Worker Groups Blast House Bill To Roll Back Curbs On Banks
The AFL-CIO and workers’ rights groups from St. Louis and Kansas City are blasting a Republican-run House committee’s legislation to roll back curbs on banks and financiers that Congress enacted eight years ago, after those interests’ finagling and fraud caused the Great Recession that cost workers jobs, homes and pensions.
But the House Financial Services Committee GOP majority brushed the workers, civil rights groups, consumers and its Democrats aside. It approved the “Financial Choice Act,” HR 5983, on a virtual party-line vote of 30-26 on Sept. 13. Rep. Bruce Polinquin, R-Maine, was the only GOP “no.” GOP leaders may bring it up for a full House vote by the end of September.
House Democrats are trying to derail that train, and Democratic President Barack Obama has yet to formally threaten a veto. But in a speech in March, he strongly defended re-regulation of the financiers, called the Dodd-Frank law, rejecting GOP claims that curbing their fraud and finagling hurts the economy.
And Obama said then “there is still some work to do” to regulate “a shadow banking system” of “hedge funds, asset managers, et cetera.” He added: “One of our projects is to make sure that we are covering some of those potential gaps.”
Curbing financial fraud and finagling is important to workers, as the recession – also called the Bush Crash, since his policies opened the way to the financiers’ actions – showed.
Workers and their allies strongly pushed Dodd-Frank, and now say the new legislation authored by House committee chairman Jeb Hensarling, R-Texas, would largely undo it.
“The Financial Choice Act” – Hensarling chose the name – “will dramatically weaken the ability of financial regulators to adopt new regulations, repeal critical banking regulations that protect the safety and soundness of our banking system, and undermine the ability of the Consumer Financial Protection Bureau to stop predatory Wall Street practices,” AFL-CIO Legislative Director Bill Samuel told lawmakers in a Sept. 13 letter.
“To make matters worse, HR5983 will increase the risk of future bank bailouts by making it easier for banks to become too big to fail. The bill repeals financial regulators’ authority to break up too-big-to-fail banks, repeals their ability to require systemically risky non-bank financial institutions to comply with heightened safety and soundness regulations, and repeals the ‘Volcker rule’ that restricts federally insured banks from making speculative investments,” Samuel said.
It was those speculative investments -- using Grandma’s grocery money for such things as derivative swaps -- that brought the economy down around everyone’s ears when those investments crashed.
Hensarling’s measure “will also repeal the new Department of Labor (DOL) fiduciary rule that protects the retirement savings of working people,” Samuel said.
“It will preclude any further movement by DOL until 60 days after the Securities Exchange Commission (SEC) finishes its rule relating to standards of conduct for brokers and dealers. The bill then onerously requires the SEC to submit a cost-benefit analysis report” to the congressional panel before that agency – and the Labor Department after it – can act.
And just as the SEC institutes its rules, mandated under Dodd-Frank, to publicly compare CEOs’ compensation to workers’ paychecks, Hensarling’s measure would stop that initiative in its tracks, Samuel added.
In identical letters, the workers’ rights boards of Kansas City and St. Louis particularly went to bat to protect the fiduciary rule. DOL issued it to order stockbrokers and other investment advisers to put their clients’ interests first, not their own. Hensarling claims DOL is hamstringing advisors for small investors.
“In repealing the DOL fiduciary rule, the bill would roll back the most significant improvement in protections for average investors in several decades, one that is based on an extraordinarily open and inclusive regulatory process and extensive economic analysis documenting the harm to retirement savers under the existing standards,” said the Rev. Audrey Holles and Ruth Ehresmann, co-chairs of the St. Louis board, and Dr. Bob Minor and the Rev. Donna Simon, the Kansas City co-chairs. Jobs With Justice sponsors both boards.
The Labor Department’s rule “at long last requires all financial professionals who provide retirement investment advice to put their clients’ best interests ahead of their own financial interests. By taking this essential step, the rule helps all Americans — who increasingly are responsible for making their own decisions about how best to invest their retirement savings — keep more of their hard-earned savings so they can enjoy a more financially secure and independent retirement,” their letter adds.
“By stripping away existing protections and inhibiting further regulatory action, Section 441 of the proposed ‘Financial Choice Act’ would preserve the ability of financial firms to profit at the expense of unsophisticated retirement savers.” They urged lawmakers to dump the entire bill.
So did Rep. Maxine Waters, D-Calif., top Democrat on the financial services panel.
“Nearly all the rules we enacted to make banks safer and stronger would be repealed, and replaced by a phony choose-your-own regulatory regime that puts the banks in the driver’s seat,” she said. Waters added consumers and workers should know who profits from HR5983.
“Let us be clear about who would benefit from the Republicans’ ‘Wrong Choice”: Wall Street and other special interests who have been fighting against financial reform since before it was enacted,” she declared.
