Don't let the perfect be the enemy of the good. That's the message progressive groups that support Wall Street regulation--including Americans for Financial Reform--want to send Senator Russ Feingold of Wisconsin, the only Democrat in the U.S. Senate who opposes the financial reform bill that is now making its way to the floor.
Heather Booth, the head of the financial reform group, expressed her deep exasperation with Feingold in a recent article by Craig Gilbert of the Milwaukee Journal Sentinel. But if national advocates are annoyed by Feingold's stand, Gilbert reports, back in Wisconsin, people are more accustomed to their Senator's lone-wolf attitude.
Citizen Action of Wisconsin, a member of Booth's coalition, thinks the compromise bill before Congress is worth passing (and it looks like it will pass, since Harry Reid appears today to have secured the 60 votes he needed to overcome a threatened Republican filibuster) but the group's director sounded resigned about Feingold's opposition:
"I guess where we come down is if Sen. Feingold had a strategy by which . . . voting it down will lead to better reform later, we'd be very interested in that, but we don't see that at all," Robert Kraig told Gilbert.
Kraig added that " 'there's extreme frustration among the national (progressive) groups' over Feingold's opposition. He said among Wisconsin groups, there's 'more of realization that when Feingold digs in on an issue, there's only so much you can do.' "
The comments at the end of the Journal-Sentinel article show that Feingold's constituents--progressives and conservatives alike--consider him honest and forthright. However maddening for the advocates, he won't likely pay a political price for taking this latest maverick stand.
Unlike Republicans, who have made all kinds of specious arguments about the bill (that it represents a new "bailout" for the banks, that it fails to go after the "real" culprits in the economic meltdown: Fannie Mae and Freddie Mac), Feingold definitely gets it. He has long understood the dangers of bank deregulation, and, he points out, he was one of only eight Senators to vote against repealing Glass Steagall--the Depression-era law that forced banks to keep their investment houses and regular, commercial operations separate. He even voted against the TARP.
But after much wrangling and a floor speech denouncing the watered-down bill and demanding tougher reforms, Feingold explains to voters in a video posted on is official web site why he won't support the final reform legislation.
"Unfortunately, this bill doesn't do the job," Feingold says. The two major issues that it doesn't address, he says, are replacing the firewall between regular banking activities and gambling on Wall Street and breaking up institutions that are "too big to fail."
The bill does do plenty of good, however, including establishing a Consumer Financial Protection Agency, brainchild of TARP overseer and Harvard professor Elizabeth Warren, whom Republicans and bank lobbyists hate so much they attempted to write language into the bill specifically prohibiting her appointment to head the new agency.
That language bit the dust, and, according to a recent post by Ryan Grim on HuffingtonPost it looks like Warren will likely be our new consumer financial protection czar when Obama finally signs the legislation. That's bad news for big banks, and good news for consumers.
Besides consumer protection in areas such as credit cards, mortgages, and payday loan outfits, BanksterUSA has a laundry list of other good things in the current legislation (and a survey, encouraging readers to grade the 2,000-page bill like "a kindergarten teacher"). The good measures include spinning off some derivatives trades--on food and energy--into separately capitalized affiliates, which will be regulated. "Former Commodities Futures Trading Commission Chair Brooksley Born, who tried to get derivatives regulated way back in 1999, is happy with this section of the bill," Bankster reports. (The group acknowledges, however, that it would have been better to spin off and regulate all derivatives.)
On "too big to fail," Bankster agrees with Feingold: "The bill falls short on the big picture, structural issues." While there is some greater oversight, "taxpayers are still on the hook for big bank failures. Big banks were not forced to prepay into a fund for future bailouts . . . Too big to fail institutions were not shrunk in size . . . Glass-Steagall was not restored. Destructive "naked" credit default swaps were not banned. At the end of the day, Treasury Secretary Tim Geithner is happy with this result."
The politics of bank reform were particularly disappointing since it appears that the Democrats worked harder to get Republican support than the support of progressives like Feingold and, on the House side, Ohio populist Marcy Kaptur, who became famous for standing up on the floor of the House to tell her constituents to stay in their foreclosed homes. Kaptur understands how banks take advantage of people, and she has been a strong voice against bailouts and for regulation. Like Feingold, she found the reform legislation disappointing. Senator Maria Cantwell, Democrat of Washington, also joined Feingold in attacking the legislation for not doing enough about derivatives trading, but she ended up throwing her support behind the final bill.
According to Zach Carter of the Media Consortium Harry Reid and Nancy Pelosi were too busy courting the bank-friendly Republicans to listen to the people in their own party who were telling them to strengthen the bill.
"Essentially, petty interpersonal spats overwhelmed the push for real reform," Carter writes. "Cantwell and Feingold’s objections to the legislation were correct so far as policy substance were concerned, and Cantwell always made clear that her vote could be won by simply closing a huge loophole in the bill. But after the two Democrats voted against the bill for being unnecessarily weak on the Senate floor, Sen. Chris Dodd (D-CT) simply shut them both out of the negotiation process."
Instead, conferees offered a compromise to Scott Brown, Republican of Massachusetts, who flip-flopped on bank reform until the Senate agreed to let banks continue investing in hedge funds and private equity funds.
In the end, we have a watered-down bill that improves consumer protection, but may not have much effect on Wall Street's most egregious practices.
If you liked this article by Ruth Conniff, the political editor of The Progressive, check out her piece 'Vapid and Hollow' Hearings Working for Kagan.
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