Financial reform, or not?

Wall Street and big commercial banks and their ever-ready Republican and Chamber of Commerce defenders vehemently opposed the Dodd-Frank Act financial reform act when it was proposed in the wake of the nation's catastrophic financial implosion of 2008. Since the sweeping bill was approved by Congress a year ago, its opponents have continued at every turn to resist or sabotage the work of writing new regulations to safeguard the nation's financial system from another casino-style investment debacle. And when the new centerpiece agency for putting the Dodd-Frank Act to work finally opens for business tomorrow, they promise to deny it a director and to keep working to dismantle the new regulatory watchdog.

Small wonder President Obama says he still believes the battle to safeguard American investors and their retirement and pension funds is far from over. If anything, the battle is destined to heat to new levels in the coming days.

Obama's nomination Monday of former Ohio Attorney General Richard Cordray to head the new Consumer Financial Protection Bureau will put the banking reform act into play, and its adversaries are lining up to crush it at the starting gate.

They've got the lobbying clout and money to entice malleable members of Congress to empathize with the banking industry's desire to keep their profits on risky investments and derivatives intact. According to a report from the Center for Responsive Politics, the banking industry spent almost $52 million in the first quarter of this year -- a 10 percent increase over the previous quarter -- on lobbying efforts to dilute reform and the safeguards the Consumer Financial Protection Bureau will oversee. More money is sure to flow in campaign donations to purchase lawmakers' support.

Wall Street investment banks and the big commercial banks that joined their ranks following the 1999 dismantling of the Glass-Steagall Act want to retain the latitude to keep kiting the sort of toxic-mortgage investments and risky, over-leveraged derivatives that brought on the Great Recession. They shouldn't be allowed to do that. Their excesses led to the destruction of millions of jobs and shuttered businesses, and left the economy in the deepest recession since the Great Depression.

Regardless, the banking industry's lobby is on a roll. It has recently persuaded regulators to lighten the cuts to debit card fees; to defer regulations on derivatives by six months; and, to exempt other more exotic investment securities from regulation entirely. It has swayed the Commodity Futures Trading Commission to reconsider its pending curb on derivatives, as well.

Banks also oppose transparency and reporting rules on investments, and bans against trading out of their own accounts, which put their investors' money into play. They oppose a rule to require them to hold higher capital reserves on own their investments to reduce the risk of failure and bailouts, and a plan to require banks that sell mortgage-backed securities to hold a portion of those investments on their own books to stem short-selling the investments they peddle to their clients. And they apparently have succeeded in requiring whistle-blowers to report suspicions of fraud to the banks first, before taking their claims to regulators.

Banks certainly can't argue that tighter oversight over the past two years has hurt them, however. Stock market indexes are up substantially across the board this year over last year, and executive salaries are soaring.

The Dodd-Frank Act is already weaker than it should be. If regulatory overhaul is going to provide any benefit to ordinary investors, concessions have to end, and some two dozen GOP bills to dismantle reform piecemeal will have to be defeated.

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