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May. 7 2010 - 10:48 am | 3,680 views | 5 recommendations | 49 comments

Death of Brown/Kaufman a Huge Blow

So the Senate voted yesterday evening. It went down by 61-33. That is frankly a crushing defeat.

The roll call has its interesting moments, notably that Alabama Republican Richard Shelby voted for it. Shelby is the leading GOP negotiator on the bill. Two other GOPers also backed it.

The Democrats split 30 for, and 27 against. Looking at those groupings will give you a pretty good idea of the nature of the divide within the Senate Democratic caucus.

via Michael Tomasky: The limits of liberalism in the Senate | Comment is free | guardian.co.uk.

As recently as last night I still had some hopes that this Financial Regulatory Reform bill might turn into something real. I was in DC watching the debate on the Senate floor yesterday and aside from being amused by the utterly schizophrenic Republican strategy for attacking the bill (several Republican Senators yesterday veered into discussions of how the new Consumer Financial Protection Agency would harm, of all people, orthodontists) there was little to the naked eye that suggested the whole thing was a farce.

In general I got the sense that many of the members on both sides of the aisle were genuinely freaked out by the snowballing corruption on Wall Street and wanted to sink at least one real fang or two into the problem, though they differed on how to get there.

This is different than the health care debate, which throughout to me felt like a gigantic mountain of posturing and back-room money-dealing smothering the genuinely passionate advocacy of a tiny legislative minority that really wanted to fix the health care problem. In the FinReg business I talked to more members and aides who believed there was real room for something genuine to happen, if only because the political/financial situation in Europe (and the serendipitous timing of the Goldman case) is putting wind at the back of previously dead or dormant reform proposals.

Then last night came to pass, or not pass, as it were.

To me there are three really big parts of the bill. There’s resolution authority/Too-Big-To-Fail, addressing how to deal with systemically ginormous companies like AIG when they go belly up and threaten the survival of the planet.

There’s the derivatives portion, which covers a more or less completely unregulated $600 trillion market.

And there’s the Volcker Rule stuff, trying to bring back Glass-Steagall, preventing banks from turbo-gambling on their prop trading desks while simultaneously acting as ostensibly safe depository institutions. An amendment by Carl Levin and Jeff Merkley is the route for dealing with that last part.

A bill that included strong reform on one of those three counts would be at least passably significant. Two out of three would still be woefully inadequate, but a good start. And none out of three would officially reduce all this to a dog-and-pony show.

Well, the count is 0 and 1. Last night the Too-Big-To-Fail amendment, a strong proposal put forward by Delaware’s Ted Kaufman and Ohio’s Sherrod Brown, got pulverized in a late-night vote. An amazing 27 Democrats voted against the bill, which would have put hard caps on the size and risk profiles of financial companies.

In a wittily insulting footnote to this massacre, Alabaman Obfuscation King Richard Shelby, the guy who has been leading the transparently lobbyist-driven and shockingly (even by DC standards) cynical Republican filibusters of this bill,  actually voted for the Brown/Kaufman amendment. I have no idea if this was Shelby’s idea of a joke or what, but somehow seeing this bloated old hack cast a quixotic Yea for this urgently necessary measure while 27 Democrats slithered back into the lobbyist camp to cast Nay votes was the most obnoxious part of this whole sordid affair.

That Brown/Kaufman got beat even worse than Shelby’s own pathetic substitute amendment on the Consumer Financial Protection stuff — the Shelby amendment that got 38 Yeas to Brown/Kaufman’s 31 was a proposal to surgically excise the Consumer Protection aspect of the bill — pretty much tells you everything you need to know about how hard it is to get real reforms passed in this Senate.

Brown/Kaufman was an obvious and logical response to the great cancer of our financial system, the rapid consolidation of power and market share in the hands of a few banks. The measure would have mandated the breakup of companies that grew beyond strictly prescribed limits, and it seems to me that it failed precisely because was a real law with no loopholes.

The Shelby amendment, on the other hand, was an open proposal to do nothing. And again, it got beat, too, but it didn’t get beat as badly as Brown/Kaufman, especially when one considers that the Democrats could have carried Brown/Kaufman all by themselves.

