Better Markets is releasing a report next week entitled “Setting the Record Straight on Cost Benefit Analysis and Financial Reform at the SEC.” Sounds pretty boring, but it’s overwhelmingly important because it exposes Wall Street’s latest lethal attack on financial reform, which has already had significant success and has put the country at grave risk of another financial crisis and more taxpayer bailouts.
While Wall Street, the financial industry and their allies deny their role in the financial collapse and the economic crisis as well as obscure and conceal its depth and breadth, it is essential to recall just how close we came to a complete collapse of the financial system and a second Great Depression. It is also critical to get past Wall Street’s Orwellian misinformation campaign that has refocused the entire public debate away from the crisis and their role in creating it to the new financial reform law and the rules being put in place to prevent another crisis. Wall Street and its allies act as if the law was passed for no reason at all and that they are being regulated and burdened for some mysterious, undeserved reason.
Because of that, the report begins by reviewing how close the country came to a total collapse of the financial system and a second Great Depression, which didn’t begin with the bankruptcy of Lehman Brothers in September of 2008 and end in the Fall of 2008. In fact, the world was slipping into a depression in the first quarter of 2009, which caused the US government to announce – for the first time in the entire history of the country — on February 23, 2009 that the full faith and credit of the United States would stand behind the entire banking and financial system. That was more than five months after Lehman’s bankruptcy.
That and so much more is what Wall Street’s unregulated recklessness and greed caused and continues to cause, as evidenced by the significant continuing effects of the crisis. The US government spent, lent, guaranteed, pledged, assumed or otherwise used trillions of dollars to save Wall Street from itself and prevent the crisis from being even worse.
But, that hasn’t stopped Wall Street from doing everything it can to kill, gut or weaken financial reform. They are, after all, in the profit protection racket and aren’t interested in protecting taxpayers or the treasury. In fact, Wall Street benefits enormously from getting the upside of their bets and sticking the taxpayers with the bill when the bets go wrong, as evidenced by the taxpayers saving them all from bankruptcy in 2008-2009. While they may deny it, JP Morgan Chase, Goldman Sachs, Morgan Stanley, Merrill Lynch, Bank of America, AIG, Citigroup and all the other too big to fail financial institutions would have all collapsed into bankruptcy in 2008 but for the actions of the US government and taxpayer dollars.
That is why passing a financial reform law was so important. However, having failed to prevent the passage of comprehensive financial reform, the financial industry just redoubled its efforts to make sure the law is never implemented as intended. Their latest weapon to kill or weaken financial reform is to claim that every rule and regulation passed to implement the Dodd-Frank Act must be subjected to exhaustive “cost benefit analysis.”
“Cost benefit analysis” is a seductively innocent sounding phrase. Indeed, it’s an activity that sounds as sensible and appealing as Motherhood and apple pie. After all, figuring out and weighing the costs and benefits of doing something appears on the surface to be reasonable. However, in the context of regulation generally and financial regulation in particular, that thinking is simply wrong and it will likely kill financial reform, as Wall Street has intended to do all along.
This is the battle that our report details. It also exposes Wall Street’s latest attack to be as baseless as its prior attempts to kill reform. While the full Report won’t be released until next week, you can read the Introduction and Highlights of the Report below.