Later On

A blog written for those whose interests more or less match mine.

More evidence that the finance industry owns Obama

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And most of Congress, as well. Teresa Tritch writes in the NY Times:

Treasury Secretary Jack Lew has defended financial reform recently, but on closer inspection, the defenses are oddly ambiguous.

Earlier this month, shortly before the House Financial Services committee voted on several bills to gut the derivatives’ reforms in the Dodd-Frank law, Treasury Secretary Jack Lew sent a letter opposing the measures to the committee’s chairman, Jeb Hensarling, Republican of Texas.

There was zero chance that the letter would change any Republican minds. It didn’t even change many Democratic minds, as the bills passed the committee with bipartisan support. As such, the letter was widely understood as a way for the Obama administration to communicate its displeasure with congressional Democrats who might be inclined to support the bills when they are considered by the full House or in the Senate.

Also this month, in an appearance before the Senate Banking Committee, Mr. Lew told the panel that he had pushed back against a group of international financial officials who had been unusually vocal in calling for American regulators to water down proposals to regulate derivatives. The foreign officials, including Michel Barnier, a prominent Commissioner of the European Union, have been incensed by proposals to impose new American derivatives rules on the foreign affiliates of American banks and on foreign banks operating in the United States.

Without robust cross-border application, the new rules will be useless. But then again, when derivatives bets went catastrophically wrong in the financial crisis, it was the Federal Reserve and the American taxpayer that did the heavy bailing of global banks, so why should Mr. Barnier and company feel any urgency to rein in reckless trades that are profitable while they last?

But I digress. At the banking hearing, Mr. Lew said he told the Barnier group “quite directly” that a letter they had sent to him protesting the international derivatives’ proposals was “not a helpful way to promote conversations” with independent regulators.

That’s not exactly, “back off, dude.” And while it’s good to see Mr. Lew, who does not have strong financial reform credentials, speak up, the question is, to what end? Is Mr. Lew pushing for strong rules? Or is he saying just enough to shield the administration from charges that it has generally stood by while the banks watered down reform and, in the process, protected their size, their profits and their too-big-to-fail subsidies?

Mr. Lew’s letter to Mr. Hensarling is hardly a full throated defense of financial reform. He stated that until regulators have been given a chance to write and implement rules, it is “premature” to attempt to repeal or amend Dodd-Frank. He wrote: “We should allow the regulators to complete their ongoing rulemakings, and then determine what changes, if any, might be necessary in certain areas to improve the effectiveness of these reforms.” If I am a Wall Street banker or lobbyist, or a politician who might be interested in doing their bidding, what that says to me is there will be a time and a place to scotch the rules, just not now, when circumventing the process could be seen to reflect the administration’s lack of political will to rein in the banks.

Also at the banking hearing, Mr. Lew said that . . .

Continue reading. This is exactly what was expect of Jack Lew and, presumably, why Obama selected him.

Written by LeisureGuy

30 May 2013 at 1:54 pm

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