House GOP Votes To Make Wall Street Regulators Into Political Tools
After the economic collapse on Wall Street in the final months of the presidency of George W. Bush, big banks and elite financial firms were bailed out using taxpayer money, and the burden of the crisis was shifted onto the backs of working Americans. As a condition to this big favor, though, Wall Street firms were subjected to new oversight.
Wall Street had proven unable to regulate itself effectively. The wise, invisible hand of the marketplace had turned out to be invisible simply because it did not exist. So, legislation commonly known as Dodd-Frank created two new oversight agencies that could set the rules for Wall Street finance schemes, to ensure that Americans would be protected from the consequences of Wall Street’s most unethical get rich quick schemes.
Vital to the economic security established by Dodd-Frank was that these oversight agencies, the Financial Stability Oversight Council and the Office of Financial Research, would be politically independent. They would be funded by Wall Street itself, through fees on investment transactions. Under this arrangement, politically-motivated members of Congress, funded by Wall Street firms, wouldn’t be able to cripple the regulators by removing their funding. The fee-based funding would also prevent working Americans from paying once again to clean up Wall Street’s problems.
Yesterday, the U.S. House of Representatives voted to do away with that political independence. The House voted to approve H.R. 3340, the Financial Stability Oversight Council Reform Act, legislation which makes working Americans pay for the Financial Stability Oversight Council and the Office of Financial Research through their taxes, and lets Wall Street get away with paying nothing for the services of these regulatory agencies.
If H.R. 3340 is passed by the Senate with a veto-proof majority, and becomes law, members of Congress, most of whom receive large political donations from Wall Street firms, will be able to decide whether the Council and the Office of Financial Research receive enough funding to do their jobs. Under such pressure, these regulatory agencies will then be able only to pursue the reforms of Wall Street abuses in a manner approved of by the very Wall Street financial elites who are perpetrating the abuses in the first place
The mindset of the politicians who voted for H.R. 3340 yesterday was revealed in comments by the bill’s author, Texas Republican Jeb Hensarling, who said that “Americans have come to loathe” the Financial Stability Oversight Council and the Office of Financial Research. I haven’t heard anyone I know express fear and loathing of the regulatory agencies that work to prevent abuses like those that led to the Great Recession. I do quite frequently hear people I know expressing fear and loathing of the political corruption funded by Wall Street’s financial powerhouses. But then, I don’t have any wealthy friends.
I think we can see that Jeb Hensarling keeps a very different kind of company than I do. The same can be said for the 238 Republicans who voted for H.R. 3340 yesterday. Only one House Republican had the decency to vote no – Walter Jones of North Carolina. Unfortunately, his vote was counteracted by the shameful yes vote of Henry Cuellar, the only Democrat crass enough to approve of expanding the political power of Wall Street.