While Everyone Was Obsessing Over Comey, Republicans Passed a Bill to Kill
Dodd-Frank
Paul Ryan called it the “crown jewel” of the G.O.P.’s effort to undo financial
regulation.
by Bess Levin,
June 8, 2017 6:33 pm
“Who can’t wait for a repeat of ’08?”
By Ty Wright/Getty Images.
Happy Comey Testimony Day! On Thursday, people all across the country dropped
what they were doing to devote several hours to watch a Senate hearing. Of
course, this was not your typical C-SPAN affair but the first opportunity to
hear from the one and only James Comey, who was fired last month after
allegedly failing to comply with Donald Trump's Valentine’s Day request to “let
this go”—this being Comey’s investigation into former national security adviser
Mike Flynn. While the event sadly did not include a dramatic reading of Comey’s
bodice-ripping prepared remarks, it was nevertheless Must See TV, of the sort
that compelled bars across D.C. to open early for viewing parties, featuring
drink specials like the “covfefe cocktail” and “Drop the Bomb.” Which made it a
perfect time for House Republicans to pass a bill that would gut financial
regulation.
Dubbed the Financial Choice Act (Republicans love choice!), the bill, authored
by Representative Jeb Hensarling, would relieve banks of certain regulatory
requirements imposed on them by Dodd-Frank, provided they meet certain capital
requirements. It would subject banks to stress tests every two years instead of
every year; scrap the Volcker rule, which restricts banks from making risky
bets with taxpayer-backed deposits; jettison the fiduciary rule, which is
intended to protect retirees from getting ripped off by their brokers; and gut
the Consumer Financial Protection Bureau, which Hensarling has previously
described as dictatorial. People like House Speaker Paul Ryan—whose life-long
dreams include taking away health care from millions—say the F.C.A. is great,
calling it the “crown jewel” of the Republican effort to send Dodd-Frank home
in a body bag. Others, not so much. On Wednesday, Senator Sherrod Brown said
Hensarling’s bill would “put taxpayers on the hook for Wall Street’s greed and
recklessness.”
However one comes down on the merits of the bill, the Choice Act stands almost
no chance of becoming a law in its current form. “We . . . see no path forward
for this legislation in the Senate,” Cownen & Co. analyst Jaret Seiberg wrote
in a note to clients ahead of the House vote, seeing as there’s no way Senate
Democrats would go for it. Senate Banking Committee Chairman Mike Crapo has
already said he plans to write his own legislation, for which he intends to
seek input from Democratic colleagues. As long as Democrats retain the power to
filibuster legislation in the Senate, Ryan and Hensarling may just have to let
this particular dream die—for now.
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Speaking of Comey . . .
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Markets apparently loved Comey’s hearing, with the Dow closing the day at
21,182.53 and the S&P 500 finishing up at 2,433.79.
There’s two takeaways here:
(1) It is astounding the degree to which investors have normalized a president
who, according to Comey‘s prepared remarks, invited him to what was supposed to
be a group dinner but which turned out to be an exceedingly uncomfortable
one-on-one; seemed to want him to beg for his job; told Comey he never had any
involvement with “hookers” in Russia (he always assumed he was being surveilled
there, he allegedly said) and pressured him to drop a F.B.I. investigation. As
Paul Ryan has explained, Trump is “just new at this.”
(2) Wall Street doesn’t care about anything except tax cuts. As Jefferies money
market economist Thomas Simons told Reuters, “the market is taking less of an
alarmist review of this situation because there is no smoking gun here. So it's
not particularly impactful for thinking about . . . Trump’s economic agenda to
go through.” Titus Wealth Management founder Eric Aanes made the point more
bluntly to CNBC: “The only thing that could be an issue is [potential] delays
into tax cuts.”