[UPDATE]: Brian Johnson with Americans for Tax Reform responds in the comments section to my post earlier today with evidence he says supports Norquist's email. In response, I posted my own rebuttal to his attempted rebuttal, also in the comments section. Feel free to wade in and comment as you like.
You know conservatives are running out of substantive and articulate rebuttals when they fall back on the this-bill-is-a-government-takeover meme. Today, anti-tax activist Grover Norquist shot out an email blast imaginatively titled "Stop the Government Takeover of Our Banks" urging his followers to call their respective senators and plead with them to block the main financial reform bill now being debated on Senate floor. "Sen. Dodd and the Democrats are trying to force their 'Wall Street Bailout Bill,' S. 3217, the Restoring American Financial Stability Act of 2010, down the throats of the American public," Norquist's email reads. Nevermind that the bill is not a "bailout bill," as misinformed observers like Norquist and even lawmakers like, say, Senate Minority Leader Mitch McConnell, have said. That's conservative scare tactic number one in Norquist's email.
Number two: Norquist's email goes on to say, "This bill will give the government powers to monitor and track your personal bank account transactions and all of your purchases and give that information to Wall Street and Big Businesses." This statement refers to a proposed Office of Financial Research, an organization that would gather financial data for modeling and, according to the bill's summary text, "monitor emerging risks to the economy" to prevent future meltdowns. The idea of an OFR has been supported by Nobel laureates, leading economists, as well as both Democratic and Republican senators. (Sen. Bob Corker (R-Tenn.), a leading GOP figure on financial reform, supports it.) Moreover, there's no evidence—apart from the baseless claims of people like Karl Rove and Fox News host Steve Doocy—that this agency will pry into the financial data and private lives of Americans.
And number three: Finally, Norquist's says, "This bill will make permanent the same risky lending practices that contributed to the financial collapse and create Fannie Mae 2.0." The bill, as it looks now, will not "make permanent" the predatory abuses that precipitated the crisis—but will crack down on those practices. A proposed independent consumer protection agency, to be housed in the Federal Reserve, would focus on ending exactly these kinds of abuses, zeroing in on non-bank institutions like subprime and payday lenders and auto dealers. As for "Fannie Mae 2.0," it's hard to know what Norquist is even talking about here. It's true, the bill does not, in its current form, address the issues of Fannie and Freddie Mac, the two government-backed housing corporations, even though the twins are a massive headache and played a major role in fueling the subprime bubble. But lawmakers have said they'll take up legislation to fix the twins—that, indeed, separate legislation is needed given the size of their problems—when they're done with the current financial reform. And if they delay, Americans will need to pressure them to make sure it gets done.
All in all, Norquist's email shows that conservatives are running out of ways to oppose to financial reform. Instead of actually critiquing parts of the bill, they're continuing to fabricate or fudge parts of the bill to scare people into fighting it.
A bloc of heavyweight Republican donors is demanding that Florida Governor Charlie Crist, who recently ditched the GOP to run as an independent in his state's US Senate race, return all of their campaign donations for his party betrayal. As of the end of March, Crist had more than $7 million in his campaign war chest, thanks in large part to his deep-pocketed friends in the GOP. The donors' demands came in a letter to Crist that read in part:
"We helped to support, and yes to bankroll, your political career. For years you have been asking us for money. And for years we have put our names and credibility on the line by asking our friends to donate to you. Those days are over."
The donors asking for their money back include the former head of the Florida Republican Party, Al Cardenas. Crist's campaign hasn't responded to the letter yet, the Associated Press reported, and he has no obligation to return any of the money.
Crist switched from the GOP to an independent last week, knowing he had little to no chance beating his Republican rival, Marco Rubio, a Tea Party darling who is the former speaker of Florida's house of representatives. Crist trailed Rubio in the polls by as much as 20 points, but as an independent, the Florida governor looks to have much more of a chance competing with Rubio and Rep. Kendrick Meek (D-Fla.), the presumed Democratic candidate.
