The Latest from the Prospect
 ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌


 

View this email in your browser
<[link removed]>

**MARCH 15, 2023**

Kuttner on TAP

****

****

****

****

****

****

****

**** Elizabeth Warren's Moment
(Again)

Nobody understands or explains the corruption of the financial system
better than the Massachusetts senator.

Elizabeth Warren first came to national prominence in 2008, the last
time the brew of corporate and regulatory corruption took down the
financial system and crashed the economy. Today's crisis is not as
severe, but the dynamics are identical.

The current banking mess is an echo of 2008 because it blends the
speculation of reckless bankers with the corruption of legislators and
regulators. In 2018, Congress joined with President Trump to weaken a
core provision of the Dodd-Frank Act that Warren had worked to make as
tough as possible.

The law was changed to raise the threshold for much tougher bank
regulation from $50 billion to $250 billion. It was fast-growing outfits
like Silicon Valley Bank that lobbied for the change. Their executives
equated larger size with bigger profits, salaries, and bonuses. They
took risks they couldn't handle. These ultimately crashed the banks
and risked crashing the system.

In a prophetic Senate floor speech on March 8, 2018, opposing the bill,
Warren explained the perversity of the measure. I don't have space to
quote it all, but you should read it
<[link removed]>.

In part she said, in inimitable Warren fashion:

This is nuts. These are banks that taxpayers bailed out ten years ago.
They cheat consumers, cheat communities, cheat markets, and endanger our
national security-and still Republicans and Democrats are joining
together to loosen oversight ... So what's this all about? You won't
hear this coming from the supporters of this bill, but it's the
truth-it's about letting these banks snap up smaller banks,
consolidate the banking industry, goose banking profits, and expand
executive bonuses.

Warren, along with co-sponsor Katie Porter in the House, has now
introduced legislation
<[link removed]>
to repeal the 2018 loophole. And this brings up the other unfortunate
echo of 2008: The roots of that major financial collapse, like this
smaller one, were all too bipartisan.

It was the Clinton administration, far more than either of the Bush
administrations, that deregulated finance, allowing bankers and
investment bankers to create the toxic exploding securities that took
down the economy and required massive bailouts. The alums of that era,
like Larry Summers and several protégés of Robert Rubin, continued to
exercise their malevolent influence in the Obama presidency.

We Can't Do This Without You
<[link removed]>

Then as now, the Democratic Party was really two parties when it came to
the regulation of finance-the Warren wing and the Summers wing. The
2018 loophole laid bare the schisms in the party, which persist.

Seventeen Democrats, including four on the Senate Banking Committee,
joined Trump and the Republicans in voting for the offending 2018 bill.
The AFL-CIO president, the late Richard Trumka, was so appalled by the
Democrats' defection the he wrote each of the offending senators a
personal letter calling them out and threatening to withhold labor
support in their next campaign.

He wrote, in part:

Dear Senator __

I am extremely disappointed in your vote for the bank deregulation bill
that would wipe out post-crisis controls on ... 25 of the 38 largest US
banks. Banks this size helped cause the 2008 financial crisis, and they
received almost $50 billion in bailout money ... Your support for this
bill will make re-electing you far more difficult.

Several of these Democrats are still in office, including Sens. Bennet,
Carper, Coons, Hassan, Kaine, King, Manchin, Peters, Shaheen, Stabenow,
Tester, and Warner. Others have become bank lobbyists.

Even after the clear evidence of the bill's toxic effects, not a
single Democrat who voted for the measure in 2018 is sponsoring
Warren's measure to repeal it.

Warren has also called out Fed Chairman Jay Powell, who used the
discretionary authority that the 2018 law granted him to weaken bank
supervision even further. She urged President Biden not to reappoint
Powell as chair, and Biden's decision to give Powell another term was
one of his bigger blunders.

Today, the Democrats remain split down the middle between progressives
and toadies for the banking industry. Barney Frank, whose name is on the
reformist Dodd-Frank Act, has not only become a paid apologist for the
bankers. He has been all over the media, defending the 2018 legislation.
He was also a board member of the now-failed Signature Bank. In 2022
alone, his seventh year on the board, Frank received cash compensation
of $121,750 and stock awards of $180,182
<[link removed]>.


It's a blessing that Elizabeth Warren is there, and a curse that her
warnings are so often honored in the breach. As the Bible reminds us, a
prophet is not without honor save in her own country.

~ ROBERT KUTTNER

To receive this newsletter directly in your inbox, click here to
subscribe.  <[link removed]>

Follow Robert Kuttner on Twitter <[link removed]>

[link removed]

Bank Crisis Reveals Numerous Federal Reserve Failures
<[link removed]>
Bad financial supervision, a panicky response, and now the Fed has
created a trigger policy for more inflation. BY DAVID DAYEN

The Case for a Banking Public Option
<[link removed]>
Every individual and business should get the same Federal Reserve
account benefits that banks enjoy. BY RYAN COOPER

Behind the Venture Capitalist Bailout
<[link removed]>
Financial expert Daniel Davies explains why Silicon Valley Bank
imploded. BY LUKE GOLDSTEIN

The Education Myth
<[link removed]>
Professor Jon Shelton explains why education doesn't fix inequality.
BY PROSPECT STAFF

 

[link removed]

Click to Share this Newsletter

[link removed]


 

[link removed]


 

[link removed]


 

[link removed]


 

[link removed]

YOUR TAX DEDUCTIBLE DONATION SUPPORTS INDEPENDENT JOURNALISM
<[link removed]>

The American Prospect, Inc., 1225 I Street NW, Suite 600, Washington, DC xxxxxx, United States
Copyright (c) 2023 The American Prospect. All rights reserved.

To opt out of American Prospect membership messaging, click here
<[link removed]>.

To manage your newsletter preferences, click here
<[link removed]>.

To unsubscribe from all American Prospect emails, including newsletters,
click here
<[link removed]>.