If the Senate accepts the House changes, however, one of two things will happen, said Michael Greenberger, a University of Maryland professor and the former head of the Commodity Futures Trading Commission’s Division of Trading and Markets. “Either we’re going to have a bill that’s regulation in name only or we going to have no regulation, which means no consumer protection infrastructure, no resolution authority and the whole of the benefits the reform provides,” said Greenberger.

Ryan Grim, Huffington Post

Another sellout of the American people. Does anyone really think we’ll wind up with something resembling real financial reform? The dynamic works something like this:

The Democrats feign reform. Their original legislation lacks teeth, but it does contain certain stipulations that Wall Street opposes. The Republicans meanwhile do absolutely NOTHING to help and instead attempt to block even the meager “reform” offered by the Democrats. The Democrats then respond by proposing compromises that are ostensibly needed in order to gain passage. These new offers further weaken legislation that was already marginal at best.

In the end, we wind up with either legislation with so many loopholes that it really changes nothing or no legislation at all — either way the status quo is maintained.

The Congressional maneuvering is really just a dance to present the appearance of legitimate government. In reality, neither side really wants any change. They have their big money benefactors to worry about. The financial sector spends a pile of money to ensure that Congress meets their needs — over $20 million between the securities/investment and commercial banking lobbies thus far in the 2009/2010 election cycle. Together, their spending is second only to lawyers and law firms.

Real finance reform would not only address derivatives but also force size limits and leverage ratios on the banks. We’re better off passing nothing than this sugar pill.

This same scenario repeats itself on every major issue. Healthcare was ostensibly about providing needed services to Americans without. Of course, the only way to achieve that without deepening the federal debt was to incorporate the public option. But since a public option would have created real competition for the medical lobby, it was quickly dropped. There weren’t enough votes to get is passed. Why? Because between doctors, pharmaceuticals, hospitals, and other healthcare services, there’s been nearly $43 million in campaign cash this term alone.

The sad truth is that the American Congress serves only a very small group of Americans. They are captured by Big-Money, and we will not see any change until and unless The People join together, from both sides of the political debate, and coalesce around the topic of campaign finance reform. Public campaign financing is already working in several states in the form of Clean Elections. And there’s a bipartisan bill in House and also the Senate to bring similar reform to Washington.

With public campaign financing, we just might get our politicians back to work for the people. Actually, since estimates place their efforts spent on fund raising at 20 percent to 40 percent of their time, we just might actually get them back to work — period. Couple public financing with preferential voting, which would allow a significant increase in votes for third party candidates, and we may see a revitalization of government. Add term limits and solid bars closing the revolving lobbyist door, and we just might return to a government of the people, by the people, for the people.

Is there anything else on the planet as twisted and useless as the United States Senate? Filibuster this, and secret hold that – the dysfunction is mind numbing. Now we have Senators Merkley and Levin trying to stop bank gambling, but they need to give auto dealers a free ride in order to do it. What kind of convoluted broke-back system produces such garbage?

The auto dealer exemption should never have passed the House in the first place. But Franks caved to Campbell and gave the Republicans another business victory at the expense of the public. The Senate should be fighting to fix the House bill, not succumbing to lobby pressure and matching it.

Damn, I hate to side with Wall Street, but this is just bad legislation.

“Once you understand that the resolution authority is an illusion, you begin to understand that the Dodd legislation would achieve nothing on the systemic risk and too big to fail front.”
Simon Johnson, MIT Professor, co-author of 13 Bankers

People need to take notice of what’s going on here. Senator Dodd’s bill absolutely needs to be sunshined and debated. This is not sound financial system reform and regulation, and all Americans need to be concerned. I’ll be the first to admit that I don’t understand all the aspects of cross-border financial institutions, but I do appreciate some regulation issues, especially where the detection component of resolution authority is involved. It just opens up an additional layer of confusion with tracking derivatives and off balance sheet transactions. Wasn’t that a big part of what was behind Lehman and Repo105?

Financial reform must definitely be high on our list of priorities, but we need to do it right. Our nation can ill afford another round like the recent meltdown. The government itself is unlikely to have the resources to put things back together next time.

I’m nowhere close to being an economist, but even I can see that Chris Dodd has put together a gift to the banking industry. Relying on resolution authority is one thing, but putting the CFPA inside the Fed and allowing the FSOC to veto its decisions . . . it’s like putting the hen in the fox house! And then leaving everything to the discretion of an agency that can be overruled, rather than setting the guidelines it will enforce into law — it’s slight of hand, and Dodd, the conman, will be gone before we find out we were ripped off.

The bill needs to have measures in place that will force the Fed’s hand, otherwise what are the chances they’ll have the nerve to test the system and pull the trigger? Real reform will have hard caps on size and leverage ratios, derivative reform, and definitive remediation requirements. It will also have a fully independent CFPA that’s not subject to FSOC control, and does have control over non-bank entities, like auto dealers.  As is, this will be a mess, but I’m still hopeful that real reformers like Ted Kaufman will stop Dodd from launching his lobbyist career on this watered down smoke-screen excuse for financial reform.