The Crapo Dodd-Frank Reform Bill

From Marshall Auerback at Naked Capitalism:

As if to maximize the possibility of another major financial crisis, the Trump administration and the GOP have recently been busy undercutting the limited safeguards established a decade ago via Dodd-Frank. The latest example of this stealth attack on Wall Street reform is the Economic Growth, Regulatory Relief, and Consumer Protection Act, appropriately sponsored by Republican Senator Mike Crapo of Idaho, chairman of the Senate Banking Committee…

[T]he proposed changes introduced in the Crapo bill (notably the increase in the asset size from $50 billion to $250 billion of those banks that are considered “systemically important” and therefore subject to greater oversight and tighter rules)…

[T]he increased asset threshold does exempt the U.S. bank holding companies of systemically significant foreign banks: Deutsche Bank, UBS and Credit Suisse, all of whom were implicated in multiple violations of both American and international banking laws in the aftermath of the 2008 crisis.

[T]he increase “removes the most severe mandate for 25 of the 38 largest banks.”

From Sen. Sherrod Brown:

Why should we have to roll back rules for the largest banks in Switzerland in order to help out community banks or credit unions in Ohio?..

Washington is suffering from collective amnesia. Thankfully, the IMF – an agency of international financial experts – has done us a favor to help jog memories.

They’ve catalogued 300 years of history of bank deregulation efforts all across the globe. You know what they found? We deregulate, the economy explodes, we put in protections, the economy gets better, and we deregulate again. Wash, rinse, repeat…

The watchdogs who understand these markets are trying to warn us.

Paul Volcker has cautioned us about this bill. He was a Fed Chair for Presidents Carter and Reagan. So has Sheila Bair, who helped us put protections in place after the crisis. Sheila Bair is a Republican warning us about this bill.

Tom Hoenig, the current Vice Chair at the FDIC – selected for that position by Republicans – has told us this bill is harmful. Barney Frank has said he’d vote “no” if he were in the Senate. Former Fed Governor Dan Tarullo has outlined a long series of concerns.

Sarah Bloom Raskin, Antonio Weiss, Gary Gensler, law professors, fair housing advocates, big bank experts, people who provide legal services across this country and civil rights groups are all telling us we cannot go down this path again.

We know what happens next. It is hubris to think we can gut the rules on these banks again, but avoid the next crisis.

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