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 Guardian, Men's Journal, the American Prospect, and TomDispatch.com, where he's an associate editor. Email him at akroll (at) motherjones (dot) com. He tweets at @AndyKroll.

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Chamber Targeting Banking Senators

| Tue Mar. 16, 2010 1:45 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.

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Chamber's New Anti-Dodd Blitz

| Tue Mar. 16, 2010 9:23 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 4:12 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."

More Delay on Derivatives

| Mon Mar. 15, 2010 3:45 PM EDT

The big omission in Sen. Chris Dodd's long-awaited financial reform bill today is any substantive update on new regulation of derivatives, those tricky, opaque financial products that have caused such immense headaches. Derivatives, in a nutshell, are contracts whose value goes up or down based the price of an underlying entity, like a stock, bond, certain form of currency, or commodity (corn, oil, etc.). Right now, most derivatives are traded "over-the-counter," which means the trade takes place between a customer and a broker-dealer, and there's little to no information published about trading, so hundreds of billions of dollars in derivatives trades essentially take place in the dark.

What lawmakers and reforms want to do is move most of those trades onto a clearinghouse or exchange like the New York Stock Exchange. That would shed some light on who's trading with whom, how much the buyer bought, and how much the buyer paid. Sounds fair, right? The House's financial reform bill called for moving OTC derivatives trading onto exchanges, and Dodd's initial framework for financial reform released in November called for the same. However, negotiations between Sens. Jack Reed (D-RI) and Judd Gregg (R-NH), the two lawmakers tasked with crafting the Senate banking committee's derivatives overhaul, have yet to result in any new breakthrough, and the derivatives language in Dodd's plan announced today offers no new updates on where those negotiations might be headed.

Going forward, the key aspect of derivatives reform to watch is whether some senator throws in what's called an end-user loophole. End users are the companies—airline companies, utilities—who use derivatives for legitimate purposes, like hedging the price of oil so that if oil costs go up or down, those companies can plan on a consistent price level. It's basic risk management. Some lawmakers want to exempt these endusers because they're not using derivatives for speculative, gambling purposes. The problem is, an enduser loophole would ultimately exempt two-thirds of OTC derivatives trades—and a number of those exempted would trades by gambling banks, letting the people who need to be regulated slip by. It would be the exception that ate the rule, and it's a crucial part of the bill. How Sens. Reed and Gregg deal with it will be a telling sign of how serious they are about reining in these troublesome trades.

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