The 17 Democrats selling out on bank regulation is worse than it looks

[zipplewrath]

39. Well, apart from the sarcasm

I get the basic thrust of the OP, because it's true, they seem to be signing on, without getting anything for their support.

Of course, what that means is getting anything FOR THEIR CONSTITUENTS per say. They are probably getting contributions from the industry, and some "protection" come election time.

That said, this bill is moving forward without alot of resistance because of what it claims to do. The collapse occurred because alot of large international banking institutions were involved in hugely risky investment vehicles. There were also huge national mortgage entities that were issuing bad paper, and then getting the rating agencies to give them safe ratings.

This bill is intended to relieve many of the smaller regional and state level banks from much of this since they weren't part of the problem to begin with. They are claiming, and their senators are representing that this is unfairly hurting them and causing the states to lose that state and local focused loans that support local growth, in favor of large national banks that are more interested in larger deals in out of state locations.

Which all sounds really good, but I'm not sure you can really make that case. Small banks struggle for a variety of reasons, most of them having nothing to do with regulation. My credit union just merged with a much larger one, not because of regulations, but because at their size, they had a hard time serving their highly distributed customer base. Regional banks often don't generate enough capital to support large regional projects, and those projects have to go seeking the larger institutions. They are often also ripe targets for mergers. When you are a large bank wanting to become a big player in New York, the quickest way is to buy up alot of small banks. None of this has to do with regulation.

And the risk isn't so much that these institutions won't be well regulated, it is that they get labeled as being easier to regulate, and so become attractive targets for others to get control and leverage into much larger deals, before anyone notices and begins to regulate them at the level they deserve. The get involved in "cooperative" deals that don't seem as large, until you see that these deals, in the conglomerate, and very big indeed. This was a big problem in the Savings and Loan Crisis way back when. Folks bought up small ones and created an interconnected set of institutions that no one noticed were all tied together, until it was too late.