Banks battle regulations by spending even more on lobbying
The battle over bank regulation rages on in Washington.
You might have thought the fight was pretty much over when Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010.
According to the Center for Responsive Politics, the banking industry spent $56.6 million on lobbying in 2010 in an effort to stop, or at least water down, the bill.
It actually spent more in 2011, about $61.2 million, to influence the regulations being written to enact all of the provisions in the 2,319-page bill and to seek favorable changes in the law.
I'm dismayed by the time and energy being expended over regulations that would have been totally unnecessary had we done the right thing after the banking crisis of 2008.
What we're seeing is a desperate attempt by governments and regulators in the United States and Europe to prevent the banking industry from recklessly crashing and burning again.
They're writing reams and reams of rules in an effort to stop the banks from taking the same foolish risks that led to the last financial crisis and every other foolish risk they can think of that might lead to the next financial crisis.
Because, as President Barack Obama said in his State of the Union address, there isn't going to be another bailout.
The next time the global banking industry decides to drive off into the ditch, it's going to be totaled and we'll be hanging on for dear life in the backseat.
We started down the road to the last crack up in 1999 when President Bill Clinton foolishly sided with Republicans pushing to deregulate the nation's banks.
The relatively simple laws that had ensured we had a sane and stable banking industry were swept away with little regard for what that would mean for us or the economy.
We were thrust into a new world where banks could take more risk with their money (and our money) and everyone would benefit from a wave of "financial innovation."
It was like Mom (the Democrats) and Dad (the Republicans) had decided to give the kids a box of matches on their way out the door for an extended vacation.
Of course, the parents expressed great confidence that the kids would use those matches in only the most responsible way.
But when they returned home, they found the kids had burned the place down and nearly taken out the entire neighborhood (the global economy) in the process.
Now the reasonable response would be to grab back the matches and realize that the kids just can't be trusted with them.
Dad became the kids' apologist and insists they need less supervision, not more, while playing with matches.
Even Mom was willing to let the kids keep on playing with matches if they'd just agree to follow a bunch of new rules that would make it safer (Dodd-Frank).
You know what we didn't have?
A serious debate about going back to all of the old rules that would forbid the banking industry from playing with matches at all.
Returning to the Glass-Steagall Act of 1933, which was written to rescue the banking industry after it plunged us into the Great Depression, made a lot of sense.
But $50 million or $60 million a year worth of lobbying and a generous bipartisan approach to campaign contributions ensured that wouldn't happen.
The kids would keep their matches, thank you very much.