Dodd-Frank

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see DODD 2

capt txt 519

financial reform, alleged post gt recession

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AN 1 25

Big Wall Street banks are hoping that President-elect Donald Trump will kill several major regulations imposed on the financial industry — including one set of rules aimed at preventing another 2008-style financial crash.

That's according to a Saturday article in the Guardian, which reported that banks are optimistic about the incoming administration's regulatory agenda. Some bankers are particularly eager about the possibility of Trump taking an axe to the Basel III rules, which were put in place in response to the global banking crisis that preceded the Great Recession of the late aughts.

In a 2024 article, Investopedia described **Basel III as an international set of guidelines developed by 28 countries that established "minimum capital, leverage and liquidity requirements to ensure major banks could survive another upheaval." This was a response to the forced bailouts of banks deemed "too big to fail," requiring an infusion of hundreds of billions of taxpayer dollars to keep financial institutions afloat.

READ MORE:**Wall Street banks accused of trying to sabotage key consumer protection rule**

In addition to Basel III, Trump could undo some of the anti-too-big-to-fail provisions in the 2010 Dodd-Frank financial reform act. This includes a mandatory "stress test" from the Federal Reserve imposed on all financial institutions with more than $50 billion in assets. Dodd-Frank also requires banks to put forth a "living will" that serves as a plan in the event a bank should fail.

A.J. Bell investment analyst Dan Coatsworth told the Guardian that big banks are optimistic about their treatment under Trump's second term given his promises to roll back corporate regulations. He said banks' surging stock prices in the wake of the election symbolizes Wall Street's bullish attitude toward the incoming administration, but emphasized that the industry didn't want so much deregulation that it would risk future instability.

“Trump wants to make things easier for banks, but he won’t want to risk any damage to the financial system,” Coatsworth told the Guardian. “That means being more lenient with rules but not having them too loose."

Financial institutions are also excited about Trump's stated opposition to the environmental, social and governance (ESG) movement in which investors are encouraged to hold their wealth in industries deemed to be more sustainable. JPMorgan Chase CEO Jamie Dimon has already suggested he would roll back the company's previous commitments to address climate change, and "use the word ‘commitment’ much more reservedly in the future" in regard to pro-environment pledges.

READ MORE:**(Opinion) Why Jamie Dimon loves Trump's policies**

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also koch

https://thinkprogress.org/how-koch-became-an-oil-speculation-powerhouse-706d135e412f/

jun 2011

In April, ThinkProgress caused a:{ }:{ }::{when we}::{ }:uncovered a series:{ }::{of Koch Industries corporate documents revealing the company’s role as an oil speculator. Like many oil companies, Koch uses legitimate hedging products to create price stability. However, the documents reveal that Koch is also participating in the unregulated derivatives markets as a financial player, buying and selling speculative products that are increasingly contributing to the skyrocketing price of oil. Excessive energy speculation today is at its highest levels ever, and even Goldman Sachs}::{ }:now admits:{ }::{that at least $27 of the price of crude oil is a result from reckless speculation rather than market fundamentals of supply and demand. Many experts interviewed by ThinkProgress argue that the figure is far higher, andout of control speculation has doubled the current price of crude oil.}:

Reached for information about its trading division, Koch Industries — America’s second largest private company — declined our request for comment

Writing on his political blog, an attorney working for Koch’s law firm angrily replied to our initial investigation by claiming that Koch is solely a bonafide hedger, meaning that it only participates in speculative markets to reduce risk for the oil the company refines (he also bizarrely argued that speculation has no relation to the price of oil). The spin obscures reality: much of Koch’s oil trading business is actually akin to a hedge fund, buying and selling financial products based on oil with little interest in the actual delivery of the product. In fact, Koch pioneered the risky speculation industry that dominates the world’s oil markets today, first by inventing oil derivatives back in the ’80s, then by working to kill off regulations. ThinkProgress has delved into the history of Koch’s oil speculation business and the following timeline spells out Koch’s leading role:

— October 6, 1986: First oil derivative is introduced to Wall Street by traders at Koch. Koch Industries executive Lawrence Kitchen devised the “first ever oil-indexed price swap between Koch Industries and Chase Manhattan Bank.”At the time, such derivatives had been limited to currency markets, and the shift of creating a synthetic financial instrument based on the value of crude oil was revolutionary.For an agreed-upon period, an oil swap is a contract where one party makes payments based on a fixed oil price, and the other party makes payments back based on the changing spot price of oil. In July of 2009, EnergyRisk magazine, a publication for commodity traders, posted a piece exploring the very first oil derivatives and Koch’s role in developing them.

— 1990–1992: Koch, along with several oil companies and Wall Street speculators, form a coalition lobbying group to deregulate oil speculation. A coalition called “The Energy Group” is organized to press the Commodity Futures Trading Commission (CFTC) to allow oil derivatives to be traded off the NYMEX or any other regulated exchange. Participants in the coalition include Koch, Enron,Phibro (a powerful commodity speculator firm recently sold from Citigroup to Occidental Petroleum), J. Aron & Co (a commodity trading division of Goldman Sachs), BP, and other companies.

— January 21, 1993. Wendy Gramm makes first major move to deregulate oil speculation. “On the final day of the [George H.W.] Bush administration, January 21, 1993, [CFTC chairwoman] Wendy Gramm … approved the rule exempting key energy futures contracts from government regulation and returned a great chunk of the energy market to the grand old days of unregulated futures trading,” writes author Antonia Juhasz in the book Tyranny of Oil. The move mirrored the demands made by Koch’s lobbying coalition, The Energy Group. Gramm, the wife of then-Sen. Phil Gramm (R-TX), leaves the Commodity Futues Trading Commission and a month later joins the board of directors of Enron.

— 1997: Koch continues to shift from oil refining and pipelines to financial products. As Koch continues its embrace of selling exotic financial products, the company pioneers the first “weather derivatives,” essentially insurance policies sold to utility companies that bet on future temperature and weather patterns. Although Enron and Koch were the first to develop such financial products, hedge funds and investment banks like Goldman Sachs later expand the weather derivative business globally.

