Within one week Republicans are going to grab the national spotlight on two huge issues that should be the realm of the party who stands up for the little guy. That party used to be the Democratic party. How can they let this happen?
On Friday, at the CPAC convention, Federal Reserve Bank of Dallas President Richard Fisher is going to call for breaking up the big banks in the wake of a failed Dodd-Frank bill.
This is mind blowing. First a Republican, Rand Paul, filibusters to get answers about the targeted killing program and now at CPAC, a speech calling for breaking up the TBTF banks. Where are the Democrats?? The last thing we heard from the party was that the executives can’t be held criminally liable, via Eric Holder and Lanny Breuer.
In advance of his speech on Friday to the Conservative Political Action Conference, Federal Reserve Bank of Dallas President Richard Fisher writes with Harvey Rosenblum about the failure of the Dodd-Frank financial reform law to adequately address financial institutions that are “too big to fail.”
“Third, we recommend that the largest financial holding companies be restructured so that every one of their corporate entities is subject to a speedy bankruptcy process, and in the case of banking entities themselves, that they be of a size that is ‘too small to save.’”
Oh, and they’ve come up with a really good meme too. They want to make changes that lead to banks that are “too small to save”. TSTS.
Last week in the Wall Street Journal, an Op-ed by Richard Fisher and Harvey Rosenblum (Executive Vice President and Director of Research Federal Reserve Bank of Dallas):
Fisher and Rosenblum: How to Shrink the ‘Too-Big-to-Fail’ Banks
Dodd-Frank isn’t working. Time for a better, simpler approach to reducing risk. Call it ‘too small to save.’
It also emboldens a sense of immunity from the law. As Attorney General Eric Holder admitted to the Senate on March 6, when banks are considered too big to fail it is “difficult to prosecute them . . . if we do bring a criminal charge, it will have a negative impact on the national economy.”
This is patently unfair. It makes for an uneven playing field, tilted to the advantage of Wall Street against Main Street, and it places the financial system and the economy in constant jeopardy. It also undermines citizens’ faith in the rule of law and representative democracy.
The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act was a well-intentioned response to the problem. Its stated promise—to end “too big to fail”—rings hollow. With a law that runs 849 pages and more than 9,000 pages of regulations written so far to implement it,
Dodd-Frank is long on process and complexity but short on results. Regulators cannot enforce rules that aren’t easily understood.
The return of marketplace discipline and effective due diligence of banking behemoths is long overdue. We offer a modest proposal to level the playing field:
Those are a few excerpts, but it is an excellent Op-ed and well worth reading their proposal in full.
It looks like Fisher has a history with the Democratic party, but lately he has been opposing Ben Bernanke’s policies and now he’s denouncing the Dodd-Frank bill (rightly so). And he is taking this proposition to CPAC. Why?
I’m shocked that the Democrats are leaving these huge vacuums on issues that are very important to the American people and that will, no doubt, be wildly popular. But I am not surprised that Republicans would start to look for ways to fill those vacuums. Just the other day my fiance and I were talking about how if they had half a brain, this is exactly what they would do because the prize is just sitting there for the taking. These are politicians, after all, and they fear the extinction of their party. Popular issues are just sitting there waiting. And we damned well know that a little hypocrisy never bothered them a bit. So what’s next? Will they do a complete turnaround on Social Security and Medicare right after the president gets his Grand Bargain and the Democrats dutifully provide the votes to cut it?
This is political suicide. It’s political malpractice.
They really need to get on this train and quickly. It would be a big mistake to remain silent as they did during the Rand Paul filibuster while people from across the political spectrum supported his stance on an issue in a very public way.
Hat tip to David Dayen.
Photo Courtesy of Wikimedia Commons