President Obama is pushing hard for financial reform except for where this crisis started, the Fed. Please consider Bank Bill Attracts Populist Amendments

Senate lawmakers in both parties are planning populist attacks on Wall Street by proposing a flurry of amendments to pending financial-markets legislation in coming weeks. Such amendments are normally batted back easily, but the anti-bank fervor in Washington has made it difficult for the financial industry to find supporters.

Sens. Ted Kaufman (D., Del.) and Sherrod Brown (D., Ohio) plan an amendment that would prohibit any bank from ever holding more than 10% of the country’s deposits and put strict caps on the debt banks issue.

Sens. Maria Cantwell (D., Wash.) and John McCain (R., Ariz.) have worked on an amendment that would force commercial banks to separate from investment banks—revisiting the Glass-Steagall Act of the 1930s.

Sens. Jeff Merkley (D., Ore.) and Carl Levin (D., Mich.) plan a provision to forbid banks with federally insured deposits from certain trading activities.

Obama administration officials have declined to weigh in on any specific amendments, with one exception: a move by Sen. Bernie Sanders (I., Vt.) to give the government more power to audit certain operations at the Federal Reserve. Fed and administration officials have signaled they would fight to stop it at all costs.

Mr. Sanders has more than a dozen co-sponsors. “I can’t predict, but I think we’ve got a good chance to pass it,” Mr. Sanders said.

Put Obama to the Test

In spite of all Obama’s flowery rhetoric about financial reform, the only time the administration actually chimed in was to block a badly needed piece of financial regulation to audit the Fed, reform the administration wants to stop “at all costs“.

I say put Obama to the test. Pass the Sanders proposal, or better yet the Grayson/Ron Paul legislation that passed the House. Let’s see if “all stops” means Obama will veto this legislation.

Pulling Out The Stops

In a last fury of politicking, the Three Fed presidents Lobbied Congress To Kill Fed Oversight Proposals

[Federal Reserve Bank of Kansas City President Thomas Hoenig was] on Capitol Hill with three other regional Fed presidents to lobby lawmakers on aspects of the financial overhaul legislation affecting the Fed and its 12 regional banks. Their primary focus was on maintaining the Fed’s oversight over thousands of state-chartered banks and bank holding companies that a Senate measure would transfer to the Federal Deposit Insurance Corp., but lawmakers leaving the meeting said they discussed a range of issues.

Sen. John Ensign (R., Nev.) told reporters that there was “broad agreement” between the regional Fed presidents that the current Senate bill would not end the problem of “too big to fail” institutions. It was not immediately clear if the Fed officials were remarking on a formal agreement reached Wednesday between Sens. Christopher Dodd (D., Conn.) and Richard Shelby (R., Ala.), or previous iterations of the legislation.

One of the biggest issues the Fed is facing is a growing sentiment on Capitol Hill that the central bank is too opaque and needs to be more open to scrutiny. Sen. Bernie Sanders (I., Vt.) is sponsoring an amendment that would enhance the government’s ability to audit the Fed, a measure Fed officials have repeatedly warned against.

Ensign said Sen. Jim Bunning (R., Ky.) got in a “spirited discussion” with the four regional presidents over the issue of Fed transparency and that there was some acknowledgement by the officials that the central bank needs to be more transparent. Ensign said he “most likely” plans to support to the Sanders amendment, while Sen. Sam Brownback (R., Kan.) said he think it is “prudent, common sense idea.

New Amendments Still Being Written

Bloomberg reports Fed Would Disclose Borrowers Under Planned Senate Amendment

May 6 (Bloomberg)

Senators Byron Dorgan and Charles Grassley plan to propose an amendment to financial reform legislation requiring the Federal Reserve to disclose the terms and recipients of its loans during the credit crisis.

“The Fed has gone beyond what was viewed as its historical authority in the last two and a half years without any transparency or accountability,” Grassley, an Iowa Republican, said yesterday in a press release. “Our amendment changes that by making the Fed’s emergency loan authority subject to the light of day.”

The central bank loaned to dozens of banks, U.S. corporations and bond dealers during the financial crisis through programs designed to provide liquidity backstops. The Fed, by withholding the names of borrowers and the type of collateral they offered, has raised questions about whether the central bank kept insolvent firms afloat.

The problem with that amendment is it only investigates emergency moves. We need a complete ongoing audit of ALL Fed actions.

What You Can Do

Please phone and fax your senators and tell them you want the Fed audited fully, and you do NOT want the watered down Dodd bill or the or the Corker-Merkley provision.

Tell them you do support the Sanders amendment and the Grayson/Ron Paul bill exactly as passed by the house.

Here is a directory sorted by state of all the Senators of the 111th Congress.

You can also look up the phone numbers in the Online Directory For The 111th Congress but the first link may be easier to use for just senators.

Send A Message

Call, Email, and Fax Your Senators Now!
If you did so the other day when I asked, please do so again.

It cannot hurt.

Congressional Insider Trading

If you are looking for the ultimate in hypocrisy please consider Congress Refuses to Outlaw Insider Trading For Lawmakers

Even a cynic can find Washington’s hypocrisy shocking at times. The Wall Street Journal reports today a House bill that would force lawmakers to make greater disclosures on financial transactions and disallow them from trading on nonpublic information is going nowhere fast.

That’s right. Members of Congress are currently allowed to profit on insider trading!

The bill, which has been languishing in the House for four years, would require elected officials “to make their financial transactions public within 90 days of a purchase or sale” and “prohibit lawmakers from trading in financial markets based on nonpublic information they learn on the job,” the WSJ reports.

It seems they’re above the transparency they’ve been calling for on Wall Street.

Congressional Hypocrisy Discussion

Aaron Task and Henry Blodget discuss insider trading and short selling of stocks by Congress in the above video. Please give it a play.

Mike “Mish” Shedlock
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