Tonight I want to talk about the SIFI Threshold, That';s because I had lunch with my old friend Roberto Rodriguez-- former congressional candidate and later special assistant for legislative affairs to the Secretary of the Treasury (Geithner at the time). So what's SIFI? Don't worry, I didn't know either til Roberto explained it over a bowl of pasta. Basically SIFI stands for "systemically important financial institution," like a too big to fail bank (or other institution, like an insurance company). The idea is that if one of these things fail, it leads to a series of events that can crash the economy. So... as part of Dodd Frank, Congress passed legislation that defined a SIFI as any financial institution with $50 billion or more in consolidated assets. There are 38 such banks and the compliance costs are seen by the crooked banksters as pretty high. So the banksters have been kvetching like rabid dogs ever since asking for the threshold to be raised. The Trump Regime, the entire Republican Party and every Democrat who takes bribes from Wall Street agrees. The idea is to raise the threshold to a quarter trillion which means only 12 institutions would be covered-- so 26 would be able to go back to irresponsible behavior with alacrity.In fact, speaking about bribes from Wall Street, Barney Frank-- the Frank in Dodd-Frank-- is now a banking lobbyist and the American Banking Association trotted him out to endorse their larcency. He's now calling $50 billion "a mistake," although the articles don't mention how much he was paid to say that. "That’s too low," he said."That was a mistake. We should have made it much higher," tossing out $125 billion as an alternative, noting that he also regretted not indexing the threshold to inflation. Does this sound like a Republican or what? "“When it comes to lending and job creation, the regional banks are obviously very, very important. I hope that if we get some regulatory changes, we give some regulatory relaxation to those banks." The Fed has already been giving plenty of "regulatory relaxation" to those banks.Let's go back to my pal Roberto for a second. He works at PriceWaterhouseCoopers Financial Services as an analyst now and he sent me this a couple weeks ago:
Senator Mike Crapo (R-ID), chairman of the Senate Banking Committee, released a bill to tweak Dodd-Frank and other financial services laws. The key proposal under the bill would raise the threshold for a bank holding company to be considered a systemically important financial institution (SIFI). The baseline SIFI trigger would be immediately raised from $50b to $100b in total consolidated assets and then to $250b 18 months after the effective date, which would lower the number of banks considered SIFIs from 38 to 12. Bank holding companies with between $100b and $250b would still have to conduct periodic stress tests, and the Federal Reserve (Fed) may apply any enhanced prudential standards to prevent systemic risk or promote safety and soundness....Nine Democrats, including six who are up for re-election in 2018, have already signed on to support the legislation. Sherrod Brown (D-OH), the ranking Democrat on the Senate Banking Committee, dropped his support last week. The Senate Banking Committee will mark up the bill on December 5th.Having nine Democrats on board bodes well for the bill’s passage because it can clear the 60 vote filibuster-proof threshold in the Senate. Although banks under $250b have already seen a reduction in their regulatory burden, including exemption from the qualitative objection under the Fed’s Comprehensive Capital Analysis and Review, a formal threshold increase for enhanced oversight will provide much more certainty.
The 10 Democrats Michael Bennet just joined the 9 other shills)-- and how much each has taken from the Financial Sector since 1990:
• Mark Warner (VA)- $7,953,499• Michael Bennet (CO)- $6,634,646• John Tester (MT)- $4,484,873• Tim Kaine (VA)- $3,716,155• Claire McCaskill (MO)- $3,588,019• Gary Peters (MI)- $3,470,941• Joe Donnelly (IN)- $2,502,087• Heidi Heitkamp (ND)- $1,812,830• Joe Manchin (WV)- $1,561,310• Angus King (I-ME)- $672,950
And, naturally, Elizabeth Warren is leading the opposition to the bill. David Dayen: "Bipartisanship, long left for dead in Washington, has struck again. And Wall Street looks to be the winner... "Using a moment the Democratic base is busy fighting the corporate giveaways in Trump’s tax scam to push through a gift-wrapped present for bank lobbyists is as cynical as Washington gets," said Kurt Walters, campaign director for Rootstrikers, a grassroots progressive group. The bill returns Washington to its longtime tradition of joining hands to reward Wall Street. Former presidents Jimmy Carter, Ronald Reagan, George H.W. Bush, Bill Clinton, and George W. Bush all hacked away at banking rules to varying degrees. After the worst financial crisis in nearly a century got in the way of this cross-party teamwork, banks had to lay low and were even forced to swallow Dodd-Frank-- although former President Barack Obama did eliminate an entire section of the bill involving derivative regulations in a year-end spending bill in 2014... Because the House has already passed a deregulatory financial bill called the CHOICE Act, Senate passage of this legislation could set up a conference committee. And with nine Democrats on board, the bill offers a path through the filibuster, the main barrier to getting initiatives through Congress."Our go-to expert in this policy area is Orange County professor and congressional candidate (CA-45), Katie Porter, who told us that "The chances that Congress repeals key protections for our economy illustrates the risks that come when candidates work for banks, rather than families. The incumbent in my race, Mimi Walters (R CA-45), voted for the House's CHOICE Act and will give Wall Street anything it wants. In fact, her only non-political job ever was working for Drexel, Burnham & Lambert, a posterchild for banking's lawlessness, as its executives faced indictments and the firm went bankrupt. In my campaign to replace Mimi Walters, I am not taking money from anyone who works for Wall Street or big banks--and I am the only candidate that I know of in the country with this strong position. I believe that the big banks have outsized influence, and that we should not let history repeat itself. Allowing banks to escape from protections puts our entire economy at risk. People can trust that I'll take my lifelong commitment to whistleblowing on bank misconduct straight to the House Financial Services Committee when I am elected to Congress."UPDATE: The 2nd Gilded Age: Economic ConcentrationAustin Frerick, the progressive running for the Des Moines-based congressional seat in Iowa, got to this a little late this morning but he had some clear ideas about the essence of what's wrong here: "The fundamental problem here is that we didn't address the key issue underlying the Great Recession and this 2nd Gilded Age: Economic Concentration. We should have broken up these too big too fail banks. Their economic power gives them political power to corrupt our system with things like manipulating the SIFI Threshold."