There’s a lot of ugly legislative backstory to all these maneuvers and if Levin/Merkley and some of the other key measures suffer the same fate as Brown/Kaufman, the Democrats and the Republicans will both come out of this wearing a lot of shame. More on this later — I also have a piece on the bill coming out in Rolling Stone in a few weeks.


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  1. collapse expand

    Great reporting. Matt. You could do a lot of good in this country just by hanging out in DC and giving us the straight goods.

  2. collapse expand

    When the wheels come off and the economy pancakes like the WTC towers, they’re all going to feel like dressing in turtleneck sweaters.

    They’re in deep denial now, but shit’s about to get real. And they’re going to be scared. Really scared. And the blame game will then begin.

  3. collapse expand

    Just another reason to get rid of all congress people and start over, hopefully with ones who aren’t part of the problem and beholding to Wall Street.

  4. collapse expand

    When the next crash drives unemployment even higher on the heels of Senate dithering and corruption, we’ll start to see some unrest methinks. Mehopes.

    We need some serious unrest over this nonsense, at least unemployed people have the time and desperation to get serious. Maybe a few mass protests will finally ungum the wheels of power. Mass campaign contributions won’t get these scumbags re-elected if the entire electorate finally realizes whose side they’re on.

  5. collapse expand

    I would guess there is a procedural reason for Shelby to cast a Yea vote. Wouldn’t that give him the leverage to actually offer a “friendly” amendment?

    Of all the strange votes, his might be the easiest to parse.

    None of this will pass, though, because government has gotten too big to ignore. There is too much power concentrated in one place, and when that happens all the lobbying and cajoling is going to be focused on that point as well.

    Take away the influence government has carved out for itself, and there is nothing left to lobby.

    We’ve reaped what we have sown.

  6. collapse expand

    “There’s a lot of ugly legislative backstory to all these maneuvers and if Levin/Merkley and some of the other key measures suffer the same fate as Brown/Kaufman, the Democrats and the Republicans will both come out of this wearing a lot of shame.”

    You can’t shame the shameless.

    Just ask our President. Who, as usual, was strangely silent about all this.

    I can just imagine the private conversations that Obama and Biden have had about Sen. Kaufman over the past year.

    “Shit Joe! I thought you said he was one of us? But this guy is actually honest and ethical. WTF were you thinking?!”

  7. collapse expand

    Hey Matt, you seem to have a line on Sanders, what’s your take on the latest incarnation of the Audit the Fed Bill? Ron Paul just took him to task claiming he’s capitulating to the White House’s opposition, but I can’t get a good read on it.

  8. collapse expand

    Something smells fishy with the death of this bill and Goldman looking to settle with the SEC.

  9. collapse expand

    I don’t know why I’m surprised but I am, I am also royally pissed off at the Dems. If we can’t get this passed at even a minimal level the system
    is truly broken. I was called by the DFL to do some phoning next week.
    Not going to happen. If I support anything it will be individual candidates.

  10. collapse expand

    This is purely a dog and pony show now. The imagined CFPA will be completely toothless and ineffective even if it is included in the bill. They plan on putting it within the Federal Reserve. Guess who was responsible for consumer protection before?!?!?! That’s right the Fed and what a good job they did.

    Aside from that, this reform now enshrines taxpayer bailouts as the preferred method of winding down insolvent institutions (it was originally going to be a $50 billion fund that was prepaid by the TBTFs, now it’s taxayer funded and we will get repaid after the fact from the remaining insolvent institutions – yeah right). Sound like AIG to you? This was a giveaway to avoid a Rep. filibuster.

    I still don’t see any requirement for putting derivatives on an exchange either.

    Just like healthcare, we’re getting a reform bill that doesn’t reform. It will give away subsidies to favored interests and the cost will be born by the taxpayer.

  11. collapse expand

    Looking at all these replies that think salvation can be found through the ballot box –this country is irretrievably, hilariously fucked.

    You really have to wonder if the unemployed will ever rise up, what with statistics like the ones Yahoo rattled off yesterday, something about unemployed people spending 40 minutes a day looking for work and 4.5 hours in front of the boob tube.

