The most dangerous amendment to Wall Street reform has four Democratic co-sponsors

by: Chris Bowers

Wed May 12, 2010 at 16:15


Perhaps the most dangerous amendment facing Wall Street reform this week is amendment #3949, introduced by Tom Carper (D-DE).  This amendment is particularly dangerous for two reasons:

  1. Worse than the status quo. It strips states of their new authority to enforce stronger financial regulations than those passed by the federal government.  Thus, it actually weakens existing regulations, and is worse than the status quo.  Zach Carter explaains how:

    Over the past decade, state regulators tried to crack down on subprime outrages, but federal regulators stepped in to protect the megabanks. If we want to establish a fair financial system, we have to empower states to take action against abusive banks.

    That's what makes a new amendment from Sen. Tom Carper, D-Del., so dangerous. Carper's plan is to ban states from enforcing their own laws against big national banks like Wells Fargo, Citigroup, and Bank of America. This is an overt attempt to take cops off the beat and allow banks to get away with outright abuses. While doing lipservice to "strong consumer protection," Sens. Bob Corker, R-Tenn., John Ensign, R-Nev., D-Mark Warner, D-Va., Tim Johnson, D-S.D., Ben Nelson, D-Neb., and Evan Bayh, D-Ind., have all gone to bat for America's largest banks.

    This is the kind of amendment that can actually sink the bill if adopted. For years, federal bank regulators at the Office of Comptroller of the Currency (OCC) asserted broad powers to preempt state laws, and courts generally backed them. But in 2009, the Supreme Court reversed those decisions, giving states the ability to go after big banks through the court system. Carper's amendment wouldn't just institutionalize a destructive status quo-it would actively deregulate, further empowering banks to take advantage of the public.

    Read Zach's whole piece for more.

  2. It might actually pass Most weakening amendments have been easily swated aside during this fight.  However, this one has Democratic support, and thus might pass.  In addition to Carper, Democratic Senators Evan Bayh, Tim Johnson, and Mark Warner are co-sponsors.
If there is a remaining amendment fight to engage in on Wall Street reform, this is probably the best one.  It is a disappointment that strengthening amendments like the Brown-Kaufmaan bid to break up the banks failed, but anything that would actively reduce existing regulation must be stopped.

It is entirely unclear when this amendment will receive a vote.  Word right now is that the cloture vote on the overall bill will take place on Monday, so basically it is going to be sometime between now and Saturday.  Whenever it happens, it must be stopped.

Chris Bowers :: The most dangerous amendment to Wall Street reform has four Democratic co-sponsors

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Why does this not surprise me? .. (0.00 / 0)
In addition to Carper, Democratic Senators Evan Bayh, Tim Johnson, and Mark Warner are co-sponsors.

Carper and Johnson are owned by the big banks.  Warner and Bayh aren't much better.


most dangerous? (4.00 / 3)
Yes.  Most important?  I don't know.  Cantwell-McCain to reinstate Glass-Steagall is pretty important.  As is Dorgan's amendment to ban naked credit default swaps.  And Levin-Merkley to close down the casino and ban prop trading.  And Franken's to reform the credit rating agency process.  I put those four up pretty high.

Insert shameless blog promotion here.

What's the fastest way to let people know these four senators are bought and paid-for hacks (0.00 / 0)
who will sell out our chilfdren's future for a small donation from a banker?

What's the reason behind this (0.00 / 0)
my Constitutional lawyer head wonders if it's Constitutional for states to regulate financial institutions that have interstate commerce. Constitutionally, it's possible only the federal government can do that under the Commerce Clause unless you're talking about a intrastate institution.

There's probably legal precidence to cite that negates that theory, I just can't think of it off the top of my head.  


Not to be impertinent (0.00 / 0)
but if State regulation of financial institutions that do business outside of that State are unConstitutional, why hasn't someone stopped States from adopting LESS stringent regulations in a bid to attract credit card companies and banks to their State?

Is it only unConstitutional to impose stricter laws?

(you can tell I'm not a lawyer, right?)

"It sounds wrong...
     ...but its right."


[ Parent ]
Well that's what I'm wondering (0.00 / 0)
I would have to look at case law involving state regulations vs. federal regulations and see. My assumption is if this was unconstitutional, state regs would have been overturned by federal courts already.


[ Parent ]
That was my assumption, too (0.00 / 0)
Except that financial profit is involved and, sometimes, cash is a thumb on the scales of justice.


"It sounds wrong...
     ...but its right."


[ Parent ]
This statement (0.00 / 0)
to regulate financial institutions that have interstate commerce

doesn't make sense from a constitutional standpoint.

States are forbidden from regulating interstate commerce, but not commerce in general (which includes inter and intra.) So a regulation that targeted out-of-state business would generally (I am glossing over some details here) be unconstitutional, but regulating a global market to the extent that its transactions occur in-state would not be. Were it otherwise, state regulation of business would be eviscerated.

Beyond that, congressional regulation of commerce can displace otherwise valid state regulations, but that is a statutory question (did Congress intend to displace state law) not a constitutional one.

Politics is the art of the possible, but that means you have to think about changing what is possible, not that you have to accept it in perpetuity.


[ Parent ]
I see what you're saying (0.00 / 0)


[ Parent ]
Can we primary Carper in 2012? (0.00 / 0)
Or is DE too corporatist?

DE is a small enough state (4.00 / 1)
(population wise)that mounting a significant primary challenge would likely not cost much, comparatively speaking. In addition, the square mileage is pretty small, and most of the population is in the north third of the state - which suggests a grassroots ground game would be (again, comparatively speaking) practical.  I would like to see more attention to these sort of considerations - a Senate seat in a place like DE is far more cost effective and attainable to pick up for progressives than a place like CA.  

What DE has often lacked is serious challenges.  Positions often seem to be traded among top elites rather than contested. This suggests to me that DE's corporatism is a product of elite politics and a lack of popular politics, rather than a product of voter demands. That is, it is changeable.

Politics is the art of the possible, but that means you have to think about changing what is possible, not that you have to accept it in perpetuity.


[ Parent ]
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