— December 12, 2000: Sen. Phil Gramm (R-TX), after being lobbied by Koch and Enron, creates the infamous “Enron Loophole” vastly deregulating the oil speculation market. On the night of December 12, 2000, Gramm attaches a 262-page amendment to the Commodities Futures Modernization Act, which is then attached to an omnibus spending bill that is signed into law by President Clinton before leaving office. The Gramm amendment, which receivedabsolutely no public scrutiny or committee hearings, radically expands and codifies the energy deregulation agenda began by Gramm’s wife during the first Bush administration.The Gramm amendment allows so-called “over-the-counter” energy derivatives not only to be traded outside of regulated exchanges, but for private unregulated exchanges to deal in these sorts of financial products. Thus, massive “dark” oil speculation markets are born, including Enron’s platform for trading energy futures, and the Intercontinental Exchange (ICE) — an online speculation exchange founded by BP, Shell, Goldman Sachs, Morgan Stanley, and other firms. Private e-mails reported by the New York Times reveal that members of The Energy Group, led by lobbyists at Enron but including at least two lobbyists from Koch and several more from Goldman Sachs and Sempra Trading, wrote Gramm’s amendment and pressured him to slip it into the bill.

— 2008: Rampant oil speculation spikes prices to unprecedented levels. As academics from the Peterson Institute, the James Baker Institute at Rice University, and others conclude, non-commercial speculators begin to dominate the market, forcing up prices. Although the evidence was abundant that speculators caused the massive price spikes during the summer of 2008, regulators were toothless to act. A bipartisan majority in the House overwhelmingly passed legislation to award powers to the CFTC to oversee rampant oil speculation, but Republican in the Senate — acting with help from Koch lobbyists — killed the bill, called the Energy Markets Emergency Act.

— 2009: Koch presentation to ICE boasts that Koch is on the level of transnational big banks and can now be considered one of the world’s top five oil speculators. The presentation, and our analysis, can be found here. Of course, Koch is not the only large corporation engaged in this practice. Large investors, like pension funds, hedge funds, investment banks, and others flocked to the commodities market after the financial crisis of 2008 and the collapse of mortgage-backed securities.

— 2010: Koch’s Tea Party front groups and lobbyists fight financial reforms designed to reign in the unregulated energy market. While Americans for Prosperity, as well as other Koch fronts, decry the Wall Street reform bill debated in Congress, Koch lobbied to water-down provisions of the bill related to derivatives. The sweeping Dodd-Frank reform bill contained broad new powers for the CFTC to crack down on excessive oil speculation, while also requiring that derivative are eventually traded on a regulated and open exchange.

— 2011: As oil speculation again hits record highs, leading to record high oil prices, Koch’s allies in Congress fight to undermine new reforms and allow unchecked speculation to spiral out of control. As ThinkProgress has reported, oil speculation is currently at a record level, which experts, and even many Republicans now agree, is causing pain at the pump. After a furious lobbying campaign, the CFTC postpones Dodd-Frank mandated regulations on excessive oil speculation, known as position limits. As the CFTC grapples with how to implement these new rules, newly elected Republicans, many with Koch-backing, proposesteep cuts to the CFTC to undercut any rules on oil speculation.

Charles Koch, the CEO of Koch Industries who is worth a reported $22 billion, likes to call his business an example of something he describes as the “Science of Liberty.” In reality, his company’s deregulation crusade has contributed to rolling blackouts, consolidation and monopolies in financial markets, and economy-wrecking oil price spikes. In comments to the CFTC, the reform-minded nonprofit Better Markets noted that, “the history of these markets is a history of anti-competitive, self-interested, predatory conduct that serves the interest of the exclusive few at the expense of the many and the system as a whole.”...

After working furiously to unleash oil speculators like Koch and Enron, the Gramm family was rewarded with plum jobs, including spots on corporate boards and placements at speculator-funded think tanks. Wendy Gramm still holds a position at the Koch-funded Mercatus Center at George Mason University, although she hasn’t authored a paper in years. While the Gramm family has faded somewhat from the public eye, their actions have radically changed the global economy. Since the Koch-Gramm-Enron deregulation bonanza, non-commercial oil speculators have flooded the market and increased the price volatility of oil in leaps and bounds, hurting consumers and businesses across the globe while making a small set of oil barons and financial giants very rich.

A McClatchy investigation found: “Prior to the 1990s, speculators made up about 30 percent of the futures market. In the latest reporting period, the ratio on May 3 stood at 68 percent speculators to 32 percent users of oil.” The following chart illustrates the dramatic changes in the oil speculation market following the Koch-prescribed deregulation campaign, and how non-commercial speculators have pushed the price of oil higher and higher:

Michael Greenberger, a former top staffer the CFTC, explained to me that a common misperception is that oil companies are only bonafide hedgers, meaning they only participate in the futures market to lock-in prices for delivery of their product. With the exception of ExxonMobil, which has explicitly stated that it does not engage in speculation, all the major oil companies (Shell, BP, Occidental, etc) operate like Wall Street investment banks and use their privileged position in the oil market to make speculative bets on the price of oil. And as the unregulated oil market has grown, investment banks like JP Morgan and Morgan Stanley have become more like oil companies, buying tankers, pipelines, oil containers, and other physical assets to give them an edge while betting on oil. The Koch contango strategy detailed by ThinkProgress is not limited to Koch Industries either — Shell for instance is known for buying up cheap oil, storing it in tankers, and betting on future prices as they reserve the oil from the market.

Tyson Slocum, an expert on oil speculation at Public Citizen, has called Koch one of the worst actors when it comes to oil speculation. Koch, Slocum explained in an interview with ThinkProgress, is unique because of its status as a political powerhouse as well as a speculator with operations all over the world.

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https://kpfa.org/episode/letters-and-politics-february-8-2017/

vp econ

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https://www.democracynow.org/2017/2/3/headlines/wall_street_journal_trump_to_dismantle_dodd_frank_regulations

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target 1/17

freedom partners:

"Main Street Growth Project" Goes to Bat for Giant Financial Institutions

A $100,000 grant also helped flush out a previously unknown entity called the Main Street Growth Project. The grassrootsy website says the group is working on behalf of regular checking-account holders, small businesses, small investors and community banks tofight the Financial Stability Oversight Council (FSOC), an oversight body created by Dodd-Frank Wall Street reform bill.

But those "regular checking-account holders" should have $50 billion or more to catch the "Main Street Growth Project's" attention. The policies that the "Main Street" group is working on would largely affect the massive financial institutions that meet the threshold for a "systemically important financial institution" and trigger extra regulatory scrutiny under Dodd-Frank.

During the 2008 financial crisis behemoth institutions like insurer AIG helped create the crisis and spread the contagion around the globe by peddling dangerous derivatives products, but because they were not regulated like banks (which can be taken over and dissolved by the FDIC), the federal government struggled to resolve the serious threats posed to the economy by the collapse of AIG.

