It’s Time for Main Street to Score a Win – Will Congress Do the Right Thing?

There they go again.
The Wall Street bankers are paying themselves hundreds of billions of dollars in bonuses just a year or so after taxpayers bailed them out. The big bonuses have a kicker, too; since the bonuses are a business expense, $200 billion in bonuses means another $80 billion in tax savings for the firms, says a New York Times story.
Meanwhile, of course, the banks aren’t doing much to help the economy after taxpayers pitched in so dramatically to help them. And the regulators keep trying to shift blame, as Fed Chairman Ben Bernanke did in a speech this weekend where he claimed bad regulation, not bad monetary policy, led to the housing bubble and economic collapse. Economist Dean Baker agrees: it was bad regulation… coming from Bernanke’s Fed.
Big bonuses for Wall Street and nothing for Main Street “at a time where unemployment tops 10% and many people are still losing their homes to foreclosures,” Fortune noted the other day.
Worse, while those foreclosures continue at massive levels, the banks aren’t converting trial mortgage assistance programs into permanent programs at any great rate, either, so the suffering on Main Street will continue. Adding a great deal to the injury, the bankers aren’t making any new loans to small businesses either, so the economy is still stuck in the muck. The New York Times: “The banking industry has throttled back lending for the last 15 months, draining more than $3 trillion of credit from the economy.”
Meanwhile, the Wall Street banks continue to increase pressure on Congress from their DC lobby offices on K Street. Waves of lobbyists continue to march on Capitol Hill seeking to throttle the plans to reform the system that failed to protect us.
While the House of Representatives narrowly rejected efforts to strike the proposed new Consumer Financial Protection Agency entirely and then narrowly passed the Wall Street Reform and Consumer Protection Act in early December, the overall reform bill – while still a landmark – took withering fire from powerful special interests that have now trained their sights on the Senate Banking Committee. Robert Reich put it this way on Marketplace: “In 2009, Wall Street came back and Main Street got shafted.”In 2010, will the Senate be able to reject the self-serving demands of the bank lobby and protect Main Street?
The Senate Banking Committee is soon expected to release a new “bi-partisan” reform package prepared by both Chairman Chris Dodd (D-CT) and Senator Richard Shelby (R-AL) as well as other committee members, after Dodd’s initial package was rejected by Republicans last November.How will we measure that Senate bill? We’ll start by seeing what’s in it.

We’ll look to see if it retains an independent Consumer Financial Protection Agency or if instead, the industry succeeds in convincing Congress that the same regulators who were unwilling to stop predatory lending will be left in charge.

  We’ll see whether the Senate closes the derivatives regulation loopholes that are in the House bill.

We’ll look to see whether the Senate reforms and democratizes the Federal Reserve Board, which claims it needs independence from Congressional pressure at the same time as it claims it is not swayed by the banker pressure that has flawed and shaped its work for decades.

There’s more, but those are three key areas where the Senate must stand strong. Then, we’ll have to see whether the Senate Banking Committee actually moves a bill that is in the public interest.
By doing nothing, the Senate lets Wall Street win.
By doing what Wall Street wants, the Senate lets Wall Street win even bigger.
But if the Senate does the right thing, and reforms Wall Street, Main Street will score a win.
It’s about time.
— By Ed Mierzwinski,  U.S. Public Interest Research Group (U.S. PIRG) veteran Consumer Program Director,In the Public Interest, Huffington Post blog column