Treasury Official Blasts U.S. Chamber for Anti-Reform Campaign
While giving the keynote luncheon address at the Chamber's fourth annual Capital Markets Summit in Washington, D.C., Wolin rebutted numerous claims the chamber makes in a $3 million ad campaign the business group has undertaken against financial service reform.
"It is so puzzling that, despite the urgent and undeniable need for reform, the Chamber of Commerce has launched a $3 million advertising campaign against it," Wolin said. "That campaign is not designed to improve the House and Senate bills. It is designed to defeat them. It is designed to delay reform until the memory of the crisis fades and the political will for change dies out."
The chamber's $3 million campaign is on top of "the $1.4 million per day already being spent on lobbying and campaign contributions by big banks and Wall Street financial firms," Wolin charged, calling it "one of the most expensive special-interest campaigns in history."
"Puzzled" by Opposition to Better Oversight
The fight against financial reform is "shortsighted and misguided," Wolin said. Refuting arguments the business group has made against financial reform legislation that passed the House in December and a bill approved Monday by the Senate Banking Committee, both on party-line votes, Wolin denied that either bill would provide a "permanent bailout fund" for large financial institutions, noting that instead, the bills would give regulators "the tools to shut those firms down" if they were failing, so that the government would not have to bail them out.
The chamber's criticism of provisions in the legislation aimed at bringing oversight and transparency to the derivatives market is also "puzzling," Wolin said. "The opaque, unregulated derivatives market was right at the center of the recent crisis," leading to the massive bailout of American International Group (AIG). The bills in Congress would strike a balance between providing strong regulation of over-the-counter derivative dealers and protecting the ability of end users to manage their risks.
But Wolin saved most of his fire for the chamber's stand against independent consumer protection agencies that would be created by both bills. Seven different federal agencies currently have authority to regulate consumer financial products and services, "But none of them sees consumer financial protection as its priority," he said.
"The special interest opposition is formidable," Wolin said. "But it is misguided. And I am confident that we will succeed."
After Fruitless Talks, Democrats Moved Forward Alone
Indeed, most of the rest of the chamber's one-day conference was devoted to excoriating the financial service regulation bills moving through Congress. At a morning session, Sen. Bob Corker (R-Tenn.), a member of the Senate Banking Committee member, declaimed against the more than 1,300-page bill that passed the committee Monday afternoon in 21 minutes by a 13-10 party vote, with no amendments, after committee Chairman Sen. Christopher Dodd (D-Conn.), ended months of unsuccessful negotiations with Republicans to produce a bipartisan bill.
"This week, we passed out of committee a very, very partisan bill, a bill that took a big left turn," Corker said.
That bill doesn't address problems that led to the financial crisis, primarily poor underwriting standards for loans made to people who had no ability to repay them, Corker said.
Contrary to conciliatory statements made by the Banking Committee's ranking Republican member, Sen. Richard Shelby (R-Ala.), who said the GOP would continue to try to work out compromises on the legislation, Corker was pessimistic that such a compromise would be reached. Fresh off it its victory in passing historic health care reform legislation, the White House is now "emboldened" to push Congress to enact more liberal legislation, he said.
However, Corker predicted it will be difficult to hold all 41 GOP senators together on the issue, due to populist anger at Wall Street that some Republicans will find difficult to resist. Said Corker: "It's going to be far more difficult" to get a more middle-of-the-road legislation at this point."