Part of the solution was to create an uber-oversight body authorized to break apart or even shut down massive financial institutions threatening the U.S. and global economy called the Financial Stability Oversight Council (FSOC). While the Main Street Growth website presents the FSOC board members as random Obama appointees, in factit includesthe most powerful financial regulators in the country, including the Secretary of the Treasury, the Fed Chair, and the heads of the SEC, FDIC, CFTC, OCC and more.

Main Street Growth Project was started by former Romney and Paul Ryan staffers as well as AEI's Paul Wallison to help institutions fightthe "systemically important financial institution" designation. They comfort asset managers: "You didn't cause the financial crisis. But now you're getting caught in the regulatory crossfire. We're here to help."

Today, as David Dayen reports, the roll back of the modest Dodd-Frank protections against another financial collapse is still priority number one for the GOP Congress. Among other attacks on the bill, the GOP wants "to raise the asset threshold for automatically labeling a 'systemically important financial institution' (SIFI) from $50 billion to $500 billion, giving big firms relief from expanded regulation under Dodd-Frank. They would also give existing SIFIs ways to wiggle out of the designation."

Backing ALEC Candidates

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related http://www.alternet.org/economy/why-community-banks-are-dropping-flies-across-america

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huffo kuttner 2014

ast week, I wrote a piece in this space lamenting the fact that so many Democrats had voted for a budget package that gutted a key provision of the Dodd-Frank Act.

The so called swaps push-out provision, now repealed, required banks to separate their speculative business in derivatives from depository banking covered by government insurance and further protected by the Federal Reserve.

The broader budget deal, technically a continuing resolution to keep the government funded through next September, also cut a lot of needed public spending and added several odious riders, including one that raises the ceiling on individual campaign contributions to party committees about tenfold.

Had Democrats resolutely opposed the deal, I argued, it would have revealed Republicans as friends of Wall Street and enemies of Main Street — a useful party differentiation between now and 2016. As it happened, the bill narrowly passed the House, over the strenuous objections of Democratic Leader Nancy Pelosi and most of the Democratic Caucus. But 57 House Democrats voted for the deal, blurring party differences.

In passing, I referred to New York Democratic Senator Chuck Schumer, the chair of the Senate Democratic Policy and Communications Committee (DPCC), as an “enabler” of the broader budget deal. Schumer, as the number-three person in the Senate leadership, supported the deal, and, I later learned, refused entreaties to use his influence to rid the measure of the gutting of a key provision of Dodd-Frank.

I soon received an outraged phone message and email from Matt House, demanding that I issue a correction. House, the Communications Director for Schumer on the staff of the DPCC, dictated the Correction he requested me to run:

“A spokesman for Sen. Chuck Schumer (D., N.Y.) says the senator played no role in promoting the change in financial derivatives regulation as part of the omnibus budget legislation.”

I refused to retract my story, and suggested that House send the Huffington Post editors a statement, which was duly published not as a correction but as an assertion from Schumer.

What set my journalistic antennae twitching was the fact that I had not claimed Schumer was behind the derivatives deal; only that he had been an “enabler” of the budget package as a whole. But clearly Schumer and his staff are extremely sensitive to any implication that he had anything to do with the derivatives part of the deal. It seemed to me that House was protesting a little too much, so I decided to do some further digging.

What was especially curious about the aggressive complaint that I got from Schumer’s office was the claim that not only did Schumer have nothing to do with getting the derivatives rider into the appropriations package, but that he took no position on it and was essentially indifferent to it. As House insisted, “He did not engage at all on this provision.”

This strains credulity, to say the least. Can we imagine that the senior senator from New York, a long time defender of the financial industry as a linchpin of the New York City economy, did not care one way or another whether the top legislative priority of Citigroup was included in the bill? According to one close observer of the process who regularly interacts with Schumer, “If Schumer really didn’t have a view on this rider, that would be gross incompetence and political malpractice.”

Schumer has long been the New York financial industry’s principal go-to guy in Washington. When he served as chair of the Democratic Senate Campaign Committee, from 2005 to 2009, Wall Street’s contributions to Senate Democrats increased 50 percent, according to a 2010 profile in the New Yorker magazine.

Schumer was a key sponsor of 2006 legislation prohibiting regulatory agencies from supervising credit rating companies — the same companies that bestowed the triple-A ratings on sub-prime securities that were a major cause of the 2008 financial collapse.

After the collapse, the political formula that had worked so well for Schumer — promote financial deregulation, reap campaign contributions — suddenly turned toxic. Schumer became a born-again reformer, supporting the Dodd-Frank Act, but prudently keeping his distance from the details of the legislative process despite his status as a member of the Senate Banking Committee and its financial institutions subcommittee.

Getting too closely engaged was a lose-lose proposition for Schumer, normally an intensely hands-on legislator. Work to strengthen the bill and you offend the banks; work to weaken it and you reinforce your image as the senator from Wall Street.

Ever since then, Schumer has performed a delicate balancing act, continuing to serve as a friend of the financial industry in Washington, but taking care not to have his name associated with any special interest legislation that could prove a broader political embarrassment. This has become doubly tricky, since Schumer is said to hope to become Democratic leader when Harry Reid, now 75, retires.

Last week, Schumer passed up the chance to become the ranking Democrat on the Senate Banking Committee. This role would have smoked out more of his views. When Schumer declined, the next in line was Sherrod Brown of Ohio, the first real progressive to hold the job since the era of Sen. Paul Sarbanes, who retired in 2006. Wall Street insiders could not have been happy that Schumer ceded the job to the populist Brown; that Schumer did so underscores the exquisiteness of his dilemma.

Schumer was described by insiders as quite unhappy when Reid added Elizabeth Warren to the Democratic Senate leadership. The post-2014, shrunken Democratic caucus, if anything, is to the left of the Democrats in the previous Senate. If Warren, the scourge of Wall Street, emerges as a rival to Schumer, close association with the big banks could prove even more toxic for him. Thus Schumer’s reluctance to be the ranking Democrat on the Banking Committee — and his adamant insistence that he had nothing to do with the swaps deal.

Should we believe him? There is no proof that he was a key player inserting the repeal into the budget resolution (nor did I write that he was) — but a lot of evidence that as a senior member of the Democratic leadership he did nothing to get it removed from the package once a strong opposition emerged. House Democratic Leader Nancy Pelosi, who led the losing fight to kill the deal, told associates that she considered Schumer an obstacle to getting the offending provision out.

