Evening news shows barely noticed the Senate vote for deregulating banks
The CBO says this bill would make another big bank bailout slightly more likely
Blog ››› ››› ZACHARY PLEAT
Sixteen Senate Democrats and one independent senator joined Republicans to move forward with a bill that would weaken financial regulations and slightly increase the likelihood of a taxpayer bailout of large banks -- but you'd barely know it if you got your news from the evening cable and broadcast shows this week.
The Economic Growth, Regulatory Relief, and Consumer Protection Act was first introduced in the Senate in November and primarily sponsored by Sen. Mike Crapo (R-ID). As The Fiscal Times reported, “The bill raises the threshold at which banks are considered systemically important and thus subject to stricter capital requirements and Federal Reserve supervision, from $50 billion to $250 billion.” The Washington Post noted that while this won’t apply to the largest banks like Goldman Sachs, JP Morgan, and CitiGroup, which are worth far more than $250 billion, it will decrease regulation on some banks such as SunTrust Banks and Fifth Third Bank, both of which received government bailouts during the 2007-2008 financial crisis. According to The New York Times, “only a handful of the biggest banks would face the toughest oversight” if this bill becomes law.
A March 5 Congressional Budget Office (CBO) cost estimate of the bill explained that it would increase the risk of taxpayer bailouts of large banks by making bank failures and financial crises a little more likely:
CBO’s estimate of the bill’s budgetary effect is subject to considerable uncertainty, in part because it depends on the probability in any year that a systemically important financial institution (SIFI) will fail or that there will be a financial crisis. CBO estimates that the probability is small under current law and would be slightly greater under the legislation.
David Dayen explained more problems with this legislation in The Intercept:
Republicans and Democrats who pushed S.2155 through the Senate Banking Committee must have heard Citi’s call. (They changed the definition of a custodial bank in a subsequent version of the bill. It used to stipulate that only a bank with a high level of custodial assets would qualify, but now it defines a custodial bank as “any depository institution or holding company predominantly engaged in custody, safekeeping, and asset servicing activities.”) The change could allow virtually any big bank to take advantage of the new rule.
Multiple bank lobbyists told The Intercept that Citi has been pressing lawmakers to loosen the language even further, ensuring that they can take advantage of reduced leverage and ramp up risk. “Citi is making a very aggressive effort,” said one bank lobbyist who asked not to be named because he’s working on the bill. “It’s a game changer and that’s why they’re pushing hard.” A Citigroup spokesperson declined to comment.
Aside from the gifts to Citigroup and other big banks, the bill undermines fair lending rules that work to counter racial discrimination and rolls back regulation and oversight on large regional banks that aren’t big enough to be global names, but have enough cash to get a stadium named after themselves. In the name of mild relief for community banks, these institutions — which have been christened “stadium banks” by congressional staff opposing the legislation — are punching a gaping hole through Wall Street reform. Twenty-five of the 38 biggest domestic banks in the country, and globally significant foreign banks that have engaged in rampant misconduct, would get freed from enhanced supervision. There are even goodies for dominant financial services firms, such as Promontory and a division of Warren Buffett’s conglomerate Berkshire Hathaway. The bill goes so far as to punish buyers of mobile homes, among the most vulnerable people in the country, whose oft-stated economic anxiety drives so much of the discourse in American politics (just not when there might be something to do about it).
A Media Matters review of Nexis transcripts for evening and prime-time programs on CNN, MSNBC, and Fox News this week found scant coverage of this bill. MSNBC’s All In with Chris Hayes had a five-minute interview on March 5 with Sen. Sherrod Brown (D-OH), who opposes the bill. Fox News’ Special Report with Bret Baier mentioned the bill on March 6 for just 17 seconds. CNN gave it no evening news coverage at all.
Evening news broadcasts on ABC, NBC, and CBS also failed to report on the bill this week. Only PBS’ NewsHour covered it, featuring a roughly six-minute interview on March 6 with Sen. Heidi Heitkamp (D-ND), who voted for cloture.