Candidates for the Democratic presidential primary are trip over each other declare themselves enemies of the billionaire class. Bank CEOs Worried About Both the composition of the House financial services committee and the presidential election landscape. But no matter how they can complain publicly, Wall Street still has a lot to celebrate. And with the predictions of a downturn ahead, their 115th Congress giveaways should make the rest of us very nervous.
In February alone, the financial services industry delivered a double whammy to consumers. First, her friend from the Consumer Financial Protection Bureau, Kathy Kraninger, decided to drastically reduce payday lender regulations, betraying the mission which is literally the first three words of the office name. Then SunTrust and BB&T announced its intention to merge, adding another bank to the rank of “too big to fail” for the first time since the financial crisis.
How is it going ? Shouldn’t our democracy be preventing payday lenders and bailout banks – two of society’s most despised players – from getting the best out of the public?
Not when the federal government was controlled by Republicans funded by Wall Street for two years. The financial services industry received an impressive number of gifts from the 115th Congress, in most cases thanks to Republicans, which are detailed in this report from my employer, Americans for Financial Reform.
For every piece of news that consumers are in shock right now, you can draw a straight line to a vote knowingly taken by Republicans in the Senate and House.
Let’s start with the CFPB’s retreat of consumer protections on payday loans. This is the first major political initiative of the new director of the office, Kathy Kraninger. Republicans confirmed it in a partisan and party line senatorial vote last december. Democrats’ main objection to Kraninger was not the president who appointed her – it was that Kraninger has absolutely no professional experience corresponding to his work. She’s never worked in consumer law, or the financial industry, or anything related to what CFPB does all day.
She did, however, work for Mick Mulvaney, then acting director of the CFPB and a former congressman whose election campaigns were heavily funded by payday lenders. Mulvaney picked her former protégé for the job, and she, as you might expect continued his legacy to help payday loan predators.
If a single Senate Republican cared more about basic qualifications for office than party alignment, he could have stopped Kraninger’s confirmation and protected low-income borrowers. But when it comes to financial regulation, all that matters to Republicans in Congress is whether you will follow the party line.
Then there is the SunTrust / BB&T merger. Last May, several Democrats joined nearly all Republicans in adopting S.2155, better known as Crapo Bill. Supporters have touted the Crapo Bill as a bipartisan effort to help struggling community banks – which is odd, as its marquee provision leaves more of the big banks avoid careful monitoring. These weakened supervisory standards gave banks more leeway to make questionable investments, boosting profits for SunTrust and BB&T, that they have just channeled into mergers and acquisitions.
If Congress really cared about the fate of small banks, it had many alternative approaches to quashing regulators at almost all banks. In fact, far from deregulation supporting lenders in underserved rural areas, the new law has pushed these small banks to merge and become larger conglomerates. S.2155 only reduced the number of players in the field, strengthening monopolies and pushing for the creation of the country’s sixth bank.
But the Crapo Bill is not the only one responsible for this merger. Thanks to the Tax Cuts and Jobs Act 2017, the 23 largest American banks, including SunTrust and BB&T, paid $ 21 billion less in taxes in 2018, funds that made the massive merger possible. Banks that have not spent their freebies on mergers blew them up on share buybacks, in the meantime lay off thousands of employees and make fewer actual loans than before the adoption of the tax reduction.
By all accounts, Wall Street has contributed less to the well-being of average Americans since the passage of the Tax Cuts and Jobs Act. Much like with the Crapo Bill and Kraninger’s appointment, Republicans put their big money ties before the very real needs of their constituents.
The news of the last few weeks should remind us that votes have consequences, and that Wall Street is keeping its allies in Congress on a leash. When the next financial crisis hits, Wall Street will inevitably reach out and demand that taxpayers cover their disaster. When it does, we should all take a close look at the file and tell Wall Street: You’ve already had too many freebies.