We know that this derivatives provision was costly to the biggest banks, and that Citigroup has been lobbying hard to get rid of it. A free-standing bill drafted by Citi’s lawyers and lobbyists passed the Republican House in 2011, the so called “Swaps Regulatory Improvement Act,” but was killed by the Democratic Senate.

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ATTACK:

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Why Dodd-Frank Is Unconstitutional

The financial regulations signed into law in 2010 do not honor checks and balances. They eliminate them.

By C. BOYDEN GRAY AND JIM R. PURCELL

June 21, 2012 6:41 p.m. ET

When President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law nearly two years ago, he stated that "our financial system only works—our market is only free—when there are clear rules and basic safeguards that prevent abuse, that check excess, that ensure that it is more profitable to play by the rules than to game the system."

We completely agree. Which is why we filed a lawsuit on Thursday asking a federal court to declare that two parts of Dodd-Frank violate a bedrock rule of law: the Constitution's separation of powers, which the Founders designed specifically to limit the growth of government...

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Charles and David Koch have received positive press for backing a bipartisan effort to reform American criminal justice laws, which have helped make the U.S. the world's biggest jailer and whose burdens have fallen disproportionately on people of color.

But, as the Kochs ride the wave of momentum toward criminal justice reform, it is becoming increasingly clear that part of their agenda would actually make it harder to prosecute corporate violations of environmental and financial laws that protect the public from corporate wrongdoing. The changes would make it harder to hold executives and their employees responsible for violating U.S. laws and would protect their financial interests, at the public's expense.

Over at least the past five years, the Kochs and Koch-backed groups like the American Legislative Exchange Council (ALEC) have been pushing to increase the "intent" standard for criminal violations, particularly for so-called "white collar" crime and executive suite criminals.

This under-reported aspect of the Koch criminal justice reform agenda has been elevated in recent weeks, and could potentially reap big benefits for Koch Industries and other big corporate players.

"Intent" Requirement Would Block Many Corporate Criminal Prosecutions

Legislation to make the criminal justice system fairer passed the U.S. Senate with bipartisan support this winter. As the U.S. House of Representatives has taken up the matter, the bipartisan consensus has begun to fray with a controversial proposal lifted directly from the Koch playbook.

A bill that passed the U.S. House Judiciary Committee last month, sponsored by Rep. Jim Sensenbrenner (R-WI), doesn't address mass incarceration, one of the primary concerns that progressives have been raising for years. His bill would instead overhaul many federal criminal laws by requiring prosecutors to prove that a person or corporation "knowingly" engaged in illegal conduct and additionally "knew" or should have known that the conduct violated federal law. Koch Industries is one of his top contributors in this election cycle.

The bill's default criminal intent standard is strikingly similar to the ALEC "Criminal Intent Protection Act," and tracks policies promoted by Koch-backed organizations for the past five years. As the Center for Media and Democracy has documented, Koch Industries is a major funder and leader of ALEC, and the Koch brothers have underwritten ALEC through foundations they control and organizations they fund.

The proposal "would make it much harder for prosecutors to criminally prosecute companies that swindle the public, endanger their workers, poison the environment or otherwise imperil consumers," said Rob Weissman, President of the public interest group Public Citizen.

Criminal laws for acts of violence typically have an "intent" requirement, which requires that prosecutors prove that a person intended to cause harm and violate the law before a long prison sentence can be imposed. This intent requirement is known in legal terms as "mens rea," which is Latin for "guilty mind."

But for a number of white collar crimes, such as environmental violations and financial crimes under the Dodd-Frank financial reform law, federal law does not require that prosecutors prove that a company or its leaders intended to violate the law by polluting waterways, for example, or crashing the economy.

Instead, the fact of extensive pollution and the harms it causes can be enough to hold a corporation and its leaders criminally liable, because intent can be difficult to prove in a complex corporate structure, with varying layers of hierarchy and lines of authority. Corporate decisions rationalized in the name of cost-cutting or efficiency can lead to tragedies like the Upper Big Branch Mine disaster, which killed 29 workers. That case recently resulted in a rare criminal conviction for the former CEO of Massey Energy.

"Requiring that prosecutors prove that a corporate executive is both consciously aware of the conduct of their subordinates and consciously aware that the conduct of those subordinates violates criminal law is very, very difficult," said Frank O. Bowman, a law professor at the University of Missouri.

"This would make [white collar] prosecutions more difficult than they now are, and they are already hard," Bowman said.

Overcriminalization vs. Mass Incarceration

Although civil rights activists have been focused on mass incarceration—such as changing the mandatory minimum sentences enacted during the drug war that have disproportionately affected people of color, policies that scholars like Michelle Alexander have described as a "new Jim Crow"—the Kochs, ALEC, and other Koch-backed groups have been largely discussing overcriminalization.

Despite how it sounds, "overcriminalization" isn't focused on the disproportionate rate of incarceration of people of color. It is instead focused on the idea that there are too many crimes—and, more specifically, too many white-collar crimes that might affect corporate interests.

"All of the attention here is on whether this will only benefit quote-unquote white-collar criminals, people at financial institutions, people at firms that are damaging the environment," Jeffery Robinson, deputy legal director of the ACLU, said about the Sensenbrenner bill.

"If it only benefits those people, then I haven't seen any evidence that there is any over-incarceration among that group. In fact, we see very few prosecutions of such individuals."

That is, corporations and their leaders are not often federally prosecuted and convicted. In fact, many Americans have expressed deep disappointment that more corporations and bankers were not prosecuted following the gambling on Wall Street that led to the economic crash in 2008, unlike the nearly 1,000 prosecutions following the Savings & Loan crisis in the late 1980s.

"To a considerable extent, deferred prosecutions—in which the Justice Department agrees not to prosecute in exchange for a promise by corporate defendants not to violate the law in the future—have replaced actual prosecutions, undermining any kind of deterrent effect" for criminal penalties, Public Citizen's Weissman added. Deferred prosecutions are almost unheard of outside of the white collar crime context.

Some have expressed general concern that there are too many federal offenses with criminal penalties and too many that don't specify an intent standard, an issue that is being studied in the Senate bill. However, Koch-backed groups have been strongly focused on white-collar crimes, and their "solution"—the blanket imposition of a strict intent standard on every federal crime, as opposed to less-stringent "negligence" or "recklessness" standards—would undermine the few corporate criminal prosecutions that do take place.

For example, the U.S. Department of Justice has noted that—if the Sensenbrenner bill had been law—it could not have secured a guilty plea in last year's case against Jensen Farms, whose failure to follow food safety standards with its cantaloupe led to a listeria outbreak that killed 33 people. Imposing a default intent requirement could affect prosecutions for violations of laws like the Clean Water Act, the Clean Air Act, the Endangered Species Act, the Resource Recovery and Compensation Act (RCRA), and many others.

