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Senator Russ Feingold (D-WI) Rejects Financial Regulatory Reform

Posted by Larry Doyle on June 29, 2010 8:28 AM |

America was assured by Washington’s political establishment that the financial regulatory reform package would prevent the need for another bailout of ‘too big to fail’ banks as occurred in 2008.

You didn’t believe them, did you?

Who stands up and has the courage to call out the Washington establishment on this charade? Senator Russ Feingold, Democrat of Wisconsin. Feingold writes:

“As I have indicated for some time now, my test for the financial regulatory reform bill is whether it will prevent another crisis. The conference committee’s proposal fails that test and for that reason I will not vote to advance it.

During debate on the bill, I supported several efforts to break up ‘too big to fail’ Wall Street banks and restore the proven safeguards established after the Great Depression separating Main Street banks from big Wall Street firms, among other issues. Unfortunately, these crucial reforms were rejected. While there are some positive provisions in the final measure, the lack of strong reforms is clear confirmation that Wall Street lobbyists and their allies in Washington continue to wield significant influence on the process.”

Feingold’s effort to break up the ‘too big to fail’ banks hearkens back to the same effort made by Simon Johnson and James Kwak in their fabulous book, 13 Bankers. (No Quarter Radio’s Sense on Cents with Larry Doyle Welcomes 13 Bankers Co-Author James Kwak; April 11, 2010)

If Wall Street banks are too big to fail, make them smaller. Does this financial regulatory reform package do that? No, it does not. What is the result? Americans remain enslaved by the largest banks in our land.

What did Senator Feingold try to accomplish within this financial regulatory reform?

Senator Feingold was one of eight senators to oppose the repeal of Glass-Steagall in 1999. Senator Feingold also opposed the Wall Street bail-out in 2008. During consideration of the financial regulatory reform bill, Feingold co-sponsored a number of key amendments to ensure that banks are no longer too big to fail, and that depression-era reforms to create a firewall between Wall Street and Main Street are restored, among other critical issues.  None of these amendments were included in the final bill, which is why it failed Feingold’s test for real reform.  Amendments Feingold cosponsored included:

>>Cantwell-McCain-Feingold amendment to restore the Glass- Steagall firewall between Wall Street and Main Street.
>>Senator Dorgan’s “too big to fail” amendment, which requires that no financial entity be permitted to become so large that its failure threatens the financial stability of the U.S.
>>Brown-Kaufman amendment proposing strict limits on the size of financial institutions
>>Dorgan amendment to ban so-called naked credit default swaps, speculative bets that played a role in the economic crisis
>>Merkley-Levin amendment to prohibit any bank with government insured deposits from engaging in high-risk finance, like investing in hedge funds or private equity funds.

I commend Feingold for standing his ground and not acceding to the pressure to support a flawed bill which does not fully address the causes of our economic crisis and prevent a repeat of them.


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