The GOP's back room talks with Wall Street began to explode in the faces of Republican senators yesterday.
"The public deserves to know what carve-outs Republicans are offering Wall Street," Senate Majority Leader Harry Reid said on television. He was referring to a trip to the financial district several weeks ago by Minority Leader Mitch McConnell and other GOP senators where they met with Wall Street titans on the issue of finance reform.
Killing the financial reform bill's $50 billion fund that would come directly from bank profits to resolve problems caused by collapse of a mismanaged financial institution is a key element of the bill that the senators were told to crush, many sources report. Instead of taxpayers paying for bailouts, the banks would pay upfront into a "pre-fund," capitalized at $50 billion.
Many on Capitol Hill, Reid included, believe that when McConnell went to Wall Street he asked the financiers what their number one concern was regarding finance reform. The senator, after hearing that the pre-funded resolution authority was the hot topic on Wall Street, promised to go back to Washington and kill at least that part of the bill, they say.
Recognizing the mass revulsion at last year's taxpayer bailout of the banks, they have tried to do Wall Street's bidding on this issue by falsely claiming the resolution authority is just another such bailout.
Supporters of the bill point out that the liquidation fund in the bill is designed to keep creditors at failing banks from jumping ship so fast that they would cause widespread panic before the bank's operations could be wound down.
Richard Trumka, president of the AFL-CIO, said last week that his federation supports set-up of a pre-funded resolution authority but backs "strengthening it even more with measures that would require workers' salaries, pensions and benefits to be moved to the top of the list of issues that have to be resolved."
The Senate bill, already approved by the Senate's banking committee, stipulates several major reforms in addition to a bank pre-funded resolution authority. The other major reforms include:
● establishment of a consumer protection agency,
● curbs on the trading of derivatives
● procedures that would allow the breaking up of large banks when and if they fail.
Sam Webb, chair of the Communist Party USA, described the bill as "a step forward but what are missing," he said, "are stronger measures that would break up the big banks before they fail and stronger measures that would increase capital requirements for the banks."
Webb said, "Beyond the issues with the bill, however, a big opportunity was missed here. We need to put the banks under public control. Although this is not in the cards now, the public would have supported that. The anger about the role of the financiers in the economic collapse and their responsibility for the joblessness is there. We and others must make the case for public control of the banks. They are there to serve the economy and the people, not the other way around."
Mass demonstrations for finance reform and for taxes on the banks that can be used to create jobs are in the works. Unions are expecting more than 10,000 to march on Wall Street itself April 29.