UPDATE March 28, 2012: Lawmakers Opposing Volcker Rule Receive Four Times As Much From Financial Sector As Those Supporting It – Those seeking to weaken the rule have received $66.7 million from the financial services industry since the 2010 election cycle.
March 27, 2012
In 1933, as a result of the 1929 stock market crash, the Glass-Steagall Act was enacted to prevent banks from rampart speculation. For 66 years it worked almost flawlessly. Then in 1999 the Glass-Steagall Act was abolished and replaced with the Gramm-Leach-Bliley Act. This action flung the bank’s gambling doors wide open, allowing them to go hog-wild with a casino-style operation. Just 9 years later, in 2008, the results of this change in laws had bankrupted the world. Bankers were the only people to prosper from the change in law, and boy, did they ever.
In an attempt to fix the problem, a new kind of Glass-Steagall Act was passed into law in 2010 known as the Dodd–Frank Wall Street Reform and Consumer Protection Act. The Volcker Rule, which restricts banks from making certain kinds of speculative investments that do not benefit their customers, was part of the new law.
This new law has upset the bankers; in particular, the Volcker Rule. It deprives them of the joy of breaking the banks again, so they are fighting it tooth and nail. To help them in their fight, they’ve “hired” some “freely elected” political warriors.
A look at the sponsors and their take from the securities and investment and commercial banking sectors:
- Sen. Mike Crapo, R-Idaho, who discussed the proposal at a hearing of the Senate Banking Committee today, has collected more than $940,000, according to the Center for Responsive Politics. His top donors include Citigroup, JPMorgan Chase & Co., Goldman Sachs, and Credit Suisse.
- Sen. Mark Warner, D-Va., who made millions in the cell phone business before entering politics, has gotten $1.8 million. JPMorgan Chase & Company and Citigroup are among his top donors.
- Sen. Pat Toomey, R-Pa., who counts JP Morgan Chase, the American Bankers Association, and Bank of America among his top donors, has received more than $1.4 million.
- Sen. Kay Hagan, D-N.C., has gotten the least among the group of senators from banking and investment industries, with just $395,000 in contributions. But one of her top supporters is Bank of America, headquartered in her state.
- Sen. Tom Carper, D-Del., has taken $2.2 million from these industries over the years. Delaware-based MBNA is his most generous supporter, followed closely by JPMorgan Chase & Co. and Citigroup.
- Sen. Bob Corker, R-Tenn., has benefited from $2.4 million from these industries. JPMorgan Chase & Company and Goldman Sachs count among his top donors.
Of course the Senate isn’t the only culprits; the House of Representatives is also heavily engaged in a bipartisan measure to protect the bankers.
FYI: In the US alone, the cost for the crisis is in the double-digit trillions.