Big Taibbi article on the Obama Financial Reform bill

[nebris]

by Gaius Publius on 8/12/2010 11:05:00 AM

I've been waiting for an electronic version of Matt Taibbi's latest in-depth analysis - this time, of the Obama administration's Financial Reform bill. Well, here you go; it's a doozy. Matt digs out all the admin-Congressional maneuvering, unpackaging the deals and naming the ugly names - insider reporting at its best.

For me, this bottom-lines the bill. First, a taste from the introduction, and then I'll gloss the piece with a "good guys-bad guys" list - all you need to know about your Congressional Betters, in one chocolate-covered post.

From Taibbi's introduction (my emphasis):
But Dodd-Frank [the Financial Reform bill] was neither an FDR-style, paradigm-shifting reform, nor a historic assault on free enterprise. What it was, ultimately, was a cop-out, a Band-Aid on a severed artery. If it marks the end of anything at all, it represents the end of the best opportunity we had to do something real about the criminal hijacking of America's financial-services industry. During the yearlong legislative battle that forged this bill, Congress took a long, hard look at the shape of the modern American economy - and then decided that it didn't have the stones to wipe out our country's one dependably thriving profit center: theft.

It's not that there's nothing good in the bill. In fact, there are many good things in it, even some historic things. [List of good things in the bill; check the article for details.]

All of this is great, but taken together, these reforms fail to address even a tenth of the real problem. Worse: They fail to even define what the real problem is. Over a long year of feverish lobbying and brutally intense backroom negotiations, a group of D.C. insiders fought over a single question: Just how much of the truth about the financial crisis should we share with the public? Do we admit that control over the economy in the past decade was ceded to a small group of rapacious criminals who to this day are engaged in a mind-numbing campaign of theft on a global scale? Or do we pretend that, minus a few bumps in the road that have mostly been smoothed out, the clean-hands capitalism of Adam Smith still rules the day in America? In other words, do people need to know the real version, in all its majestic whorebotchery, or can we get away with some bullshit cover story?

In passing Dodd-Frank, they went with the cover story.
The article is Taibbi at his researching best, and the writing is wonderfully clear.

Now for my good guys-bad guys lists. But first some context - the two big issues in the bill, two things real reform needed, were these:

1. The Levin-Merkley amendment, which implemented the "Volker rule" forbidding FDIC-insured banks from laying bets with their own money (in effect restoring Glass-Steagall), and


2. The Blanche Lincoln amendment, which would have forced commercial banks to spin off their derivatives business.

Needless to say, both failed. From the article, Volker-rule good guys are:

• Carl Levin (D-MI) & Jeff Merkley (D-OR), who fought for it hard and got knee-capped for their trouble by both parties.
• Paul Kanjorski (D-PA), a strong supporter of the Volker rule in the House.
• Barney Frank (D-MA), who agreed to re-introduce the amendment in conference talks, after Brownback and Reid stripped it out (see below).

Volker-rule bad guys:

• Sam Brownback (R-KS) & Harry Reid (D-NV), who worked together to kill a Brownback amendment to which Levin-Merkley was attached, then bring back the Brownback amendment clean.
• Scott Brown (R-MA), who demanded many changes to the amendment in exchange for his vote, after Barney Frank got the amendment resurrected.
• Chris Dodd (D-CN), powerful chair of the Senate Banking Committee, who used Brown's intervention as ground cover for even more evisceration, on behalf of this guy -
• Tim Geithner, whom Taibbi says "acted almost like a liaison to the financial industry, pushing for Wall Street-friendly changes on everything," and who was clearly fronting for unnamed others in the administration (go ahead, guess).
• Chuck Shumer (D-NY), Lloyd Blankfein's BFF (you have to read the Shumer section; it's priceless), who like a blade-wielding pro sliced the last vestiges of meaningful restriction from the amendment.
• Barney Frank (D-MA), who upheld these last-minute Senate changes by refusing Kanjorski's request to block them in the House version.

Yep, Barney Frank is on both lists. Good guys on Blanche Lincoln's derivatives rule:

• Maria Cantwell (D-WA) and a small group of Dem stalwarts who stayed on the Senate floor, ready to object if Chris Dodd tried to swiss-cheese it in the middle of the night (yes, Maria Cantwell, whom I wrote about here expressing doubts).

And that's about it. Guess whose name is missing? Bad guys on Lincoln's derivatives rule:

• Chris Dodd (D-CN), who tried to substitute his own swiss cheese version for Lincoln's, only to be blocked by Cantwell & crew. (Wonder where Dodd's next office will be? Wall Street? K Street? Thank-you Street?)
• Barney Frank (D-MA), the House New Democrats Coalition (click to read the list), the Treasury dept, influential FDIC chief Sheila Bair, and NY mayor Michael Bloomberg, all of whom were strongly opposed.
• Blanche Lincoln (D-AR) herself, who gutted the amendment for good, once she got past Bill Holder in the Arkansas Dem primary.
• Little-known Blue Dog Collin Peterson (D-MN), who went even farther than Lincoln did in eviscerating its restrictions (apparently Peterson wants to make soup from the left-over entrails).

And there you have it. Our fine friends in Washington. The name of the bill? Dodd-Frank, of course. The name of the article? "Wall Street's Big Win". As I say, money enables Republicans and neuters Dems.

I'd hang onto these lists. Keep your enemies in front of you if you don't want their arrows in your back.

GP