    I don’t know what the answer is, but it probably lies somewhere between multiple secessions and the Jacobins. Families — people you actually know, sometimes — are being evicted from their homes just to fill the pockets of people like Chris Dodd and John Boehner and all those guys, and we continue doing absolutely nothing. Not one fucking thing. Even Taibbi’s T/S readership is dropping off, I’ve noticed, as if people just don’t even want to know.

    A nation of disgusting, self-absorbed pussies, tweeting and barbecuing while people die, comically deluded in their sense of self-importance. What a sad, sad joke. May as well learn Chinese now before it’s too fucking late.

  12. collapse expand

    I’d wager that Shelby’s vote, as well as Ensign’s and/or Coburn’s, was to allow Lincoln and Specter to vote ‘yea’ and burnish their populist bona fides without ever seriously endangering the amendment’s failure. Gotta keep the membership of the corporatist club intact. This does show the value of a primary: does anyone really think they’d vote as they did if they weren’t feeling significant heat from the left? I wonder if Gillibrand would have voted as she did had she a stiff primary challenge from her left…New York pols gotta keep the Street happy, sure, but on average I’d bet more New Yorkers would rather see these financial behemoths dismantled.

    It is somewhat disheartening to see so many of the nominally “liberal stalwart” Dems (ex: Lautenberg, Kerry, Udall, Shaheen) help to vote this down. And it would be nice if Dodd viewed his lack of need to run for reelection as an opportunity to remove his lips from Big Finance’s keister for once. Oh well.

  13. collapse expand

    Matt, it’s interesting to look at the vote along regional lines. (http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=111&session=2&vote=00136#top)

    Many of the self-described liberal Northeasterners — who wave the progressive flags the highest and shout the loudest and shrillest at Republican ties to business — voted no.

    Who knows how Shelby would have voted if his vote were the deciding one, but I wrote to him mentioning “Looting Main Street” and told him I was on the side of Main Street, not Wall Street, and that I hoped he was, too. Maybe Shelby was just representing his constituency.

    Note that John Kerry (former Democratic presidential candidate) and Joe Lieberman (former Democratic vice-presidential candidate) both voted nay. As well, Feinstein of CA voted nay. Oh, and of course there was no way the two Senators from New York were going to vote for it.

    Anyway, it’s worth the time for people to study the vote results. Maybe, just maybe, they’ll question the media obsession (and their own) with dividing every issue into Liberals/Democrats/Blue States vs. Conservatives/Republicans/Red States. Instead of telling us how silly Sarah Palin is to oppose the amendment, maybe the media could challenge Kerry or Feinstein.

    The center of progressivism, we are told, resides in the northeast corridor. But look at the vote results. All six senators from Connecticut, New York, and Massachusetts voted no. Republicans from Alabama, Oklahoma, Nevada voted yes. It’s pretty clear the path to meaningful reform is not being blocked by us yahoos in the flyover states (as the progressives would have you believe).

    It’s frustrating. Thanks, Matt, for covering these issues honestly. A lot of us truly appreciate your efforts.

  14. collapse expand

    EVERYTHING these ass-clowns have done over the last few weeks to infuse the public mentality that the congress was actually going to DO something was ALL a flimflam.. They are spineless as an organization and even worse as individuals..

    They are all a sham and one of the biggest reasons America won’t look like “America” in 10 years… It may not even take that long if another stock-market ‘flash-crash’ like the one of yesterday continues to happen and they all stick !! We’re done…

    That was a good PR stunt last week with the phony impugning of the Goldman Sucs guys but that too was just for show,, Nothing will ever come out of the congress to even limit one of these guys, not one, from taking the whole global economy down with them…

  15. collapse expand

    Shelby is one of the few people in Washington that did something good and Matt Taibbi still had to ridicule him. And then Matt wonders why politicians act like politicians. It obviously because they are scum. But even crusader like Matt Taibbi can’t resist shaking his blue pompoms and motherfucking the red team in all matters. And we wonder why politics is such a game?? Because the public, even the venerable Matt Taibbi, looks at is a 2-team competition. Maybe if Matt weren’t a has-been jock, he could think more clearly. The question all American must ask these filthy whores is: Are you a corporatist or aren’t you? Not: Are your a blood or a crip? dammit! That’s why we are losing our nation!!

