Why Democrats Can’t be Trusted to Control Wall Street

Who needs Republicans when Wall Street has the Democrats? With the help of congressional Democrats, the Street is rolling back financial reforms enacted after its near meltdown.

According to the New York Times, a bill that’s already moved through the House Financial Services Committee, allowing more of the very kind of derivatives trading (bets on bets) that got the Street into trouble, was drafted by Citigroup — whose recommended language was copied nearly word for word in 70 lines of the 85-line bill.

Where were House Democrats? Right behind it. Rep. Sean Patrick Maloney, Democrat of New York, a major recipient of the Street’s political largesse, co-sponsored it. Most of the Democrats on the Committee, also receiving generous donations from the big banks, voted for it. Rep. Jim Himes, another proponent of the bill and a former banker at Goldman Sachs, now leads the Democrat’s fund-raising effort in the House.

Bob Rubin – co-chair of Goldman before he joined the Clinton White House, and chair of Citigroup’s management committee after he left it – is still influential in the Party, and his protégés are all over the Obama administration. I like Bob personally but I battled his Street-centric views the whole time I served, and soon after I left the administration he persuaded Clinton to support a repeal of the Glass-Steagall Act.

Jack Lew, Obama’s current Treasury Secretary, was chief operating officer of Citigroup’s Alternative Investments unit, a proprietary trading group, from 2006 to 2008, before he joined the Obama administration. Peter Orszag, Obama’s Director of the Office of Management and Budget, left the Obama Administration to become Citigroup’s vice chairman of corporate and investment banking, and chairman of the financial strategy and solutions group.

All these men are honorable. None has broken any law. But they and their ilk in congress – the Democrats who are now rolling back Dodd-Frank – don’t seem to appreciate the extent to which Wall Street has harmed, and continues to harm, America.

It’s not entirely coincidental that the Obama Administration never put tough conditions on banks receiving bailout money, never prosecuted a single top Wall Street executive for the excesses that led to the near meltdown, and still refuses to support a tiny tax on financial transactions that would bring in tens of billions of dollars as well as discourage program trading.

Democrats can’t be trusted to control Wall Street. If there were ever an issue ripe for a third party, the Street would be it.

This piece is cross-posted from Robert Reich.org with permission.

6 Responses to "Why Democrats Can’t be Trusted to Control Wall Street"

  1. JStC   May 24, 2013 at 12:43 pm

    a third party…that's for sure….in every country

    • Sonny   May 29, 2013 at 7:37 am

      We already have one, but everytime the Tea Party raises its voice, it is ridiculed.

      • lydiardave   May 30, 2013 at 1:10 pm

        Because nobody believes there is any difference between the Tea Party and the conservative wing of the Republican party. If we are wrong, please tell us why.

  2. JPBulkoMBA   May 28, 2013 at 6:13 am

    We come to praise the Congressional Democrats, not bury them, for they are all honorable men (and women) …. [with thanks & apologies to William Shakespeare] … Apparently, more than "honor" is required to represent the interests of the people of the United States, not just the financiers …

  3. benleet   May 28, 2013 at 5:05 pm

    1/3 of all funding for 2012 Presidential campaign came in amounts greater than $10,000, so what's surprising about lax financial rules? See http://www.opensecrets.org/overview/donordemograp

  4. Dennjs Gibb   May 30, 2013 at 9:19 am

    Holy Crap! I find myself agreeing with Robert Reich! What's next finding value in Paul Krugman? Money will corrupt anyone and everyone it touches, Wall Street is expert at marketing and paying someone off has always been the best marketing tool. Wall Street can not be unregulated they ( I say this as a 40 year Wall Streeter) have shown time and time again a fecklessness that would not be tolerated in any other industry.

    We two things a law that says that no firm can lobby Congress on bills that effect it, and we need to increase the funding for the enforcment divisions of the various regulators.