The Banksters Financing The Romney-Ryan Ticket Don't Want Anyone Regulating Their Predatory Agenda

After the vice presidential debate Thursday evening, Rep. Barney Frank took Paul Ryan to task for his lack of specifics in the plans he and Romney have for the economy.

"You cannot reduce rates that they're talking about and make that up by closing loopholes without hitting some loopholes that are very popular," Frank told The Huffington Post, citing the mortgage interest deduction and other deductions. "His failure to cite those is an admission there is no real way to do that."

Romney has promised to slash marginal tax rates by 20 percent, cut corporate tax rates, and cut taxes on investment income. He has said he will close loopholes to pay for those tax cuts, but he has not specified any major loopholes that he would close.

In the vice presidential debate, Ryan also failed to specify the loopholes that he and Romney would close. Vice President Joe Biden hammered him for his lack of specificity, saying, "The only way you can find $5 trillion in loopholes is cut the mortgage deduction for middle-class people, cut the health care deduction ... take away their ability to get a tax break to send their kids to college."

The Tax Policy Center concluded in a recent study that Romney's tax plan is mathematically impossible without raising taxes on the middle class.

Frank told the Huffington Post that Romney and Ryan are using the deficit as a red herring for their plan to "savage all the domestic programs."

"His main goal wasn't to cut the deficit," Frank said, adding that Romney and Ryan's proclaimed obsession with deficit reduction is "just a way for them to cut back on programs that they don't like, that are too popular for them to cut back on their own without saying we need to reduce the deficit."

For someone retiring from Congress, Barney has been on a real tear lately. He's leading the charge to get Elizabeth Warren elected to the Senate from his own state of Massachusetts and we saw him helping Blue America and PDA raise campaign funds for Lee Rogers and Rob Zerban in their lonely congressional battles against powerful GOP chairmen Buck McKeon and Paul Ryan. But what he does most aggressively-- and most definitively-- is defend the legislation that bears his name that was passed to regulate Wall Street after the unrestrained greed and avarice of a few banksters nearly threw the world economy into another Great Depression. Romney, Ryan, the Republican Party and more than a few corrupted Blue Dogs and New Dems would like to get rid of the bill or at least eviscerate it to the point where it won't interfere with the predatory instincts of banksters who went unpunished and haven't come close to learning any lessons. Yesterday Barney lit into Romney.

During the first Presidential debate on October 3rd, Mitt Romney inaccurately and misleadingly characterized the Wall Street Reform and Consumer Protection Act, stating that he “wouldn’t designate five banks as ‘too big to fail’ and give them a blank check. That’s one of the unintended consequences of Dodd-Frank.” He also described the law as an “enormous boon” to the biggest banks.

Romney’s characterization is wholly false-- the financial reform law specifically outlaws taxpayer bailouts of large financial institutions. Moreover, the financial institutions designated for increased oversight under the law have been fighting to avoid it; if it was a “boon” they would embrace it, not attempt to escape it.

Title II of the financial reform law explicitly states that when a large financial institution faces possible collapse, the United States government may not use taxpayer money to save the company. However, in order to stop the spread of financial contagion, government regulators may assist the orderly liquidation of the firm in order to protect the larger economy. In that process, the shareholders lose their investments; the executives are fired; and the board of directors is dismissed. To be clear, under the law, failing institutions which endanger the economy will be wiped out, not bailed out.

The fact that the financial reform law ends taxpayer bailouts of large financial institutions has been acknowledged by key policymakers. Sheila Bair, former Chairman of the Federal Deposit Insurance Corporation who was appointed by President George W. Bush and is a lifelong Republican, said that the new financial rules make it so that “regulators simply have no authority to do bailouts anymore.” She also stated that new powers “give us the tools to end Too Big to Fail and to eliminate future bailouts. Ben Bernanke, Chairman of the Federal Reserve who was also first appointed by George W. Bush, said that the financial reform law “gives the government an important additional tool to safely wind down failing financial firms.” Lord Adair Turner, Chairman of the Financial Services Authority in Britain, has said that “…the Dodd-Frank bill in the U.S. makes it legally impossible to provide such [taxpayer] support on a bank-specific basis.” Moody’s Investors Service not only confirmed this point, but it staked its reputation on it by lowering its rating of Bank of America, stating that "the downgrades result from a decrease in the probability that the US government would support the bank, if needed.” Edward Conard, a former colleague of Mitt Romney at Bain Capital, in a recent book criticized the financial reform law precisely because it puts an end to bailouts.