And such changes could also make it harder to prosecute Koch Industries.

As *Forbes* noted, in 2000, "A federal grand jury indicted the privately held company and four of its employees in September on 97 related charges for alleged violations that took place at the company's refinery in Corpus Christi, Tex." Koch Industries was facing "criminal charges, in which the petroleum giant is accused of spewing the toxic chemical benzene into the environment in 1995 and then trying to hide it from government investigators."

Koch and its employees may not have intended to "leak" 91 metric tons of toxic benzene into the air and water around their refinery but their failure to install key protections and fully monitor their emissions resulted in their refinery loading 15 times the legal limit of the toxic substance into the environment.

That is, Koch Industries exposed nearby residents to massive amounts of benzene, which "is a well-established cause of cancer in humans." It is a "group 1" carcinogen because studies have documented that it causes acute myeloid leukemia in humans, and it may also cause lymphocytic leukemia, non-Hodgkin's lymphoma, and multiple myeloma. It can also result in reduced production of bone marrow and suppress T-cells, which makes people more vulnerable to infections. It has also been found to lead to chromosomal aberrations and can reduce birth weight and cause other health problems.

But then George W. Bush became president and John Ashcroft was named Attorney General. In the 2000 election, David Koch was one of the top 30 donors to Bush and the Republican party in the U.S., contributing $378,500 directly and an untold sum through soft money operations resembling the Triad group that was tied to the Kochs following a Senate investigation, as the Center for Media and Democracy has documented.

The Bush administration reduced the charges, which could have led to fines of more than $500 million, and dropped the case to just one count for a Koch Industries subsidiary, Koch Petroleum Group. "Under the plea agreement, Koch will pay a total of $20 million dollars: $10 million in criminal fines and $10 million for special projects to improve the environment in Corpus Christi—a record amount imposed in an environmental prosecution," the DOJ stated.

It is this experience—the massive emission of a known carcinogen—that the Kochs say sparked their interest in criminal justice reform. Over the years, Koch Industries has been investigated for numerous potential violations of federal and state law. And the Koch reform efforts could help prevent such prosecutions from ever occurring again.

"Overcriminalization: Liberty, and More, At Risk for Corporations and Their Employees"

At times, the Kochs have been clear about the connection between "overcriminalization," a mens reaintent requirement, and their corporate interests.

In September of 2011, for example, Koch Industries' Associate General Counsel, Marsha Rabiteau, gave a presentation titled "Overcriminalization: Liberty, and More, At Risk for Corporations and Their Employees." She had given a nearly identical presentation two years earlier, titled then "Mens rea and other Criminal Law Fundamentals on the Tines of the Public Pitchfork."

That presentation, to a meeting of the Federation of Defense and Corporate Counsel, warned that:

"The life of the corporation, the liberty interests of corporate officers and other employees can be in the cross-hairs of criminal prosecution over matters that often do not rise to true criminal activity."

The solution to the "overcriminalization" problem, Rabiteau said, was to create a default mens rearequirement, as would later appear in the Sensenbrenner bill and in ALEC model legislation.

Rabiteau suggested that attendees visit the Koch-backed Heritage Foundation's "Overcriminalization" project (at overcriminalized.com) and cited a report from Heritage and another Koch-backed group, the National Association of Criminal Defense Lawyers, called "Without Intent: How Congress Is Eroding the Criminal Intent Requirement in Federal Law."

(Rabiteau also suggested that corporations, as a legal fiction, could not form the requisite "intent" to be held liable for a criminal act—although corporations and Koch groups have supported the creation of a right to corporate "free speech" in the form of spending unlimited amounts in elections.)

The Koch Associate General Counsel argued that reforming corporate criminal justice law is needed "so that wrongdoers are punished with laws that are clear and adhere to our Anglo-American heritage."

Although Rabiteau was likely referring to the country's "legal heritage," an appeal to "our Anglo-American heritage" to protect white collar criminals from criminal prosecution—when the burdens of an unjust criminal justice system have largely fallen on non-Anglo-Americans—further indicates the divide between the corporate criminal justice crusaders and civil rights-oriented reformers.

Moreover, America's legal heritage viewed corporate power with deep skepticism and for many years required that corporations have limited charters and durations to prevent them from misuse.

Dodd-Frank Wall Street Reform Compromise, "Without Intent"

The Koch funding for criminal justice reform efforts ramped-up as the federal government began taking steps to reign in financial institutions following the collapse of Wall Street.

As the Dodd-Frank financial reform bill was being debated in 2010, two Koch-backed groups, the National Association for Criminal Defense Lawyers (NACDL) and the Heritage Foundation issued a comprehensive joint report and project called "Without Intent" criticizing "overcriminalization" and the lack of intent requirements in the federal criminal code.

The co-author of NACDL's "Without Intent" report, which has been repeatedly cited in Congress' debate on criminal justice reform, is Tiffany Joslin, who is now Deputy Chief Counsel for the House Judiciary Crime Subcommittee, which is chaired by Rep. Sensenbrenner.

NACDL urged Congress to strike criminal provisions of Dodd-Frank that did not include an intent requirement, but Congress rejected that lobbying. When the law passed later that year, NACDL criticized the bill on these grounds:

"the overwhelming majority of the criminal offenses contained in the bill lack adequate mens rea, or criminal intent, requirements and, consequently, will fail to protect innocent or inadvertent actors from being criminally prosecuted or punished."

Why would the Kochs be concerned about Dodd-Frank and financial regulation? Because a big part of their multi-billion-dollar business comes from oil speculation. The Kochs have long been deeply involved in global financial markets, especially energy and commodity trading.

- See more at: http://www.prwatch.org/news/2015/12/13002/koch-criminal-justice-reform-trojan-horse#sthash.qFGXGqkw.dpuf

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http://www.democracynow.org/2015/8/21/in_victory_for_corporations_court_rejects

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t. 22 (Bloomberg) -- The U.S. Chamber of Commerce and National Association of Manufacturers asked a federal court to modify or scrap U.S. Securities and Exchange Commission rules governing so-called conflict minerals.

dodd- frank provison to acc't for oit $

white SEC

Finish 1504

make sure the Securities and Exchange Commission finishes the job to make Big Oil publish what they pay and put an end to secret deals.

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7/15

The WaPo noted there was some resistence to Jeb’s lobbying reforms in the beltway. No kidding.

This week's news provided an additional counterpoint underscoring why reversing decades of economic policies creating America’s inequality quagmire is so hard. Tuesday was the fifth anniversary of the Dodd-Frank reform law,which was passed to rein in Wall Street excess after 2008’s global financial meltdown.

The White House issued a long release touting the law’s stronger consumer protections, which have stopped commercial banks from gouging customers. It’s collected and paid back $10.1 billion to 17 million people, it said, and tried to make financial institutions more transparent and curb excess risk. The GOP has not fought the law like Obamacare;instead it's blocked one-third of its rules from taking effect, complaining all along that it would harm the economy.  

Meanwhile, outsized CEO pay—the most easily understood indice of greed—is still sky high. Two high-profile Wall Streeters, Goldman-Sachs CEO Lloyd Blankfein and JP Morgan CEO Jamie Dimon—just joined the ranks of the world’s billionaires. So the financial reform law, imperfect as it may be and hated by the GOP, has not exactly been bad for Wall Street's elite.

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fang machine:

ch 4 reform hits wall at k str

tom perrielo bogus ltrs 125 naac, sr, AAU women; bonner; WM watered house, killed senate

outside lobbying (only register if spend more than 20% talking directly to lawmakers, so astroturf not covered 126

bernays set up front for Mack truck for interstate hwy 127

TP astro by pol ops become fronts for corps eg salt; pol ops are hubs in rwi, energized by ~BO ad hoc swarm on single issue/bill

PR Qorvis staff henretty posed as news reporter and interviewed college rep on student debt (fun to track down to check on hoist]

lots of astro pose as merely ideological eg cut tax limit gov't but rentable sg Freedomworks army front for BP post spill 129.

CDR --> cornwall

tim phillips 131 goodlatte ralph reed, century stray  xian; rec by rove led to 1st big gig: enron 380K$ for energy dereg --> energy crisis /recession 201 DAVIS?! 132 note 15 Public citizen blind faith  see blindfaith.txt  http://www.citizen.org/cmep/article_redirect.cfm?ID=7104  see below  davis and reed got stuff in NYT

phillips marianas island sweatshop forced abortions, w/ abramoff indian scams 133 w/ grover launder $?

chambliss, sonny perdue, black bastard dtr ~ Mcc 134; hot air, tour, save my ballot tour joe the p; reg reality tour bouncy castles, food ~Clean air act 135 so god in 2010 expande 2012 tip pt on agw w/ pledge; met bloggers: if doubt on sci we win 136

ACA: see toxic sludge bk: rush jail ppl and bankrupt usa; harry & l: diss Moore as entertainer; APCO

Creative Concepts rick scott HCA, w/ APCO 3.8M$ 2009 142  CoC 10m$; industry 107M$ neg ads

1/2 AMA for ACA 1st x, so bogus CPPR, DCI; porter novelli ...

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How Wall Street Killed Financial Reform

It's bad enough that the banks strangled the Dodd-Frank law. Even worse is the way they did it - with a big assist from Congress and the White House.

by MATT TAIBBI

MAY 10, 2012

Two years ago, when he signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, President Barack Obama bragged that he'd dealt a crushing blow to the extravagant financial corruption that had caused the global economic crash in 2008. "These reforms represent the strongest consumer financial protections in history," the president told an adoring crowd in downtown D.C. on July 21st, 2010. "In history."

This was supposed to be the big one. At 2,300 pages, the new law ostensibly rewrote the rules for Wall Street. It was going to put an end to predatory lending in the mortgage markets, crack down on hidden fees and penalties in credit contracts, and create a powerful new Consumer Financial Protection Bureau to safeguard ordinary consumers. Big banks would be banned from gambling with taxpayer money, and a new set of rules would limit speculators from making the kind of crazy-ass bets that cause wild spikes in the price of food and energy. There would be no more AIGs, and the world would never again face a financial apocalypse when a bank like Lehman Brothers went bankrupt.

Most importantly, even if any of that fiendish crap ever did happen again, Dodd-Frank guaranteed we wouldn't be expected to pay for it. "The American people will never again be asked to foot the bill for Wall Street's mistakes," Obama promised. "There will be no more taxpayer-funded bailouts. Period."

Two years later, Dodd-Frank is groaning on its deathbed. The giant reform bill turned out to be like the fish reeled in by Hemingway's Old Man – no sooner caught than set upon by sharks that strip it to nothing long before it ever reaches the shore. In a furious below-the-radar effort at gutting the law – roundly despised by Washington's Wall Street paymasters – a troop of water-carrying Eric Cantor Republicans are speeding nine separate bills through the House, all designed to roll back the few genuinely toothy portions left in Dodd-Frank. With the Quislingian covert assistance of Democrats, both in Congress and in the White House, those bills could pass through the House and the Senate with little or no debate, with simple floor votes – by a process usually reserved for things like the renaming of post offices or a nonbinding resolution celebrating Amelia Earhart's birthday.

The fate of Dodd-Frank over the past two years is an object lesson in the government's inability to institute even the simplest and most obvious reforms, especially if those reforms happen to clash with powerful financial interests. From the moment it was signed into law, lobbyists and lawyers have fought regulators over every line in the rulemaking process. Congressmen and presidents may be able to get a law passed once in a while – but they can no longer make sure it stays passed. You win the modern financial-regulation game by filing the most motions, attending the most hearings, giving the most money to the most politicians and, above all, by keeping at it, day after day, year after fiscal year, until stealing is legal again. "It's like a scorched-earth policy," says Michael Greenberger, a former regulator who was heavily involved with the drafting of Dodd-Frank. "It requires constant combat. And it never, ever ends."

That the banks have just about succeeded in strangling Dodd-Frank is probably not news to most Americans – it's how they succeeded that's the scary part. The banks followed a five-point strategy that offers a dependable blueprint for defeating any regulation – and for guaranteeing that when it comes to the economy, might will always equal right.

STEP 1: STRANGLE IT IN THE WOMB

The first advantage the banks had lay in the fact that for all Obama's bluster, Dodd-Frank was never such a badass law to begin with. In fact, Obama's initial response to the devastating financial events of 2008 represented a major departure from the historical precedent his own party had set during the 1930s, when President Franklin D. Roosevelt launched an audacious rewrite of the rules governing the American economy following the Great Crash of 1929....

STEP 2: SUE, SUE, SUE

While death and taxes may be only relative certainties in today's economy – failing megabanks neither die nor pay taxes anymore – one thing that was always absolutely certain from the start was that Wall Street was going to sue the living hell out of Washington before the ink was even dry on Dodd-Frank. It took a little while, but the banks very quickly found a tried-and-true method of tying up the reforms in court.

Wall Street's first big win involved a small-but-important change known as the "proxy access" rule, which made it easier for people who own stakes in a company to remove directors from the board – giving shareholders more power to rein in corrupt or overpaid company executives. More democracy in business sounded like a good idea to almost everyone. But Wall Street has a dependable playbook for getting rid of any reform, no matter how small, that leads to greater accountability. "First, they hire a shit-ton of lobbyists to go to the regulators," says Jim Collura, spokesman for the Commodity Markets Oversight Coalition. "Then, they beat the crap out of them during the rulemaking process. And then, when that's over, they litigate the hell out of them."

Sue their asses! For all the right's supposed hatred of "activist judges," conservatives immediately flocked to the courts in search of magistrates willing to casually overturn the work of elected officials. In the case of the proxy access rule, Wall Street convinced its two favorite lobbying arms, the Business Roundtable and the Chamber of Commerce, to sue the Securities Exchange Commission over a technicality, claiming that the agency had not done a proper cost-benefit analysis before it instituted the new rule. In an appropriately loathsome touch, the Chamber's legal team was led by one Eugene Scalia, son of Supreme Court Justice Antonin Scalia. The younger Scalia, who looks like the product of a twisted test-tube experiment that crossed his father with Ari Fleischer, pitched a federal appeals court on the idea that the proxy access rule was "arbitrary and capricious," and that the SEC hadn't spent enough time studying the rule's effects on "efficiency, competition and capital formation."

In fact, the agency had produced 60 pages of cost-benefit analysis and had spent, according to SEC chief Mary Schapiro, some 21,000 man-hours working on the bill and studying its effects. Still, the court wasn't impressed. In his opinion, presiding judge and Reagan appointee Douglas Ginsburg peed all over Dodd-Frank, vacating the rule, which he dismissed as "unutterably mindless." With striking chutzpah, considering that he was ruling in a case brought by the mother of all special­interest lobbies, Ginsburg also denounced the shareholder rule as a gift to special interests, particularly "unions and government pension funds."

Almost immediately after the win, the gloating Scalia issued a thinly veiled threat to regulators, letting them know that any attempt to implement more limits on Wall Street would likely result in the same kind of lawsuit. "I would hope the agencies are taking to heart the potential consequences for Dodd-Frank rules," he chirped.

The success of the lawsuit cemented Wall Street's strategy for doing away with Dodd-Frank. Rather than challenge the constitutionality of the bill in one broad suit, the finance industry would take the bill apart by pulling out one fingernail at a time. "Dodd-Frank is not one thing but many," Margaret Tahyar, a partner at the white-shoe corporate defense firm Davis Polk, told reporters last year. "There is no reasonable constitutional or statutory challenge on the whole – only on the bits and pieces."...

STEP 3: IF YOU CAN'T WIN, STALL

You might think otherwise, but it doesn't naturally follow that because a law has been passed by Congress and signed by the president, said law actually has to be implemented. With Dodd-Frank, the SEC took a brilliant approach to submarining one of its own regulations. The agency was supposed to begin enforcing the new proxy access rule by late 2010. Instead, in October 2010, it granted speculators a last-minute stay – essentially giving the Chamber of Commerce time to prepare its lawsuit to permanently kill the rule.

Position limits are another example. Dodd-Frank ordered the CFTC to begin enforcing the new rule no later than January 17th, 2011. But January 17th came and went, and – no position limits! Gary Gensler, the head of the CFTC and a former executive of Goldman Sachs, then announced that he hoped to implement the rule by September 2011. But September came and went, and soon it was 2012, and before you knew it, the CFTC, like the SEC, was in court, facing a lawsuit that would permanently kill the rule.

Even the president got into the stalling game. During the year of nonaction on position limits, the "disease that did not exist" – energy speculation – returned to ravage the American gasoline market. In the winter of 2011, oil soared above $100 a barrel, despite fundamentals of supply and demand that would have suggested a price drop. Obama blasted fuel speculators for the price hike and announced that he was creating the Oil and Gas Price Fraud Working Group to "root out any cases of fraud or manipulation in the oil markets." He added, in stern and stirring tones, "We're going to make sure that nobody is taking advantage of American consumers for their own short-term gain."

...

STEP 4: BULLY THE REGULATORS

A seldom-considered factor in Dodd-Frank is that Congress controls the funding for the federal regulators who are charged with carrying out the new law. Last year, after Republicans attempted to slash the CFTC's funding by more than 33 percent, Congress settled for freezing the agency's budget, despite the fact that under Dodd-Frank, the market that the CFTC is responsible for overseeing soared from $40 trillion to $340 trillion. That same year, Republicans tried to cut the SEC's budget by more than $25 million.

This results in a curious dynamic: When Wall Street is frustrated by regulators in the rule-making process, it can simply lobby Congress to rein them in. The regulators are then forced to strategically surrender on the rules in order to stave off budget cuts, Eugene Scalia or whatever other horror-show phenomena Congress and the financial industry might throw their way.

Take those huge Paul Ryan-led budget cuts that the House passed in April, scrapping the entire bailout portion of Dodd-Frank. The cuts may not survive in the Senate, which is still controlled by Democrats. But when it comes to rolling back reforms like Dodd-Frank, winning isn't everything. These continual whippings of the new law in the House serve a larger purpose, which is to frighten and intimidate regulators like the SEC and the CFTC, who aren't even finished writing the law's actual rules. The message is clear: If you don't write the rules in the weakest way possible, we have the juice to overturn you in Congress.

"What this is, above all else, is a play to put the House on record," says one congressional staffer familiar with the budget-cutting­battle. "It's a leverage tactic. If they have 75 percent of the Financial Services Committee that says, 'You've made mistakes,' or 'This is too gray,' that is a huge hole card."

Even the CFTC admits this pressure exists: Commissioner Bart Chilton warned in March that his regulators risk being "scared into making rules and regulations that are weak or ineffective because we are overly concerned about what we call 'litigation risk.'" According to Marcus Stanley, policy director for Americans for Financial Reform, one regulator admitted that he worries in advance about Wall Street going over his head. "If we make this rule too tough," the regulator told Stanley, "industry is just going to go to Congress and punch it full of holes."...

STEP 5: PASS A GAZILLION LOOPHOLES

By the beginning of this year, as a result of all of these threats, delays and lawsuits, Americans could barely see Dodd-Frank's footprint in their everyday economic life. Yet Wall Street was still insufficiently convinced that key portions of Dodd-Frank were really dead. So it went over the heads of regulators and impelled Republicans in the House to create an avalanche of new laws designed to undercut the rules the CFTC and SEC were already heroically failing to write.

You might wonder how a bunch of lunkhead Republican congressmen would even know how to write a coordinated series of "technical fixes" to derivatives regulation, a universe so complicated that it has become hard to find anyone on the Hill who truly understands the subject. (One congressman who sits on the Financial Services Committee laughingly admitted that when the crash of 2008 happened, he had to look up "credit default swaps" on Wikipedia.) It turns out, they had help from the inside. Scott O'Malia, a Republican commissioner on the CFTC who formerly served as an aide to Senate Minority Leader Mitch McConnell, apparently sent a member of his staff over to the House to help the Republicans write bills to undercut the CFTC's authority. Originally a Bush appointee, O'Malia ignited a controversy when he was renominated to the CFTC by Obama because he had once been a lobbyist for Mirant, an energy company that was caught withholding power from California during blackouts. One of Mirant's subsidiaries was even fined $12.5 million for attempting to manipulate natural gas prices.

Now, Obama's own appointee is reportedly leading the charge against finance reform. "O'Malia has assigned a staffer to quarterback all of these bills," says Greenberger. "He's orchestrating a sort of under-cover-of-darkness approach to driving holes in Dodd-Frank."

The nine bills being contemplated by Congress take a variety of approaches to gutting Dodd-Frank. Two bills, H.R. 1840 and H.R. 2308, are essentially stalling tactics, requiring regulators to undertake more of those sweeping cost-benefit analy­ses that result in lengthy delays. Another bill, H.R. 3283, is more substantive: Sponsored by Connecticut Democrat and hedge-fund industry BFF Jim Himes, it exempts foreign affiliates of U.S. swaps dealers from all Dodd-Frank oversight. The rule, if implemented, would make the next AIG possible, given that AIG was undone by half a trillion dollars in derivative bets produced by such a foreign affiliate – its London-based financial products outfit, AIGFP. If passed, says Rep. Brad Miller, a Democrat from North Carolina, H.R. 3283 would leave a "massive, gaping hole" in Dodd-Frank. "It would be very easy to move those trades to whatever the most indulgent country would be," Miller explains.

The bill also exempts from oversight any swaps deals between company affiliates – meaning that Goldman Hong Kong can sell swaps to Goldman New York without having to deal with Dodd-Frank. That sounds harmless, but when you combine it with the AIG-style exemption, a bank would basically be able to get around Dodd-Frank entirely by creating its swaps products at an overseas branch, or moving them back and forth between affiliates.

An even more distressing bill, which recently raced through the committee process with a simple voice vote, is H.R. 3336, granting broad exemptions from swaps regulations to any company that offers "extensions of credit" to customers. There are some who are convinced that once the financial industry's lawyers get hold of this "extensions of credit" line, they will use it to win exemptions for banks engaged in almost any kind of lending activity – including those involved with municipal-bond offerings, one of the most dependably corrupt businesses in the American economy.

"If all of these bills pass," says Stanley, "I don't know why we wouldn't just invite the industry lobbyists in to rewrite the rules."

...

The truth is that Dodd-Frank is so huge, and contains so many complicated new rules, that there are, in fact, many areas where small technical fixes are needed. H.R. 4235, one of the nine bills brought before Congress, resolves a real problem with the way swaps data is collected, an issue that was preventing foreign swaps dealers from getting onboard with the reform. But when needed fixes like this are thrown in side by side with a mind-boggling exemption for swaps dealers like H.R. 3336, which hits the floor as the innocuously named "Small Business Credit Availability Act," all those members of Congress who don't sit on the Financial Services Committee will have no way of telling which bill is the minor technical fix and which is the sweeping repeal. Moreover, when those members see that some bills are co-sponsored by Democrats, and that the Democratic leadership agreed to put the bills on the suspension calendar for a simple voice vote, many will take it as a cue that it's OK to vote for the rollbacks.

That's particularly true because most members of Congress know that the public seldom pays any attention to the fiendish complexities of things like derivatives reform. "I've never had someone back in the district say to me, 'I think derivatives need to be traded on an exchange,'" says Miller. "These are the kinds of issues that aren't going to have any pop in a 30-second ad."

The nine bills to gut Dodd-Frank could also receive a JOBS Act-style welcome when they reach the Senate. There are only two Senate committees with the jurisdiction to tackle these bills, and neither appears to be planning to take a whack at any of the new measures. The Agriculture Committee, which oversees the CFTC, has been busy dealing with a huge farm bill. The Banking Committee, which oversees the SEC, is dominated by Democrats who wouldn't mind at all if Dodd-Frank had both its legs broken, including Chuck Schumer of New York and Mark Warner of Virginia. What's more, the committee's understated chairman, Sen. Tim Johnson of South Dakota, seems weirdly willing to let pretty much anything touching the financial world roll straight to a vote without his changing a comma – a sharp contrast to the days when fist-shaking politcal Godhead Chris Dodd ran the committee.

"Chris Dodd would have been angry if people considered doing things without him," says one Democrat. "He'd be like, 'You, out of my sandbox.'"

That means all those thousands of hours of debate and fierce negotiation spent hammering out Dodd-Frank two years ago might now go up in smoke in a matter of a few quiet minutes. Of the big-ticket items that were actually passed two years ago, the derivatives reforms have been completely gutted by loopholes, the Volcker Rule has been delayed for two years, and the Consumer Financial Protection Bureau may be thrust under the budgetary control of Congress, which is determined to destroy it. And much of this is taking place with the assent of Democrats, for a very simple reason: because the name of the game isn't cleaning up Wall Street, it's cleaning out Wall Street – throwing a "yes" vote at a bank-approved bill to get them to pony up in an election year. "All this is aimed at the financial services industry," admits one senior Democratic congressional aide. "It's to let them know, 'Hey, you're OK, we're not going to destroy your business – and give us your money, because we're trying to raise it for an election.'"

That's the underlying problem with cracking down on Wall Street: Our political-economic system has grown too knotted and unmanageable for democratic rule. While it's incredibly difficult to get a regulatory reform passed, it's far easier – and more profitable to politicians – to kill it. Creating legislation is a tough process. But watering down legislation? Strangling it with lawsuits and comment letters and blue-ribbon committees? Not so tough, it turns out....

http://www.rollingstone.com/politics/news/how-wall-street-killed-financial-reform-20120510?print=true