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:
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.
- 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.
- 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.
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.