The need for a method to enable the orderly liquidation of failing financial institutions was made clear near the end of the Bush administration in September, 2008, when Bear Stearns teetered on the edge of collapse and then Lehman Brothers announced that it was filing for bankruptcy. Bush Treasury Secretary Hank Paulson feared that failing to save other endangered firms and those entwined with them could cause a second Great Depression. He faced what he called an “awful reality”-- he would have to choose between allowing these firms to collapse possibly resulting in a much more severe financial meltdown, or using taxpayer money to bail out the very institutions whose reckless behavior caused the problem in the first place. Paulson was deeply troubled by this. “I believe that if the system collapsed, we easily could've seen unemployment of 25 percent," he later told a reporter. "I think we came very, very close." The Bush administration chose the latter option, leading efforts to extend over $700 billion in loans, primarily to large financial institutions which President Bush and his advisors believed were “too big to fail.”

In 2010, shortly before the Wall Street Reform and Consumer Protection Act was signed into law, former Treasury Secretary Paulson praised the provisions in the bill which would give a future Treasury Secretary the ability to wind down a failing firm, thereby protecting the broader economy. “We would have loved to have something like this for Lehman Brothers,” he told the New York Times. “There’s no doubt about it.”

The financial reform law ensures that no future Treasury Secretary will be faced with the awful choice of either saving the economy or preventing taxpayer bailouts. Under the law, most financial institutions will still be subject to the bankruptcy process when they fail. However, some very large “systemically important financial institutions” (SIFI’s) will be subject to higher capital standards and stricter scrutiny by the Financial Stability Oversight Council. They will also be required to write “living wills”-- plans for how they could be unwound if they face failure. And if those firms fail, they specifically will not be rescued but will be taken apart in an orderly process which is designed to help prevent them from contaminating the broader economy.

If being designated as systemically significant were an “enormous boon” to the biggest financial institutions, presumably they would lobby regulators to argue that they don’t deserve that designation and shouldn’t be subject to these harsher rules. In reality the banks have fought not to be so designated because they furiously object to the heightened scrutiny and higher capital requirements that SIFI designation entails. When senior representatives of the key banking regulators were asked during a hearing of the House Financial Services Committee whether large financial institutions had approached them to ask that they be designated as systemically significant, every one of them answered “no” with the exception of the representative of the OCC (who pointed out that all relevant institutions under its jurisdiction are automatically covered.) In a recent article in the American Banker, former FDIC Chairwoman Sheila Bair flatly contradicted Mitt Romney’s assertion that being designated as systemically significant is an “enormous boon” to the biggest banks, likening SIFI designation as “more of a poke in the eye with a sharp stick” than the “big kiss” which Governor Romney claims it to be.

Mitt Romney also claims that the Wall Street Reform and Consumer Protection Act gives a “blank check” to the biggest banks, presumably out of the pockets of taxpayers. But not only does the law make bailouts illegal, it also prohibits that any costs associated with dissolving a failing bank be passed on to taxpayers. The statute states that the costs of an orderly dissolution must be taken first from the assets of the company itself, and second from a levy on the largest financial institutions in the country-- those with assets greater than $50 billion. Governor Romney implies that small businesses are somehow hurt in the process, but the these are clearly not small businesses.

Governor Romney presents himself as an opponent of future bank bailouts. However, he proposes to repeal the Wall Street Reform and Consumer Protection Act-- the law which prevents future bailouts. It is therefore not surprising that the country’s largest financial institutions are heavy contributors to Mr. Romney’s campaign. If the  executives of these institutions believe that Governor Romney is determined to deny them an “enormous boon” by repealing the financial reform law, their support of his candidacy would be a self-inflicted wound of the greatest proportions. Governor Romney asks us to believe that these institutions support him in spite of his brave stand, but it’s obvious that they know whose side he is on.

Facts matter. The Romney-Ryan campaign is based on distorting them, ignoring them and denying them. Thank God there are people like Barney Frank able and willing to call them on their lies. This year Wall Street has given Romney $16,394,969 (not counting untold tens of millions more in dark money funneled through right-wing PACs run by people like Karl Rove). By way of comparison, Wall Street has given Obama less than a third, $5,002,198.

And while we're on that idea of following the money, one way to gage which Member of Congress are the worst shills of Wall Street is to see whose PACs get the biggest Wall Street donations. These figures aren't contributions to campaigns; these are contributions from the banksters to the leadership PACs of their most devoted congressional servants with the intention of helping them build power. These are the dozen Members of Congress most beloved this cycle by the banksters:

 Please note that the DCCC is carefully not taking on any Wall Street favorites. They never do. Wonder why?