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Sherrod Brown Goes After the Big Banks
William Greider March 13, 2013
Senator Brown explains, “The four largest behemoths, now ranging from $1.4 trillion to $2.3 trillion in assets, are the result of thirty-seven banks merging thirty-three times. In 1995, the six biggest US banks had assets equal to 18 percent of GDP. Today, they are about 63 percent of GDP.”
In earlier eras, such a gross distortion of the economy would have prompted popular outrage, political campaigns for reform, then government legislation. In our time, the outrage is plentiful, but the political system is dead in the water. Despite the vast destruction produced by the concentrated banking system, neither party wants to embrace the remedy Brown proposes.
The Dodd-Frank reform law of 2010, incomplete though it was, has been utterly stymied by the billion-dollar lobbying campaign of the financial sector. Nearly three years later, fewer than half of the regulations needed to implement Dodd-Frank have been completed. The president’s proud boast that the law put an end to “too big to fail” banks has been twisted into Wall Street’s sick little inside joke.
“It’s not just the economic power these guys have, it’s the political power,” Brown says. “The inability to get these new rules in place is the result of these lobbying pressures from Wall Street.”
There is a larger problem facing Brown—his own party and president. Barack Obama is not just absent on this issue; he is on the other side. So are many Democrats in Congress. Throughout his first term, Obama kept his distance from sharp critics of the big banks. His appointed lieutenants, led by Treasury Secretary Tim Geithner, were deeply loyal to Wall Street and protected its players from harsher measures, like criminal prosecution.
When I asked Brown about the Obama administration, the senator replied, “Well, I’m disappointed so far. I think they are in a different place than they used to be, but they are still not where they need to be.” At the Senate Finance Committee confirmation hearing for Jack Lew, nominated to be the new treasury secretary, Brown questioned him on the issue of size and scale in banking. “His answer was less than adequate, even on the advantage that the biggest banks have,” Brown said, then added: “The Obama administration opposed my amendment on Dodd-Frank and even seemed gleeful afterward that we had lost.”
Maybe Brown is being too polite. As he knows, the question of the big banks is deeply divisive for Democrats. It is an internal conflict that has roiled the party for two decades, ever since the center-right dogma took over in the Clinton era. Bill Clinton brought in the Robert Rubin team in 1993 to chart economic policy, and finance-friendly policy types have governed ever since. Democratic activists still faithful to older liberal-labor principles are usually excluded. Obama was already in with Rubin and his crowd before he came to power. He has stayed true to that perspective as president, relentlessly excluding contrarian thinkers and treating big bankers with a gentle touch. No “Go Directly to Jail” cards in his deck. Some of us hoped Obama might allow a little more variety in his second term. That’s not going to happen. Old faces, mostly associated with the Clinton years, are still running the show. Many learned well at Rubin’s prep school for policy wonks. Lew was baptized by his tenure at Citigroup, where in 2008 he was paid an extraordinary $1.1 million or more for his short-term labor before returning to Washington to re-enter government. Gene Sperling, director of Obama’s National Economic Council, got a similar baptism at Goldman Sachs.
.
In earlier eras, such a gross distortion of the economy would have prompted popular outrage, political campaigns for reform, then government legislation. In our time, the outrage is plentiful, but the political system is dead in the water. Despite the vast destruction produced by the concentrated banking system, neither party wants to embrace the remedy Brown proposes.
The Dodd-Frank reform law of 2010, incomplete though it was, has been utterly stymied by the billion-dollar lobbying campaign of the financial sector. Nearly three years later, fewer than half of the regulations needed to implement Dodd-Frank have been completed. The president’s proud boast that the law put an end to “too big to fail” banks has been twisted into Wall Street’s sick little inside joke.
“It’s not just the economic power these guys have, it’s the political power,” Brown says. “The inability to get these new rules in place is the result of these lobbying pressures from Wall Street.”
There is a larger problem facing Brown—his own party and president. Barack Obama is not just absent on this issue; he is on the other side. So are many Democrats in Congress. Throughout his first term, Obama kept his distance from sharp critics of the big banks. His appointed lieutenants, led by Treasury Secretary Tim Geithner, were deeply loyal to Wall Street and protected its players from harsher measures, like criminal prosecution.
When I asked Brown about the Obama administration, the senator replied, “Well, I’m disappointed so far. I think they are in a different place than they used to be, but they are still not where they need to be.” At the Senate Finance Committee confirmation hearing for Jack Lew, nominated to be the new treasury secretary, Brown questioned him on the issue of size and scale in banking. “His answer was less than adequate, even on the advantage that the biggest banks have,” Brown said, then added: “The Obama administration opposed my amendment on Dodd-Frank and even seemed gleeful afterward that we had lost.”
Maybe Brown is being too polite. As he knows, the question of the big banks is deeply divisive for Democrats. It is an internal conflict that has roiled the party for two decades, ever since the center-right dogma took over in the Clinton era. Bill Clinton brought in the Robert Rubin team in 1993 to chart economic policy, and finance-friendly policy types have governed ever since. Democratic activists still faithful to older liberal-labor principles are usually excluded. Obama was already in with Rubin and his crowd before he came to power. He has stayed true to that perspective as president, relentlessly excluding contrarian thinkers and treating big bankers with a gentle touch. No “Go Directly to Jail” cards in his deck. Some of us hoped Obama might allow a little more variety in his second term. That’s not going to happen. Old faces, mostly associated with the Clinton years, are still running the show. Many learned well at Rubin’s prep school for policy wonks. Lew was baptized by his tenure at Citigroup, where in 2008 he was paid an extraordinary $1.1 million or more for his short-term labor before returning to Washington to re-enter government. Gene Sperling, director of Obama’s National Economic Council, got a similar baptism at Goldman Sachs.
.
http://www.thenation.com/article/173336/sherrod-brown-goes-after-big-banks
