[RD] Democrats to Roll Back Dodd-Frank

[BvBPL]

Dodd-Frank was a banking reformed passed in 2010 to prevent the sort of under-securitized lending that lead to the Great Recession. Now, eight years later with the American economy in much better shape, rank and file Democrats are joining with the GOP and Trump’s promise to roll back the industry reforms introduced by Dodd-Frank.

Democratic senators from states like Missouri, North Dakota, West Virginia, Indiana, and Montana are moving to support the bill, support that is essential to the bill passing cloture. Those senators are all up for reelection in states that went for Donald Trump. They are also not from states known for their financial sectors, and represent some of the states most affected by the Great Recession.

Democratic leaders, including Minority Leader Schumer, are theoretically opposed to the roll back, but have done very little whip work to bring the rogue dems in line. More verbal have been Sen. Warren and the progressive wing of the party, but their complaints have largely gone unregistered by those Democratic senators who want to be seen licking the boots of Donald Trump.

In light of the pending roll back of Dodd-Frank, any numbskull who argues that the mainstream of the Democratic party is fighting for the average American deserves the sort of spineless leadership delivered by Schumer and Durbin. It is any wonder that people rolled the dice on the ridiculous farce of a president now in office when the mainstream of the Democratic party is so willing forget the grave errors of the very recent past so readily?

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[onejayhawk]

You can make the case that good press makes bad law. Dodd-Frank is an illustration. It's a good idea taken much too far. It would have bee sufficient to roll back some Clinton administration guidelines designed to make mortgages available to low income people.

J

 

[Lexicus]

You can make the case that good press makes bad law. Dodd-Frank is an illustration. It's a good idea taken much too far. It would have bee sufficient to roll back some Clinton administration guidelines designed to make mortgages available to low income people.

J

"Clinton administration guidelines" designed to make mortgages available to low income people had nothing to do with causing the recession, though this is quite a common racist myth.

It is any wonder that people rolled the dice on the ridiculous farce of a president now in office when the mainstream of the Democratic party is so willing forget the grave errors of the very recent past so readily?

"His leg hurt, was it any wonder he cut it off?"

Weakening Dodd-Frank is something that matters mostly to the media. Dodd-Frank accomplished virtually nothing and would not have prevented the recession had it been in force in the 2000s.

 

[warpus]

You guys need a party for the people on top of the 2 parties you have for the corporations.

 

[Zkribbler]

The Crapo bill was written by Republican Senator Mike Crapo, is supported by the lockstep, spineless Republicans, and has the grudging support of enough Democratic senators to squeeze past the Senate. To characterize this as "Democrats to Roll Back Dodd-Frank" is blatantly dishonest.

The bill purports to help community banks, but like most Republican legislation, this too is a lie. Community banks are not in trouble.

This bill is designed to remove many reporting requirements for big banks, to remove the stress test which big banks had to pass to demonstrate the can survive an economic downturn, and to remove consumer protections.
The big banks will once again be able to engage in hedge-fund-like gambling with their FDIC-insured funds. Heads they win; tails the taxpayers lose.

I hope you folks enjoyed the Great Recession of 2008 because the REPUBLICANS are taking us back to those days.

 

[onejayhawk]

"Clinton administration guidelines" designed to make mortgages available to low income people had nothing to do with causing the recession, though this is quite a common racist myth.

How racist? As the saying goes, poor don't know color.

In any event, it is no myth, nor the recession directly. Just the Fannie Mae/Freddy Mac crisis and the collapse of mortgage based securities.

J

 

[BvBPL]

Given that the bill would not be passed without the support of Democratic Senators McCaskill, Manchin, Heitkamp, Donnelly, and Tester, among others, I do not believe the title is dishonest.

 

[Lexicus]

To characterize this as "Democrats to Roll Back Dodd-Frank" is blatantly dishonest.

Not really though. Republicans can be expected to support crap like this. Democrats are held to higher standards. There is no point electing any Democrat who acts like a Republican in office.

 

[onejayhawk]

Zkribbler has a point. This is a Republican bill with bipartisan support. His characterization of it as a sop to big banking is about as honest as you calling it a Democrat bill, ie some not very much.

J

 

[Zkribbler]

"Clinton administration guidelines" designed to make mortgages available to low income people had nothing to do with causing the recession, though this is quite a common racist myth.

Interesting. Removing the requirement that borrowers prove they could repay their loans had NOTHING to do with causing the Great Recession? Liar loans were not the problem? The cascading defaults of millions of mortgages "had nothing to do with causing the recession?" Pray tell then, what was the cause, and why am I racist for believing otherwise?

 

[timtofly]

How racist? As the saying goes, poor don't know color.

In any event, it is no myth, nor the recession directly. Just the Fannie Mae/Freddy Mac crisis and the collapse of mortgage based securities.

J

Because most of the manufacturing / slave jobs went over seas?

 

[GoodEnoughForMe]

Interesting. Removing the requirement that borrowers prove they could repay their loans had NOTHING to do with causing the Great Recession? Liar loans were not the problem? The cascading defaults of millions of mortgages "had nothing to do with causing the recession?" Pray tell then, what was the cause, and why am I racist for believing otherwise?

