After almost destroying the entire U.S. economy with their reckless trading of “exotic instruments” (otherwise known as worthless paper), Wall Street banks are now subject to at least a nominal set of rules thanks to the Dodd Frank legislation passed in the wake of the financial crisis.
Nobody believes these rules are tough enough, but they are better than nothing. They were passed in a bipartisan act of Congress, in response to a pressing need: the need to prevent banks from doing things that can create a dangerous bubble that might pop, and then require a bailout, courtesy of taxpayers, to prevent the entire American entire financial system from cratering. In sum, Dodd Frank attempted to put some restraints on Wall Street, so that what happened in 2007 doesn’t ever happen again. The Act also prevents consumer banks–aka credit card companies–from ripping off consumers with large fees, rates, nasty fine print, etc.
So you might wonder why Tim Fox, our new attorney general has decided to sue the federal government to try to invalidate Dodd Frank. He has recently joined a lawsuit with ten other states, Republican states with Republican attorneys general.
To help sell it, Fox has enlisted a few small bankers in Montana who claim that the Dodd-Frank rules are too onerous on them, and that they must “devote a staff person” to dealing with the red tape and thus Dodd-Frank “hurts Main Street.”
This is a lot of rot, pure and simple. Tim Fox’s campaign for attorney general was funded with at least $700,000 in anonymous money. He never told us whose money it was, but we should now presume, given that he refuses to say who wrote the check, that it came at least partially from big banks who stand to benefit from getting rid of these new Dodd-Frank rules.
Hence Fox’s first act as attorney general is to try to remove new regulations aimed at preventing banks from 1) running themselves into bankruptcy with stupid financial decisions, 2) creating a situation where a single bank’s failure can domino into a catastrophic, global financial disaster, and 3) getting the American taxpayers to bail the system out, while the CEOs remain in their highly compensated positions and continue to collect big bonuses.
That’s your attorney general at work.