Just ten years ago, reckless and criminal behavior on the part of Wall Street banks and their executives caused the greatest financial collapse since the Great Depression. Millions of Americans lost their jobs and their life savings. At the height of the crisis, three million Americans also lost their homes to foreclosure each year. At the same time, literally half of middle-class wealth in the U.S. was wiped away. All told, the federal government estimates that $22 trillion was lost.
The impact was widespread, and affected both younger Americans entering the workforce, who wondered if they would ever be able to attain their parents’ quality of living, and older Americans, who wondered if they would ever be able to retire.
We all learned a painful lesson about what happens when greedy bankers are given too much control over the economy. I saw this firsthand in my legal career: our clients sued companies like Goldman Sachs, Countrywide, and GMAC Mortgage for their role in causing the crisis. I saw how a callous disregard for taking risks with other people’s money created a ticking time bomb. I can tell you from experience that these banks are bottomless pits of greed. They don’t care how many people lose their homes or their pensions if it means their executives and shareholders can buy another house, yacht, or private jet.
Amazingly, we are on the verge of repeating history and setting the stage for yet another financial crisis. This week, senators from both political parties finally found something that most of them could agree on: doing the bidding of the Wall Street banks who finance their campaigns. The bill they just sent to the House would gut the Dodd-Frank Act’s safeguards on lending and risk-taking practices of banks with between $50 billion and $250 billion in assets.
Let me be clear: this bill does not benefit ordinary Americans in any way, shape, or form. It is being pitched as a way to help community banks and credit unions, but that’s a lie. There are 5,300 community banks in the U.S., and almost all of them have fewer than $1 billion in assets. They’re not helped at all by this rule.
But 25 of the 38 biggest banks in the country fall into the $50 to $250 billion range, and now those banks will be free to do what they did before Dodd-Frank: make bets on the market with federally-insured deposits, engage in discriminatory lending practices, and take on outrageous levels of risk. These are exactly the same tactics that caused the last financial crisis, which is why the independent Congressional Budget Office said this bill would make it much more likely that we experience another financial crisis and another round of bank bailouts with taxpayer dollars.
These are big banks, not “mid-sized” banks, and they were at the heart of the last financial crisis. Countrywide and GMAC had fewer than $250 billion in assets at the time that they triggered the crash in the mortgage market. Megabanks like Barclays, Credit Suisse, Deutsche Bank, and Santander will also slip under the $250 billion threshold.
The banks and their puppets in Congress have claimed that the Dodd-Frank rules are stifling banks’ ability to make money. This is another lie: bank earnings have increased every year since the law’s passage in 2010, and hit record highs in 2014, 2015, and 2016. Community banks, which Wall Street lobbyists are using as a shield to ram through rule changes for big banks, are also doing well: 96 percent of them are profitable, and deposits have gone up every year since 2010.
Lobbyists have also argued that Dodd-Frank is hurting consumers, which is yet another lie. Since 2010, the number of banks offering free checking has gone up, mortgage and auto loan rates have gone down, and bank fees have leveled off after years of growth.
I’m running for Congress to represent you, not Wall Street banks. As this bill heads to the House, I urge you to call Tom Marino at 202-225-3731 and demand that he does the same.