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April 3, 2013

Democrats Are Undermining Wall Street Reform, Too

“Many of the laws that Congress passed to rein in big banks in the wake of the 2007 financial meltdown have yet to go into effect, but lawmakers are already working to dismantle them. And it’s not a partisan thing either.

“A group of 21 House lawmakers—including eight Democrats—is pushing seven separate bills that would dramatically scale back financial reform. The proposed laws, which are scheduled to come before the House financial-services committee for consideration in mid-April, come straight on the heels of a major Senate investigation that revealed that JP Morgan Chase had lost $6 billion dollars by cooking its books and defying regulators—who themselves fell asleep on the job. Why the move to gut Wall Street reform so soon? Financial-reform advocates say Democrats might be supporting deregulation because of a well-intentioned misunderstanding of the laws, which lobbyists promise are consumer-friendly. But, reformers add, it could also have something to do with Wall Street money.

“”Reformers’ main complaint is that it’s too early to tweak Dodd-Frank. Although the massive financial-reform law passed more than two years ago, all of its provisions must go to regulatory agencies to be crafted into rules before they have any effect in the real world. Because of heavy industry lobbying to weaken or kill the regulations, two-thirds of the 400-odd rules are still not finalized. And yet members of Congress, including many Democrats, are already piling on top of Wall Street’s attacks with ones of their own.

“Yet another Democratic bill would allow big multinational US banks to get out of US regulations by operating through their international arms. Current Dodd-Frank provisions allow foreign banks to be exempt from US rules if their host country’s rules are comparable. The Swap Jurisdiction Certainty Act, whose sponsors include Reps. John Carney (D-Del.) and David Scott (D-Ga.), sets up the presumption that foreign regs are just as strong as US rules, and puts the burden of proving otherwise on the CFTC and the Securities and Exchange Commission (SEC), another financial regulatory agency. The regulators would have to draft a report for Congress on the thinking behind their decisions, and draw up identical rules, making it harder for them to regulate, says Dennis Kelleher of the financial-reform advocacy group Better Markets.”

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Read full Mother Jones article here

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