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 St.'s Looming "War Over Money"

| Wed Mar. 17, 2010 9:46 AM EDT

There's a Wall Street war on the horizon. So says best-selling author Michael Lewis, who's making the rounds promoting his new book The Big Short, an autopsy of the financial meltdown and, even more, a narrative of the handful of traders who saw the subprime meltdown looming, shorted that troubled industry (i.e., bet against it—big time), and made billions.

Lewis, in an interview with Reuters, said he anticipates a "collision" within the Senate banking committee's financial reform negotiations, led by Sen. Chris Dodd (D-Conn.), on the issue of whether to bust up big banks like Citigroup, Bank of America, JPMorgan Chase, and Wells Fargo. "To put it in the crudest possible way, these firms have to be smaller and less profitable," Lewis said. "If they were regulated properly and the rules of their game were sane, it would be less profitable to be a trader at a big Wall Street firm...It is really a war over money."

Lewis is almost certainly right. When the Senate banking committee begins marking up Dodd's financial reform bill next week, one of the most contentious issues in Dodd's new bill, released Monday, is the intent to prevent big, supermarket banks from gambling with their own funds for their own gain (also known as "proprietary trading") and to block them from investing in other financial casinos like hedge funds and private equity funds. Conservatives don't like the proprietary trading language at all, saying it's unwelcome government meddling in the markets. Liberals have cried foul because they believe Dodd kneecapped the ban by requiring a six-month review period before taking any action. What's for certain is the prop trading ban will divide the banking committee in the coming weeks, and it'll take a fight for Dodd and his liberal allies to keep the ban in the bill.

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Chamber Targeting Banking Senators

| Tue Mar. 16, 2010 2:45 PM EDT

The US Chamber of Commerce, in its battle to defeat a new consumer protection agency and other "burdensome" financial reforms, is aiming a multimillion-dollar ad campaign at influential senators tasked with shaping the Senate's financial overhaul. In a press conference with reporters today, David Hirschmann, president and CEO of the Chamber's Center for Capital Markets Competitiveness, said his organization planned to spend $3 million on ad campaigns to push its financial reform message, which mainly consists of defeating a consumer agency. That money will be focused in Tennessee, Montana, South Dakota, Indiana, Virginia, and Arkansas.

Why those six states? Well, they just so happen to be the homes of six crucial—and mostly undecided—lawmakers with a hand in deciding the fate of the Senate's Wall Street overhaul. Five of them sit on the powerful banking committee tasked with writing new financial reforms:

  • Bob Corker (R-Tenn.) was the GOP's lead negotiator on financial reform until late last week. No doubt he'll continue to figure largely into the Senate's negotiations;
  • Jon Tester (D-Mont.) has staked out a liberal position on financial reform, but has fielded intense criticism for backing Senate Democrats' financial reform efforts like a consumer protection agency;
  • Tim Johnson (D-S.D.) is the second-ranking Democrat on the banking committee, but, as a centrist, is seen as less likely to rally alongside Sen. Chris Dodd's Wall St. overhaul. It doesn't help that Citigroup, one of the world's largest banks, has major operations in Johnson's home state;
  • Evan Bayh (D-Ind.) hasn't taken much of a stand during the Senate's financial reform talks—which means he's more likely to be swayed by constitutients' concerns about a new consumer agency;
  • Mark Warner (D-Va.) has played a leading role in crafting a bipartisan solution with Corker on ending too big to fail banks and creating a bank "resolution," or euthanization, process. Warner's state, however, is hardly a liberal hotbed in lockstep behind the idea of a consumer agency;

The final senator, Blanche Lincoln (D-Ark.), isn't on the banking committee. She is, however, the chairwoman of the Senate agriculture committee, which will help craft future regulation of derivatives. Lincoln, who's facing a tough reelection battle this fall, could use derivatives reform as a way to curry favor with big business in her state. (Businesses who use derivatives for risk management or hedging purposes—known as "end users"—want an exemption from derivatives regulation; if Lincoln delivered that exemption, she'd score points and potential campaign cash with the business community.)

The Chamber has already spent more than $3 million on ads and other messaging efforts to influence Wall Street reform. With this new focused push, keep your eye on these six senators to see whether the Chamber's efforts pay off.

Chamber's New Anti-Dodd Blitz

| Tue Mar. 16, 2010 10:23 AM EDT

This morning, the radio airwaves here in Washington, DC, featured a new ad from lobbying behemoth the US Chamber of Commerce attacking Sen. Chris Dodd's new financial reform bill, unveiled yesterday afternoon. The bill, the ad says, would add burdensome bureaucracy to financial regulation, and that we'd all be better off with a revamp of the system in place then creating new entities like a council of regulators and a consumer protection agency. The ad essentially echoes the Chamber's public position on the Dodd bill—which is outright opposition. "This bill takes three steps backwards with the hope of making future progress," said David Hirschmann, president and CEO of the Chamber's Center for Capital Markets Competitivenes.

That the Chamber opposes Dodd's bill is far from surprising. The organization, which has spent as much as $300,000 a day lobbying, fervently opposes many of the key reforms in the Dodd bill—it even started an entire website, StoptheCFPA.com, to fight plans to create a new Consumer Financial Protection Agency, an independent organization whose purpose would be to protect consumers against predatory lenders, unscrupulous credit and debit card practices, exorbitant rates charged by payday lenders, and more. The Chamber, however, has claimed that the CFPA would kill jobs and place undue burden on small business owners.

Today, the Chamber is holding a press conference on the Dodd bill at its Washington offices. We'll be there, so check back for more later this afternoon.

 

Former FDIC Chair Blasts Dodd

| Mon Mar. 15, 2010 5:12 PM EDT

Who better to turn to for perspective on Sen. Chris Dodd's new Wall Street overhaul than a top former regulator? That's what CNBC did this afternoon, inviting Bill Isaac, a former chairman of FDIC during the 1980s, to discuss Dodd's comprehensive new bill and its ramifications on our financial markets, consumer protections, and the like. What Isaac had to say was a blunt reality check on Dodd's new bill.

The former regulator, now the head of an international consulting firm, said flatly that there is "no significant financial reform in this bill." The root causes of our regulatory failures, Isaac said, reside in lackluster watchdogs like the Treasury Department, Federal Reserve, and the Securities and Exchange Commission. By expanding the Treasury and Fed's power and "ignoring" the SEC, Dodd's bill merely glosses over the institutional problems in need of serious repair, Isaac said. "This is not a serious financial reform proposal," he said. "Senator Dodd himself back in November put forward a much more sweeping reform of our regulatory system. Our regulatory system is broken. It needs a sweeping overhaul."

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