    • collapse expand

      It’s funny how different people read articles with quite different perspectives. My take is that Matt was pretty disgusted with both sides, and pointed out who the stronger representatives were on both sides.

      Sadly I think think even passing this bill would be helpful, but I felt anything that made it past this legislature would be BS designed to make the public feel good as well as let the corporations off the hook. When Harry Reid sent out one of his emails extolling the grand work of the Democratic party on this bill (I am apparently on a lot of mass lists for all of my phone calls during the health care bill), I replied back with “Please reinstate Glass-Steagall.” Hell, there were even attempts at the latter, and look where we are.

      June 8th is the Iowa primary. I’d be happy if EVERY senator and congressional rep had to defend his/her seat this year – well, only if they had to do it with no $.

      In response to another comment. See in context »
  16. collapse expand

    I never had any illusions about a reform bill putting real teeth into financial reform getting passed. Not in this Senate. Not with these Democrats. But 33-61 is staggering. You’d think there’d be a few more Democratic Senators who’d want to vote Yea for show, if nothing else, secure in the knowledge that the amendment would never pass.

    But they don’t even care enough to make a show of it. Of course, it’s not just the Senate at fault. How indifferent to real financial reform do you have to be, as the Obama administration, to wait a year and a half after the banks almost brought civilization as we know it to an end and raw anger at Wall Street was fresh in peoples’ minds, to gget around to putting financial reform on the front burner, after you’ve burned your political capital on some amorphous POS health care bill that no one likes, either on the right OR the left?

    If the Obama administration’s choice of lieutenants in Geithner, Summers, Rubin et al. didn’t tell people how unconcerned with actually reforming Wall Street they were, (as opposed to signing something labeled Financial Reform, a la Health Care Reform) their timetable speaks volumes.

    • collapse expand

      They ARE making a show of it — for their Wall Street puppetmasters.

      Also, if the vote had been close, voters could target their anger at specific senators. As it is, their anger dissolves into hopelessness and apathy.

      That’s my take, anyway.

      In response to another comment. See in context »
  17. collapse expand

    Ah…good to see Mary Landrieu voted nay on this. Just another reason to not vote for her when it’s reelection time.

  18. collapse expand

    Maybe we’re at the point now that we should give up–and face up to the fact that the leadership structure in this country is implacably, irreversibly and forever opposed to the interests of working Americans. Once we accept this, we can begin to do something about it, even if it’s only joining some sort of militia.

  19. collapse expand

    I’m surprised that people still believe in Democrats and Republicans. I see them merging into a single Democrat-Republican party in the near future (as they once were in the past) vying against an Independent-Green-Tea party. The basic division here would be sellouts vs. principled folks, with the particular principles espoused being of far less importance than the mere fact that they hold any at all. The current system has proven absolutely spineless and futile in the face of financial, environmental, energy, transportation, and every other kind of corruption.

  20. collapse expand

    Nice post. Here’s a gnarly chart that puts the sweep of global banking in context.


  21. collapse expand

    RE:In general I got the sense that many of the members on both sides of the aisle were genuinely freaked out by the snowballing corruption on Wall Street

    Is the senate freaked out by its own corruption…?

    Let’s not forget, that Dodd, the most corrupt senator among the 100 corrupt senators….is the front man for financial reform…..which is probably being written by a couple of 23 year old GS lawyers…..

  22. collapse expand

    Al Franken has an amendment that’s worth following too, changing the way credit ratings agencies operate – they wouldn’t be able to be paid (bribed) by debt issuers for AAA ratings anymore, an agency would handle matching up issuers and raters. Says something about the Senate when a former comedian is trying to show them the light…

  23. collapse expand

    I am surprised that I don’t really see anyone talking about if this vote may have played a role in the massive plunge on Wall Street earlier on Thursday. I mean, if one of the possible reasons can be that a guy accidentally entered a “b” instead of an “m”, I don’t see why this should be left out of the mix. Anyone think this vote could have played into Thursdays plunge?

