Focus on the Corporation: Round One to the Banks, More to Come
The Senate has now passed its Wall Street reform bill, having rejected probably the most important measure proposed to reduce Wall Street power, strengthen financial stability and fortify our democracy: breaking up the banks.
By a 33-61 vote, the Senate defeated the Brown-Kaufman amendment, which would have forced the largest banks to get smaller. Three Republicans, including Richard Shelby, the ranking member of the Banking Committee, joined 30 Democrats in supporting the measure.
This was a very big deal loss. Although the defeat of Brown-Kaufman was crushing, it was nonetheless an indicator of the strength of the populist call to break up the banks and reduce Wall Street power. A sign of Wall Street’s ongoing dominance on Capitol Hill had been its success in defining the call to “break up the banks” as outside the bounds of legitimate debate. Wall Street succeeded in the House, which did not seriously consider proposals to break up the banks. But it could not block the issue from an airing in the Senate; and once aired, the break-up-the-banks proposal gained
substantial support, notwithstanding opposition from the White House and
the chair of the Banking Committee, Chris Dodd.
The defeat of Brown-Kaufman does not mean the issue will go away. Wall Street hopes that it will be able to weather the storm from this round of legislation, and escape further scrutiny and control. But as the recent Securities and Exchange Commission charges against Goldman Sachs reveal, there are still a lot of buried bodies to be uncovered. The growing tide of scandal may well lead to subsequent rounds of reform, with momentum building to break up the banks that are clinging desperately to their hold on Capitol Hill.
A host of named and anonymous industry lobbyists recently admitted to the Washington Post that they feared losing control of the Senate debate. “You’ve got an environment, six months before an election, where politicians are acting like politicians,” Sam Geduldig, a financial lobbyist and former Republican staffer, told the Post. “They are viewing any vote as a potential campaign ad. And that might not be good for any of us.”
Well, not good for any of the industry lobbyists, perhaps. But ideal for democracy, and the democratic imperative to exert control over Wall Street.
–Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor