By Simon Johnson, MIT Professor and author of 13 Bankers
April 22, 2010
The President's rhetoric today at Cooper Union was impressive and his body language indicates a major shift in administration attitudes towards the big banks over the past year. This is commendable.
But there is still the awkward question of legislation that would actually reduce the political power of big banks -- and make our financial system significantly safer. The latest indications from the Senate are that there will be some sort of "Dodd minus" compromise bill brought to the floor early next week. The Republicans have substantially backed down from Senator McConnell's "hell, no" position of last week because the polling is crystal clear: Anyone perceived as opposing financial reform will lose badly in November.
But the Democratic leadership is not seizing on this advantage and on the opportunity presented by the SEC case against Goldman Sachs -- key figures in the Democratic establishments are too worried about upsetting financial sector donors. As a result, come November, independents will view the Democrats with scorn, while the Democratic base will be far from energized; you do the math.
What can you do? What makes sense in both economic and political terms?
Call your Senator [Sen. Kyl [(202) 224-4521Fax: (202) 224-2207 Email.]Tell them that you support the Brown-Kaufman SAFE Banking Act (unveiled yesterday) -- as an amendment that would greatly strengthen the Dodd bill by capping the size and leverage of our biggest banks. Politely ask the people who answer the phone to make certain that this amendment gets an "up or down vote" in the Senate.
Sen. McCain [(202) 224-2235 Fax: (202) 228-2862 Email],
Call Senator Harry Reid (Senate majority leader) [Phone: 202-224-3542 / Fax: 202-224-7327Email], and
Call the White House [(202) 456-1111 Email]
The Brown-Kaufman Act is our best near-term chance to reduce the size of Wall Street megabanks that are too big to fail and that threaten our economy. (If you don't understand why this is important, read 13 Bankers; quickly -- this could all be over by this time next week.)
Tell everyone you know why this makes sense and ask them to make the call also. These calls will determine the outcome. If the Democratic leadership understands the groundswell of support for breaking up big banks, the Brown-Kaufman proposal has a chance to come to the floor -- and who exactly on the Republican side would like to be on the record as opposing it?
If no one who reads this post speaks out (and makes the call), the Brown-Kaufman amendment will not come to the floor. If some of you speak out, there is a sliver of a chance. And if all of you -- and everyone you know and everyone they know -- make three simple, short, and friendly phone calls, there will be a vote.
This post is crossposted at The Baseline Scenario. The book 13 Bankers is on sale now.
26Dems Editorial Comment: Simon Johnson and Co-Author James KWAK appeared on Bill Moyers Journal April 18. The authors sum up how Big Finance grew powerful enough to bring down the global economy, plus their take on Washington politicians and hope for real reform. Click on the picture below to view this important commentary.