Deregulating Wall Street Sets the Stage for More Bailouts

Wednesday evening, the U.S. Senate approved S. 2155, legislation that deregulates Wall Street, on a vote of 67-31. The bill was authored by U.S. Sen. Mike Crapo (R-Idaho), chair of the U.S. Senate Banking Committee and contains more than 40 provisions that include deregulation of banks with as much as $250 billion in assets, erasure of reporting requirements meant to combat racial discrimination in lending, permission for certain banks to speculate with depositor funds and many others. The bill goes now to the U.S. House of Representatives, which has passed more than 90 Wall Street deregulation measures this session.

The following are statements from Public Citizen experts in response:

"When Washington rolls back Wall Street rules, Americans suffer. It happened with savings and loan association deregulation, which led to a real estate collapse. It happened with repeal of Glass-Steagall in 1999, which led to the 2008 crash. And it may well happen with this bill. It's especially disappointing that Democrats made this possible - but not surprising, since nine of the 13 Democrats who sponsored the bill received more campaign cash from the financial industry than any other. Political spending should not determine financial policy.

"Washington insiders are telling a story about centrist Democrats up for reelection aiming to demonstrate their commitment to bipartisanship. But that fairy tale is upside down: among the public, there is in fact overwhelming bipartisan opposition to Wall Street deregulation."

- Robert Weissman, president

"Public Citizen opposes this bill, as do all other consumer groups, as well as labor unions, civil rights leaders, faith leaders, university professors and, importantly, former regulators. Paul Volcker opposes it, as does Republican Sheila Bair, Independent Tom Hoenig of the FDIC and many others. Only bankers and Trump-appointed regulators support this bill.

"Masquerading as aid for community banks, this legislation reduces oversight of 25 of the largest 38 banks, a group guilty of misconduct and recipients of some $48 billion in bailout money after the 2008 crash. In addition to setting the stage for another taxpayer-funded bailout, this bill also reduces safeguards against discriminatory, predatory lending for some of the most vulnerable consumers. A number of senators have highlighted these problems. Public Citizen applauds U.S. Sens. Sherrod Brown (D-Ohio), Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), Catherine Cortez-Masto (D-Nev.) and others for defending Main Street consumers in their valiant, though ultimately unsuccessful, effort on the Senate floor to stop this travesty."

- Lisa Gilbert, vice president of legislative affairs

"Ten years to the week after Americans began bailing out Wall Street with the rescue of Bear Stearns, the Senate heads us down the same path with this bill. Senators should make good on promises for financial reform such as the restoration of the Glass-Steagall, contained in both Democratic and Republican platforms. Instead, they are moving forward with removal of safeguards enacted after the 2008 Wall Street crash. Today, senators either brag they opposed the repeal of Glass-Steagall or regret that they supported it. The same will prove to be true of Crapo-Hensarling."

- Bartlett Naylor, financial policy advocate