The Senate passed the final version of new financial regulations yesterday. Senator Chuck Grassley voted against the cloture motion to allow the Restoring American Financial Stability Act of 2010 to come to the floor, and later voted against the bill itself, as did all Senate Republicans except for Scott Brown of Massachusetts and Olympia Snowe and Susan Collins of Maine. Senator Tom Harkin voted to overcome the Republican filibuster attempt and for the bill itself, as did all other Senate Democrats except Russ Feingold of Wisconsin.
Grassley had joined Snowe, Collins and Brown in voting for the Senate’s original financial reform bill in May. After the jump I’ve posted Grassley’s official statement explaining his reasons for opposing the bill that emerged from the House/Senate conference committee.
Statements from Harkin and Grassley’s Democratic opponent, Roxanne Conlin, are also posted below.
Alison Vekshin of Bloomberg News and Annie Lowrey of the Washington Independent briefly summarized the bill’s provisions; click here for the full text. On balance, passing this bill is better than doing nothing, but too many important reforms were excluded from the package or watered down in conference. I also agree with former Clinton cabinet official Robert Reich, who argued here that the bill is too narrow in scope:
The White House and Democratic leaders could have described the overarching goal as overhauling economic institutions that bestow outsize rewards on a relative few while imposing extraordinary costs and risks on almost everyone else. Instead, they have defined the goal narrowly: reducing risks to the financial system caused by particular practices on Wall Street. The solution has thereby shriveled to a set of technical fixes for how the Street should conduct its business.
Share any thoughts about financial reform in this thread. Conlin appears likely to bring this up repeatedly in her campaign against Grassley. One of her campaign’s statements released yesterday noted that so far in this election cycle, “Grassley has taken close to $900,000 in campaign contributions from Wall Street bankers and their PACs.”
UPDATE: House Democrat Barney Frank was one of the key architects of this bill. He discusses some of its high and low points here.
House Appropriations Committee Chairman David Obey, who is retiring this year, shared some of his parting thoughts with The Fiscal Times:
But I leave more discontented when I came here because of the terrible things that have been done to this economy by political leaders who allowed Wall Street to turn Wall Street banks into gambling casinos which damned near destroyed the economy.
I think the more important thing was what was my biggest failure. I think our biggest failure collectively has been our failure to stop the ripoff of the middle class by the economic elite of this country, and this is not just something that happened because of the forces of the market.
Statement from Senator Tom Harkin, July 15:
WASHINGTON, D.C. – Senator Tom Harkin (D-IA) issued the following statement after the U.S. Senate passed the Dodd-Frank Wall Street Reform and Consumer Protection Act by a vote of 60-39. As a senior member of the Senate Agriculture Committee, Senator Harkin served as a member of the Senate-House conference committee that produced the measure.
“One of the most important tasks before this Congress was to put new rules of the road in place for Wall Street to help prevent a crisis like this from happening again. The problem in the financial sector, as with so many areas of our economy, is that the ground rules and oversight have been too lax. Too many in the financial industry put profits ahead of people. As a direct consequence, many millions of ordinary Americans have lost their jobs, their homes, and, their livelihoods. This legislation will help restore some balance to our financial sector by setting a new regulatory framework and providing more transparency.
“A key feature of the measure is a strong Consumer Financial Protection Bureau. For too long our regulatory system has failed to adequately protect consumers from abusive practices in areas ranging from credit cards, to pay day loans, to mortgages. This Bureau will be able to appropriately regulate and put a stop to predatory financial practices without threatening the stability of Iowa’s community banks.
“The bill also includes better regulation of the derivatives market. The lack of oversight in the derivatives market was one of the key causes of the financial crisis and this bill will provide integrity and transparency to this market. I am particularly pleased that the Dodd-Frank bill will force many of the riskiest types of derivatives trading out of our commercial banks so that they can get back to the core business of banking.”
Statement from Senator Chuck Grassley, July 14:
Conference Report on Financial Regulation Bill
I’ll vote against the conference report because of concerns about changes made to the Senate bill, which I supported.
First, there’s new spending with a new offset that’s a huge problem. The new offset uses TARP dollars. TARP dollars should be returned to the taxpayers and used for deficit reduction, as was promised from the start. I voted for the Senate version of the banking bill to protect taxpayers from another government bailout of Wall Street, not to put taxpayers on the hook by spending more money through TARP.
The new offset also uses FDIC fees for a budget gimmick by crediting those fees to the FDIC and using them as an offset.
The conference report also waters down important reforms that were in the Senate bill.
I wanted to make the derivatives market transparent. The conference report weakened the Senate derivatives title, which required that banks receiving federal assistance push out all derivatives trading to separate affiliate operations. Instead, the conference report allows certain types of derivatives trading by the bank which puts them in a more risky position.
I also wanted to target conflicts of interest with credit rating agencies. The Senate bill contained an amendment that I cosponsored to break up the conflict of interest where security issuers get to pick the credit rating agencies. A lack of independent assessment in this area was a major factor in what led up to the meltdown in 2008. The conference report guts this reform by replacing it with a mere study.
I also wanted to make the Fed open to scrutiny and accountability. The Senate bill took a step in that direction, albeit way too small of a step. A lot more should have been done in this area. For instance, the House version included a full audit of the Fed, and members of the conference could have taken that stronger language.
It’s a bill that most of Wall Street wants passed. And that’s the last thing Iowans expect in any real reform bill.
Statement from Democratic Senate candidate Roxanne Conlin, July 14:
“Senator Grassley repeatedly voted against this measure at the end of April so it comes as no surprise that he refuses to stand up for the working Iowans and continues to support Wall Street, who has filled his campaign coffers with millions of dollars. Iowans who lost jobs, retirement savings, and were victims of unscrupulous lenders are left to wonder why someone they trusted to look out for them has turned his back on them. People in all 99 counties tell me their stories of hardship.
This bill will bring shadowy derivatives trading — the off-the-books and out-of-sight gambling that drove our economy off a cliff — out into the light. It protects consumers from predatory lending practices with a new consumer protection bureau. And it puts into effect a whole host of other common-sense reforms that will help make sure Wall Street plays by the same rules we have to obey on Main Street. Iowans want and need meaningful reform to keep us safe. We are all disappointed Senator Grassley took the side of Wall Street.”
Statement from Roxanne Conlin, July 15:
Conlin Statement: Grassley votes status quo, not what Iowans need
(Des Moines)-Chuck Grassley voted for Wall Street today, and against the interest of Iowans. His vote was one of thirty-eight NO votes trying to obstruct the passage of meaningful Wall Street reform. Below is a statement from U.S. Senate candidate Roxanne Conlin:
“I was truly hoping Senator Grassley would change his mind on Wall Street reform. I have been talking with Iowans about this particular bill the last couple days and they have spoken loud and clear that this bill is essential to our economic security. It’s a shame that Senator Grassley wouldn’t vote for Iowans over Wall Street and the financial sector who have been filling his campaign coffers. Senator Grassley supported the deregulation of Wall Street and as a result of that recklessness, the average American household has lost $100,000 in wealth, eight million Americans have lost their jobs, and trillions of dollars in hardworking Americans’ savings have disappeared. This should be a sign to Senator Grassley that the status quo is not working. Instead, he chooses to ignore the facts and support the special interests who continue to finance his reelection campaigns.”