Fact Checking the ‘Too-Big-to-Fail’ FinReg Attack Ad
I don’t watch much television, and therefore have missed most of the attack ads on financial regulatory reform. But, with Sen. Chris Dodd’s (D-Conn.) bill finally on the Senate floor for formal debate — and the open amendment process starting today — the back-and-forth will only heat up. When Sen. Jim DeMint (R-S.C.) tweeted “Let’s stop ‘too big to fail’” with a link to an ad this morning, I thought I would check it out.
Compelling. But let’s fact check, line by line.
**When our economy crashed, small investors were left behind. Congress bailed out the Wall Street banks that caused the collapse with your money.
So far, so good. When the economy crashed, the government did prop up the Wall Street banks with cash infusions and bailouts via Congress and the Federal Reserve. By “small investors,” I presume the ad means “small businesses,” which certainly have not benefited much from Washington’s efforts. Either way, yes, the little guy was on the hook for the big fishes’ losses.
Now Congress is considering so-called “financial reform” that gives the government unlimited executive bailout authority – unlimited bailouts for big banks, paid for by you and me.
I’m not sure what “unlimited executive bailout authority” means — though it is a nice, menacing turn of phrase. Dodd’s bill does not at all provide the executive branch with the authority to bail out firms willy-nilly; the whole point of the bill is to prevent the government from having to rescue the financial sector again by forcibly shutting down and breaking up dangerous firms, and creating a slew of provisions to stop them from becoming dangerous in the first place.
The Republican counterproposal does precisely the same thing — but actually puts taxpayers on the hook first. The Dodd bill forces banks to create a $50 billion fund for the government to use in the process of “resolving” — that is, liquidating — a failing or dangerous firm. The Republican proposal makes the government liquidate the firm first and then recoup any losses.
**Who supports this phony reform? The big banks. The CEO of Goldman Sachs, a bank under investigation, says, quote, “The biggest beneficiary of reform is Wall Street itself.” And after receiving billions in taxpayer bailouts, Citigroup’s CEO says, quote, “You can count on Citigroup to support these efforts.” **
No, financial firms do not support the reform bill. Provisions such as the ban on proprietary trading and regulation of derivatives will make their businesses less lucrative. Thus, they have spent millions of dollars lobbying against the bill.
And of course Wall Street does not announce its opposition to reform. It would hardly be politic to argue, “We would like to remain unregulated and capable of taking risks that might destroy the world economy but will certainly enrich us,” in Congressional testimony.
When big banks line up to support phony reform, it’s like, well, you know…
Accompanying this text is footage of oinking pigs. I guess that this implies pork, or greed, or something. I really have no idea.
And there’s the ad, as brought to you by Consumers for Competitive Choice, an astroturf lobbying firm. For more on them, see TPM’s excellent reporting here.