The donors' letter is another piece of bad press for Crist, and another example of the GOP's efforts to purge him from the party. Recently, Florida Republicans began auctioning Crist-related memorabilia on eBay, like an autographed business card of Crist's and campaign buttons from his gubernatorial campaign. The party is also trying to sell off a $7,500, scandal-ridden oil portrait of Crist. Given the bad blood between Crist and the GOP—RNC chairman Michael Steele recently said there "will be no Senator Crist"—it's unclear, should Crist win in Florida, with which party he would caucus. With the way Florida's election is shaping up, that victory looks far from likely.
An overwhelming number of senators from both parties passed the first major amendment on financial regulatory reform this afternoon, making substantial changes to how too-big-to-fail banks are liquidated when they fail. The vote was 93 to 5, with Sen. Byron Dorgan (D-ND), a staunch supporter of reform, the only Democrat to vote against it. The Dodd-Shelby amendment, named for senators Chris Dodd (D-Conn.) and Richard Shelby (R-Ala.), replaces the previous proposal—that a $50 billion fund be created to pay for the orderly euthanization of Citigroup-like megabanks—with a provision giving the Federal Deposit Insurance Corporation the power to wind down these banks. (The FDIC already takes over and winds down small to medium sized banks.)
The Dodd-Shelby amendment mandates several more new rules. Shareholders who receive government money in a bank's wind-down will be forced to pay back any funds exceeding what they would've received had the bank simply been liquidated. The Federal Reserve will only be allowed to use its emergency lending powers with banks who are still solvent, and not failed. Finally, the amendment, if it remains untouched and the bill passes, will give regulators the power to ban top executives and directors of failed banks from again working in the financial sector, a proposal sure to draw ire of Wall Street and its phalanx of lobbyists.
Earlier this afternoon, the Senate also passed the Boxer amendment, which explicitly says that taxpayers will never again be on the hook for future bailouts or support to struggling megabanks. That amendment also passed with near-unanimous backing from both parties.
Pissed with Republicans' stalling tactics on financial reform, Senate Majority Leader Harry Reid offered his biggest bash of GOPers yet today. GOPers, Reid quipped, are doing nothing less than "making love with Wall Street" with their continued obstruction. Reid's comments come as Senate GOPers continue to stall the Senate's progress on passing a financial reform bill; after voting threeseparate times to block open debate on the Senate floor last week, Republicans are now refusing to submit their own amendments to the finance bill, which has slowed the bill's progress. They say they won't let the amendment process proceed until Sens. Chris Dodd (D-Conn.) and Richard Shelby (R-Ala.) reach a strong agreement on how to euthanize too-big-to-fail banks. That agreement appeared to be reached late last night, but it's still not clear if GOPers are ready to move ahead on financial reform.
Today, Republicans released their own version of a new consumer protection division to counter the Democrats' plan. The GOP's version would seriously scale back consumer provisions in the current bill, crafted by Democrats, by both weakening the division's rule-writing power and continuing to let federal bank regulators preempt rules crafted at the state level. The GOP's decision to lay out its own consumer division could signal the party's intention to let the debate go forward, which would allow votes on amendments to happen today.
Senate Republicans have put forward their own proposal for a new consumer protection agency, a plan that significantly kneecaps the consumer division Democrats are pushing for and does little to actually help consumers. Republicans' plan would establish a consumer protection division within the Federal Deposit Insurance Corporation, but it wouldn't be independent or autonomous, a condition seen as a dealbreaker for consumer advocates. (The Democrats would put an independent agency in the Federal Reserve.) In the GOP's plan, the division's ability to write new rules would be seriously constrained by the FDIC, which have to agree to those new rules before they became law.
The GOP's consumer proposal would also allow federal consumer laws to continue to override, or preempt, state laws. (The Democratic plan, on the other hand, would let states' attorneys general and other regulators, who are nimbler and respond to on-the-ground events faster, to craft laws at the state level.)