The near-Depression of 2008, known by the rather frightening term of the “Great Recession,” certainly wasn’t the product of one problem in the financial services or investment industries. But there is no question that the free-wheeling, mortgage-gambling, high risk for high stakes ways of Wall Street helped lead the country to near disaster.
Now, the Wall Street cowboys are feeling good that they’re not in prison and are witnessing a sort of economic rebound in the United States. They are saying to Congress that they’re ready to dust themselves off and get right back on the horse.
Good advice for a real cowboy maybe, but not for the greedy investment house honchos who survived the Great Recession without going to jail – which is where many Americans who were nearly ruined in the recession would like to have seen them. They now want to erase the regulatory reforms Congress put into place to prevent another Great Recession.
With Republicans in charge of Congress, the banks and investment houses are working hard to dismantle the Dodd-Frank law that put stronger oversight and regulation over Wall Street, The New York Times reports. The regulations, some Wall Streeters are whispering to sympathetic members of Congress, just make it hard for them to make the big money and hinders America’s economy.
Uh, huh. Well, the regulations apparently haven’t hindered the Wall Street pockets too much. Lobbying expenses and political contributions are soaring to new heights. And these aren’t so much expenses for the financial industry as they are investments in politicians who’ll take those campaign checks and just say, “Show me where to sign” on legislation to weaken regulation and give the cowboys room to roam.
Standing against abandoning the regulations is, thankfully, Massachusetts Democratic Sen. Elizabeth Warren, a match for the Wall Street crowd when it comes to knowledge of their industry and its regulation. Warren, who is considering a run for president, sounds the alarm when she sees bills coming along to strip down provisions of Dodd-Frank.
The senator well remembers how hard the financial industry fought the establishment of the Consumer Financial Protection Bureau, part of Dodd-Frank, which was established to oversee a broad swath of the financial industry on behalf of consumers. Warren, a Harvard professor, was to be its first director, but opposition to her in Congress, and from the financial industry, was too great to overcome.
Wall Street might have been better off if she had taken that job instead of winning a Senate seat. She’s the one calling attention to attempts to weaken hard-won rules, and the Obama administration, where the veto resides, will listen to her.
Still, banks and investment firms are liable to win some battles along the way, which won’t be good for average Americans. But those folks are up against, The New York Times reports, $1.2 billion in spending on lobbyists and campaign contributions by the financial industry.
And there are other signs of maneuvering along the way by big companies that don’t like the oversight they now face. MetLife, the insurance company, is fighting the label applied by the federal government of its being a “systemically important financial institution,” which under Dodd-Frank means regulators can put tighter reins on the company’s potentially risky investments because it is, to use a term all-too-familiar thanks to the Great Recession, “too big to fail.”
Congress is feeling the pressure all the time. The New York Times’ extensive report on the challenges to regulation included this from Vermont’s independent and populist Sen. Bernie Sanders: “You can argue that of all the very powerful interests that work in this city, Wall Street is at the top of the list.”
And that means the interests of average Americans are further down the list than ever.