The Senate Should Debate “Too Big to Fail” On Live Television

Richard Eskow

Now that the ideological defense of Wall Street behavior has collapsed, brought down by the wreckage of deregulation, bankers and lobbyists are pursuing a new strategy: fighting the democratic process itself. They’re suggesting that this issue is a little too complicated for public scrutiny, and that what’s really needed is for wiser heads to sort things out in private. We’ve seen what happens when deals are made in the back room. What we really need is the opposite: A live, televised debate before the American people.

The “adult supervision” theme was struck in JPMorganChase’s recent “analyst report,” where gratuitous insults directed at “ignorant Senators” were followed by this comment: “(With) the financial reform debate…in the final innings, it’s time for the grownups to step in.” And now the Washington Post reports that lobbyists are worried about the messy, unpredictable nature of democracy. Here’s the bankers’ fear, as described by the Post:

(Bank lobbyists) were counting on Senate committee hearings and backroom negotiations among key lawmakers to remove or soften what the financial industry considers most objectionable in the bill. That hasn’t happened. And now, as early as Tuesday, the Senate will begin to consider populist amendments that spell even more heartburn for the banks.

It’s always so much easier to cut deals in the backroom, isn’t it? That way politicians don’t have to be held accountable for their actions. Instead they can say things like “it wasn’t politically feasible” or “we’ve forged a bipartisan compromise,” comfortable in the knowledge that their Wall Street contibutors still feel they’re getting their money’s worth.

Here’s the bank lobby’s vision of governance, as reported by the Post: “They’ve got to get this thing off the [Senate] floor and into a reasonable, behind the scenes (situation). Let’s have a few wise fathers sit around the table in some quiet room.”

“Wise fathers” (no mothers, apparently) presumably means Alan Greenspan, Robert Rubin, and the other deregulation mavens who bear so much responsibility for our current woes. These are the comfortable words of an oligarch, redolent of J. Pierpont Morgan’s famous remark to Teddy Roosevelt: “If we have done anything wrong, send your man to my man and they can fix it up.”

As with the Chase “report,” contempt for the political process remains the order of the day. “I think some of this stuff is going to get totally irrational,” said one of many lobbyists (in the Post article) … “Every amendment you hear about is emotionally driven. . . . The Senate has turned from a deliberative body into an emotional reactor.” Yet greed – the driving force behind past colloquys of solons and “wise fathers” – is an emotion, too.

A table in a quiet room? We need the exact opposite. We need a live TV broadcast of the debates and the votes (C-SPAN will do) surrounding each key amendment, starting with the Kaufman/Brown SAFE Act that breaks up the “too big to fail” insititutions. Why start there? Because, while there are a number of excellent and important amendments before the Senate, “too big to fail” is a key part of our systemic risk problem. Most importantly, it’s where the greatest political hypocrisy is taking place. That’s where the white light of television cameras can exert its most cleansing effect. Without it, politicians will keep fulminating about “too big to fail” while privately opposing any steps that would eliminate it.

Simon Johnson is pessimistic about the possibility of a “too big to fail” vote. He believes we’re seeing a “fake debate” before an insider deal is cut that protects these risky institutions. But a source in Sen. Kaufman’s office told me yesterday that they remain optimistic about their chances. What’s more, Sen. Dick Durbin (Assistant Majority Leader and a strong voice for reform) came out strongly in favor of the measure yesterday. Durbin said this on the floor yesterday: “(Of) all the major amendments which will be offered, this is clearly a game changer … I am supportive of this amendment.”

Durbin added: “What they’re talking (about) is dealing with the concentration of wealth and the concentration of economic power to a level which can literally bring the economy down … that’s what led to the massive taxpayer bailout, and that’s what the Brown-Kaufman Amendment addresses foursquare.”

Gee … I don’t know. That doesn’t sound emotional to me.

The bank lobby is clearly frightened of the democratic process … and it should be. The continued existence of “too big to fail” is clearly not in the public’s interests, and the public wants to see it stopped. There is also overwhelming support for ending the exploitative consumer practices and shady deals rampant on Wall Street. The best outcome for the banks would be a cozy backroom deal forged by the people they call the “wise fathers” … but the rest of us now consider the “usual suspects.” The last thing in the world they or their political servant class want is a public debate of the issues.

That’s exactly what we need. Voters should demand the right to see where their representatives stand, live and in-person, the way that democracies are supposed to work.

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Richard Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America’s Future. This post was produced as part of the Curbing Wall Street project. Richard also blogs at A Night Light.

He can be reached at “rjeskow@ourfuture.org.”

Website: Eskow and Associates

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