  3. They are getting ready to do it all over again – interest rates are on and upward trend, housing prices all so, affordability is going down, funny loans are resurfacing – same scenario. I bet you know one stops it!!! Wall Street will win again, at the citizen’s expense!!!! I am so disappointed in the powers that be (all of them), except Trey Gowdy.


  4. I bet Steven Mnuchin and George Soros’ former bank, OneWest, is going to benefit.


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