Congress is captured by mega megacorporations.
...It rolls back key regulations on financial institutions that were put in place with the Dodd Frank financial regulation bill of 2010, which was passed in order to prevent another financial crisis similar to the one of 2008. Critics of the bill have called it the bank lobbyist bill, because as was largely written by them. However, defenders of the bill argue that it is badly needed in order to support community banks which are being hampered by too much regulation.
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DEAN BAKER: Well, a couple of points in that. First off, the idea of calling a bank with $50 billion in assets a community bank is kind of a joke. I mean, this is a very large bank. It’s not the largest, it’s not a JP Morgan. But these are very large banks, $50-250 billion. So PNC here, and you know, the East Coast. American Express falls into this category. There’s a lot of very large banks or financial institutions that fell into this category. They are not at all community banks. So that’s just silly.
...The main part of the law that they changed was that they had to undergo stress tests, I believe was every year... What that means is they just put their assets on a spreadsheet. So they say how many mortgage loans they have, how many car loans, business loans. And then they’re told, they say, assume, you know, they’re given a number by the Federal Reserve Board. Assume 10 percent of those go bad. And then they’ll have an extreme case, assume 15 percent. I’m taking those numbers out of the air. But they’re given numbers, and then they go, OK, how would our books look if that were the case.
That’s a very simple exercise, or at least it should be for any institution that size. So the idea this is some huge regulatory burden is basically utter nonsense. And then you say, why did the banks fight so hard to get that? Well, presumably because they want more risky, to hold more risky assets that might not look very good if they put them up on the spreadsheet. So yes, we should be worried about that, because there is no good reason for them to be fighting against this sort of regulation. It’s not an onerous burden.