Andy Kroll

Andy Kroll

Senior Reporter

Andy Kroll is Mother Jones' Dark Money reporter. He is based in the DC bureau. His work has also appeared at the Wall Street Journal, the Detroit News, the Guardian, the American Prospect, and TomDispatch.com, where he's an associate editor. Email him at akroll (at) motherjones (dot) com. He tweets at @AndrewKroll.

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Wall Street Reform: The Battle Ahead

| Fri May 21, 2010 10:02 AM EDT

With last night's passage of the Senate's financial reform bill, next up is what's called "conference," where the House and Senate must resolve any differences and merge their two bills. In size and scope, the two bills are pretty much the same. But as always, the devil is in the details.

Here's a breakdown of the differences between the House bill, shepherded through that chamber by Rep. Barney Frank (D-Mass.), the House financial services committee chairman, and the Senate's, which relied on the negotiating acumen of Sen. Chris Dodd (D-Conn.), the banking committee chair, and Majority Leader Harry Reid's (D-Nev.) hard-charging leadership. I'll be updating this post as I dig through the two bills for more notable discrepancies.

Dems On a Roll: Finance Reform Passes

| Thu May 20, 2010 9:48 PM EDT

All this week, despite Republican threats to prolong or outright block the process, Senate Majority Leader Harry Reid (D-Nev.) said he wanted a swift finish to the Senate's debate on financial reform. Right on schedule, Reid got what he wanted. This evening, the Senate passed its massive, far-reaching, historic overhaul of how Wall Street does business and how our financial markets function. The vote was 59-39.

Unlike the hyperpartisan nature of health care reform's passage, the Senate's victory tonight featured a modicum of Republican support. Sens. Scott Brown (R-Mass.), Olympia Snowe (R-Me.), and Susan Collins (R-Me.), all of whom voted for the cloture motion to essentially end the debate on financial reform earlier this afternoon, as well as Sen. Charles Grassley (R-Ia.) voted in favor. There were two Democratic defectors: Sens. Maria Cantwell (D-Wash.) and Russ Feingold (D-Wisc.), both of whom voted against the bill because they thought it wasn't strong enough. Cantwell said changes were needed to the bill's derivatives reform language, which right now doesn't punish those who disobey the bill's proposed rules. The Senate's derivatives reform, in her view, is toothless. Meanwhile, Feingold said he believed the bill simply doesn't do enough to prevent banks and non-bank financial companies from becoming too-big- and too-interconnected-to-fail.

Financial reform advocates and the Obama administration generally hailed the bill's passage this evening.  "Today we stand closer than ever to enacting meaningful financial reform that will benefit every American family and business, help improve the competitiveness of our financial markets, and strengthen the safety and soundness of our financial system," said Treasury Secretary Tim Geithner. "This bill, while not perfect, takes significant steps to close those regulatory gaps and make our financial system both safer and more stable," added Barbara Roper, director of investor protection at the Consumer Federation of America. Michael Calhoun, president of the Center for Responsible Lending, congratulated lawmakers but warned, "[C]oncerns remain. In this final stretch we hope lawmakers will resist Wall Street’s efforts to water down the bills’ strong provisions."

Questions Loom over Final Finance Vote

| Thu May 20, 2010 3:23 PM EDT

On his second try, Senate Majority Leader Harry Reid (D-Nev.) corralled together enough votes to all but end the debate on financial reform and set up a final vote tomorrow evening. Joining 57 Democrats to vote "Yes" on today's cloture motion, the second in two days, were Maine Republicans Olympia Snowe and Susan Collins and Massachusetts Senator Scott Brown. The cloture motion passed 60-40. 

The real story of today's vote, though, involves the two Democratic "No" votes, Senators Maria Cantwell (D-Wash.) and Russ Feingold (D-Wisc.). Unlike their fellow "No" votes, Cantwell and Feingold opposed cloture today, as they did yesterday, because they want the bill to be tougher. Both senators say the bill doesn't go far enough on two hot-button subjects—preventing financial institutions from becoming too-big-to-fail and overhauling the derivatives markets.

In Feingold's case, he essentially wants to see some form of the Glass-Steagall Act—which erected a firewall between staid commercial banks and more risky investment banks—reinstated via the Senate's reform bill. Yesterday, after voting "No" the first time, Feingold said:

We need to eliminate the risk posed to our economy by ‘too big to fail’ financial firms and to reinstate the protective firewalls between Main Street banks and Wall Street firms. Unfortunately, these key reforms are not included in the bill. The test for this legislation is a simple one—whether it will prevent another financial crisis. As the bill stands, it fails that test. Ending debate on the bill is finishing before the job is done.

Maria Cantwell said yesterday after her first "No" vote that her main concern about the bill was that it contained no punishment for those who violated the new restrictions on derivatives. Cantwell explained that she wanted tougher language in the bill to crack down on derivatives users that don't comply with the bill—but that language has not yet been included, which likely explains her vote.

Cantwell and Feingold's defections are a major headache for Reid. It'll be a lot easier for Senate Minority Leader Mitch McConnell (R-Ky.) to reel back in one, two, or three of the GOPers who voted for cloture today, switching them from presumed "Yes"s to "No"s on the final vote. What's far harder is convincing Cantwell or Feingold that they should vote for the bill even though they see major, fundamental problems with how its currently written. With Feingold, he's essentially saying the biggest aspect of the bill—ending too-big-to-fail—won't fix anything and needs to be changed. There is, however, no way that'll be fixed in the next day—after all, it took months of backroom battling to get to where we are today.

Reid's got his work cut out for him winning over Cantwell and Feingold by tomorrow evening.

Obama's HAMP and Goldman's Abacus: Doomed to Fail?

| Thu May 20, 2010 12:55 PM EDT

Was the Obama administration's $75 billion homeowner rescue program doomed to fail? Is it the federal government's version of Goldman Sachs' now-notorious Abacus deal, the complex financial product Goldman allegedly peddled to customers knowing it was destined to implode? That's what the Wall Street Journal's Evan Newmark asked in a Wednesday column—a question sure to rile up folks at the Treasury and White House. But as someone who's covered Obama's housing relief efforts, in particular the flailing Home Affordable Modification Program (HAMP), I think Newmark makes a clever connection here about a program that's left millions of struggling homeowners out to dry.

Newmark notes that he all but predicted HAMP's demise back in February 2009, when Obama first unveiled his housing rescue; that from the outset, he knew HAMP wouldn't at all work. Likewise, a few months into the program, I cited housing experts who'd identified major flaws in the design of the program, which was intended to help millions of homeowners by lowering their monthly mortgage payments and keeping them in their homes. These experts also ripped the Treasury for rushing a program that mortgage servicers—on whom the brunt of the program's responsibilities fell—were woefully under-equipped and unprepared to handle. The result was long delays, mass confusion, disorganization, and measly success rates. That logjam continues more than a year later, suggesting that HAMP never recovered after stumbling out of the gates. And as I recently wrote, the pace of trial modifications—a test run for homeowners entering the program—is slowing considerably, signaling a slow death for the initiative.

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