Since December, Congress has twice passed measures to weaken regulations in the Dodd-Frank financial law that are intended to reduce the risk of another financial meltdown.
MIT Economist Simon Johnson (Photo: Robin Holland)
In the last election cycle, Wall Street banks and financial interests spent over $1.2 billion on lobbying and campaign contributions, according to Americans for Financial Reform. Their spending strategy appears to be working. Just this week, the House passed further legislation that would delay by two years some key provisions of Dodd-Frank. “[Banks] want to be able to do things their way, and that’s very dangerous.” MIT economist Simon Johnson tells Bill.
“‘Here we go again’ — I think that’s exactly the motto, or the bumper sticker for this Congress. It’s crazy, it’s unconscionable, but that is the reality.”
Lawmakers are pinning these provisions to Dodd-Frank onto bigger must-past bills like spending measures that the president doesn’t dare veto.
Bill Moyers: The safeguards that Congress is tearing down, even as we speak, were put in place after the financial disaster of 2008 to prevent another one like it from happening. Why do you think the Republicans are trying to sabotage them?
Simon Johnson: It’s mostly the lobby, specifically a few very large banks that don’t like those restrictions on their activities. They want to be able to take more risk. They’re not worried of course about how that could negatively impact the rest of us, and they’ve persuaded the Republicans to help them in that quest.
Moyers: Are they putting depositors and taxpayers at risk?
Johnson: Yes, absolutely. That’s the core of the reforms: Try and make sure — and it’s hard — that part of the financial system is safe; that depositors are safe; that the taxpayers, as the ultimate backstop for deposits, are safe; and of course, try and make sure that you don’t have a huge crisis that affects the broader economy with millions of people being thrown out of work. That’s the goal. And JPMorgan, Chase, Citigroup, Bank of America and Wells Fargo don’t like that. They want to be able to do things their way, and that’s very dangerous.
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