  24. collapse expand

    Shelby was the only Republican to vote against the original repeal of Glass-Steagall. I haven’t followed what he’s been doing on the reform bill but, in a weird way, his vote to break up the banks is consistent with his past voting record. I’m not saying that absolves everything else, just saying he never wanted banking restrictions lifted in the first place.

  25. collapse expand

    Don’t add to the doom and gloom. Let’s keep up the fight.

    I realize the failure of reform enables you to write even more caustic pieces but please let’s see if we can’t see another version of Kaufman Brown come up next week in the Senate.

    • collapse expand

      Let’s keep up the fight.

      What fight? Blog-replying isn’t a fight, it’s a hobby, like collecting Pogs.

      Taibbi’s posts are inspirational, but the doom and gloom will continue until a real and valid alternative party emerges.

      Personally, I’d like to see Taibbi continue to push for drafting Liz Warren for president. He should mention that in passing in every post, maybe as just a sig.

      Someone else, however, needs to organize a PAC, too, that type of stuff, and start the process of funding. Taibbi can’t do everything all by himself while everyone else sits idly by, “keeping up the fight” by typing encouraging words to Matt Taibbi and assuming he’s secretly from Krypton and will save us all.

      In response to another comment. See in context »
      • collapse expand

        Mr. Saeger,
        Sometimes predicting and expecting defeat leads to defeat. If there is a vast uniformity of opinion out there that we are doomed to corruption and plutocracy, it will become a self-fulfilling prophesy.

        Matt is not uninfluential, as his vampire squid piece shows. However I think that he may be caught between a more activist journalist stance and being someone who gets kicks out of standing by and watching the car wreck. Right now, while keeping a careful eye on the facts, I think it is warranted for him to get more activist.

        Yes, Liz Warren for president sounds like a good plan. I’m in.

        In response to another comment. See in context »
  26. collapse expand

    There are a couple of ways to look at what happened, none (that I can see) are very uplifting:
    “[Senator] collapses into his chair and admits total defeat. He’s been played masterfully and he knows it. [Senator] then makes a decision that would bring a smile to [lobbyist] if he were here to witness it for it signals a successful assimilation of the psyops.”
    “[T]he point is, the guy who destroys this economy because it’s ‘the right thing to do’ will have to flee for his life, and whatever president or political party was in power when that decision was made will be out of power for the next 200 years. That’s why Washington panicked and passed ‘the bailout,’ they didn’t want to be the fools whom all the Ponzi victims blame for tanking the Ponzi scheme, so they broke the glass and pumped up a newer, bigger Ponzi scheme.” http://bit.ly/clsTC6

  27. collapse expand

    Most people grudgingly accepted the necessity of bailing out the banks but they also assumed severe and extensive reforms would immediately follow, along with civil and criminal prosecutions.

    Banksters may celebrate their astonishing success to thwart efforts curtailing their wanton freebooting without realizing the price they’ve paid. Through arrogance and avarice they’ve effectively ensured the end of Too Big To Fail.

    There will never be another government intervention into business or industry for any reason, at any consequence. Even wholly purchased lawmakers will fear the wrath of Tea Partiers, whose determination and persevering relentlessness define everything that is lacking in progressive circles.

    So banksters, tone-deaf to the changed political environment will likely be embolden to commit further excesses that again threaten the economy but next time the chute won’t open and the country will suffer even more.

    That is, of course, assuming that we have dodged the bullet this time — not a completely sure thing.

  28. collapse expand

    Another way of looking at the Too Big To Fail thing, though, is that it may have encouraged smaller banks to grow to the size that qualifies for a bailout. Gretchen Morgenson wrote about this in the NYT a few weeks ago. http://www.nytimes.com/2010/04/25/business/economy/25gret.html?scp=2&sq=too+big+to+fail&st=nyt
    Of course, that’s not to say there’s no way of dealing with Too Big To Fail, and now that Brown-Kaufman is dead the Senate will say “we considered it” even though they considered only one–flawed–possible solution.

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