The largest growth in mortgage debt, largest bubble fuelers, largest group of defaulters, everything, were middle and upper class/high credit score buyers and speculators/flippers. Subprime mortgages have higher default rates in general, but they didn't really change during that time. Exorbitant wealthy borrowing did.

 

[Lexicus]

Interesting. Removing the requirement that borrowers prove they could repay their loans had NOTHING to do with causing the Great Recession? Liar loans were not the problem? The cascading defaults of millions of mortgages "had nothing to do with causing the recession?" Pray tell then, what was the cause, and why am I racist for believing otherwise?

Your questions show you are quite confused so it's a good thing you've turned to me to straighten things out. The major cause of the recession was indeed a Clinton-era policy, but it was Bill Clinton's "reinvention of government" rather than any guidelines intended to make mortgages available to low-income households. The idea that making mortgages available to low-income households caused the crisis was simply a way for the right to blame the crisis on black people (note that this dogwhistle association is made by those making this argument, I'm just pointing it out - similar to how ostensibly race-neutral rhetoric on welfare almost always is intended as a dogwhistle reference to black people) while exonerating Wall Street.

Anyway. Your confusion. "Removing the requirement that borrowers prove they could repay their loans" is something that never actually happened. Liars' loans were the problem, but their profusion was not linked to guidelines intended to make mortgages available to low-income households.

Bill Clinton's decision to gut the financial regulatory apparatus (euphemistically termed the "reinvention of government," it reconceptualized regulation as a "service" provided by the government to the "customers," the industries the government was supposed to be overseeing) allowed a thicket of fraudulent mortgage lenders to spring up and do business while ignoring the regulatory requirements. Meanwhile, the largest banks bought up massive tranches of these mortgages to bundle into the famed "mortgage-backed securities," all while intentionally ignoring the underwriting data.

You might ask, why did they ignore the underwriting data? Didn't they know that buying up fraudulent mortgages would surely cause massive losses to the institutions they were supposed to be running?" And that's a good question, but it has an equally good answer: there was a deliberate policy of ignoring the data, because the banks were being run as control frauds.

All control frauds work in roughly the same way: grow massively through the issue or purchase of garbage financial instruments, use compensation structure to turn this growth into lots of money for the bank's employees (but especially its officers and executive), then throw up your hands and blame poor people when the fraud scheme inevitably leads to collapse. Importantly, since you've already been paid your commissions based on the quarterly earnings of the bank before the fraud became apparent, you don't actually care what happens to the bank. All the incentives operate to encourage you to take the money and leave the institution holding the bag. The interests of bankers were diametrically opposed to the interests of banks as corporations.

Empirically speaking, as GEFM has already mentioned, there is no association between increased lending to poor households and the growth of the bubble. All sorts of research has shown this.

The false narrative here is that government encouraging homeownership forced the banks into lending to people who could not repay their loans, causing a crisis that nearly brought the economy down. The reality is that government deregulation allowed criminal bankers to destroy the economy through massive fraud, and that people who took out loans they could not repay were victims of this fraud.

 

[onejayhawk]

Nice, though slanted, summary. It's valid to say that the actual law was on the books since the the 1970s. In return it is valid to say that the intent was to aid low income families purchasing a first home. The effect was to push low margin loans. The rule of unintended consequences.

J

 

[Zkribbler]

[Zkribbler's] characterization of it as a sop to big banking is about as honest as ... some not very much.

Are you inferring that my reference to "big banks" referred to ALL big banks? Let me then clarify: The Crapo bill removes protections for 25 of the top 38 banks...not "all."

 

[onejayhawk]

Then it becomes a matter of definitions. How big is big? Suffice to say not the 14 largest. What does do is relieve a lot of paperwork burden on regional and local banks, such as you will find in the states the Democrat Senators represent.

There are two sides worth looking at. This is a Republican initiated bill, but it has significant benefits to Democratic constituents. That's the definition of bipartisan.

J

 

[Lexicus]

And a nice indication of the fact that when a politician says "bipartisan" in the United States you should check your pockets.

 

[onejayhawk]

And a nice indication of the fact that when a politician says "bipartisan" in the United States you should check your pockets.

That's any politician, in any state, at any time in US history.

J

 

[Commodore]

Dodd-Frank accomplished virtually nothing and would not have prevented the recession had it been in force in the 2000s

While I agree that it wouldn't have prevented the recession, it did get the banks to (at least temporarily) stop engaging in such obviously predatory loan practices that caused the housing market to collapse.

 

[Timsup2nothin]

While I agree that it wouldn't have prevented the recession, it did get the banks to (at least temporarily) stop engaging in such obviously predatory loan practices that caused the housing market to collapse.

That's a theory. Another theory is that those predatory loan practices would not have been effective in the recently collapsed housing market. In many ways the law 'prevented' them from doing something they weren't at the time interested in doing, and now that the market conditions are again becoming favorable for doing those things the Republicans are rolling back the law so they can get back to it.

And yes, @BvBPL has, as usual, put a whopping lie in the thread title. But we expect no less. The surprise is that J didn't immediately swear to it.