USA BANKS “We Are Lurching Toward Plutocracy”: Rep. Ellison on Rollback of Key Dodd-Frank Banking Regulations

by democracy now | 24th May 2018 10:51 am

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In a rare bipartisan effort Tuesday, House lawmakers voted 258 to 159 to exempt banks with less than $250 billion in assets from many of the 2010 Dodd-Frank Act regulations, even though banks’ profits are soaring. The Dodd-Frank Act was passed after the 2008 economic crisis, which was provoked by years of risky lending by Wall Street banks. Thirty-three Democrats joined their Republican counterparts in voting for the financial regulation rollback, which, if signed into law, would leave less than 10 banks in the U.S. subject to stricter federal oversight.


For more, we speak with Minnesota Democratic Congressmember Keith Ellison. He is the first Muslim member of Congress and the deputy chair of the Democratic National Committee, or DNC.


This is a rush transcript. Copy may not be in its final form.


JUAN GONZÁLEZ: On Capitol Hill, Congress passed sweeping legislation to exempt thousands of banks from key regulations in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, meaning the vast majority of banks will no longer have to follow the regulations aimed at preventing another financial meltdown. The Dodd-Frank Act was passed after the 2008 economic crisis, which was provoked by years of risky lending by Wall Street banks. Yet, in a rare bipartisan effort on Tuesday, House lawmakers voted 258 to 159 to exempt banks with less than $250 billion in assets from many of these regulations, even though banks’ profits are soaring.


AMY GOODMAN: A report issued Tuesday from the FDIC, the Federal Deposit Insurance Corporation, said the net income of banks and savings institutions hit $56 billion in the first quarter this year, a 27 percent increase from a year ago. Thirty-three Democrats joined their Republican counterparts in voting for the financial regulation rollback, which, if signed into law, would leave less than 10 banks in the U.S. subject to stricter federal oversight.


Well, we’re still with Democratic Congressmember Keith Ellison of Minnesota, first Muslim member of Congress, deputy chair of the Democratic National Committee.

Congressmember Ellison, there’s a hashtag going on there that says #resistance or #assistance. Talk about the significance of this bill and the more than a score of Democrats who joined with the Republicans in rolling back these regulations.


REP. KEITH ELLISON: This was a very bad bill for the American consumer, for investors, for just everyday citizens, homeowners, people who want to keep their jobs. I mean, it’s like people forgot all of the financial and economic devastation of the 2008 collapse. And so, now, 10 years later, we’re rolling it all back again, setting ourselves up for another catastrophe, which, of course, the big bankers are going to ask the American people to bail them out of, as they go about just consolidating wealth and income. You know, not only are banks highly profitable, they’re consolidating and becoming more monopolistic. This bank bill will allow them to do even more. You know, it was sold to people as a community bank bill. I think it’s an anti-community bank bill because what it will do is amass and accumulate more money in the hands of the biggest banks, which they will then use to buy smaller banks and thereby deprive community banks of, you know, their market share and take people and deprive people of those banks, those regional banks, community banks, that they rely on to meet their financial needs. I think it will consolidate profits, consolidate markets, and it will be to the detriment of everybody.


But there’s another thing about it I’d like to mention, if I may, Amy and Juan. And that is, stripping down the Home Mortgage Disclosure Act. Now, the Home Mortgage Disclosure Act is very important, because what it does is it says that you may not discriminate against people on the basis of their race in mortgage lending. And mortgage lending is a big deal. This is the—you know, the biggest asset any American is—like, not any, but most Americans, are ever going to acquire is going to be their own house. It’s sort of this American dream idea. For black and Latino community members, they share that dream with all the rest of their Americans. And yet, we know that mortgage discrimination is rampant throughout the country. And what does Congress do? Strip it down, make it even—get rid of the data, make sure banks don’t have to collect that data anymore, so that the problem can even exacerbate worse.


So, I’m really, really disappointed in that vote. Look, I’m not going to comment on individual members and their decision. I can tell you this: I did all I could to try to convince people to go no on this bill, and some people still voted for it. So we’ll just continue to debate this issue.


JUAN GONZÁLEZ: Well, Keith Ellison, one of the things that strikes me is, it’s almost as if the financial—the Great Recession and the financial collapse of 2008 has been forgotten. It’s only been 10 years.




JUAN GONZÁLEZ: And I’m wondering, when you see, in this bill, for instance, American Express, a huge financial corporation in this country, is no longer considered systemically important to the U.S. economy—




JUAN GONZÁLEZ: —and so it’s now—regulations governing it have been loosened. How do you—where do you see this ending? Because this is only the beginning of attempts to roll back completely all of Dodd-Frank that the Trump administration has been touting.


REP. KEITH ELLISON: True. As you know, Juan, they’ve already tried to attack the Consumer Financial Protection Bureau and make it not an agent of real assistance for consumers. But also, don’t forget this: Just last December, they passed a massive tax bill that gave all kinds of advantages to big companies and wealthy individuals. So, they’re rolling back the banking bill now. They cut the taxes of the richest, biggest companies a few months back. We are full-on lurching toward plutocracy. We are full-on lurching toward oligopoly. And what that means is that the idea of an American dream, of people working hard and making a better life for themselves, is becoming more and more difficult.


You know, we just did a study[1], from my office, called “Rewarding or Hoarding.” And, by the way, this study would not have been possible but for Dodd-Frank, because Dodd-Frank required that the publicly traded companies report the ratio between the CEO and the median worker pay, which they did not have to do before. Now they have to do it. The first data set, after five years of them fighting it, has come out, and we crunched the numbers in that data set and found that the CEO pay ratio is just dramatic. But in the 1968, it used to be about one—20 to one. And then, in the ’80s, it was about 34 to one. Now it’s 339 to one. But that’s just the median. That covers the fact that for companies like Mattel, it’s like almost 5,000 to one. McDonald’s, it’s 3,100 to one. These huge corporations that give executive compensation with no bearing, no connection at all, to the people who actually make the products on the ground.


And this is hurting our economy. And it’s—and you asked where it all ends, Juan. You know what? It doesn’t end well, because what it means is that they use all that extra money to buy political influence in Washington, to try to influence people like me to give them even more benefits. And it’s a bad sign. And so, I’m going to keep on working on the grassroots to get Americans understanding that they deserve an economy where they can retire, where their kids can aspire, where they can put food on the table, because, certainly, it’s certainly within our grasp. And these are political decisions being made that are stagnating the American dream.


AMY GOODMAN: I mean, the ratio you talk about, the average CEO-to-worker pay ratio for consumer discretionary industries, a category that includes McDonald’s, Gap and Kohl’s—




AMY GOODMAN: —almost a thousand to one, 977 to one—


REP. KEITH ELLISON: Thousand to one.


AMY GOODMAN: —the highest of any industry?


REP. KEITH ELLISON: Isn’t it crazy? I mean, the people who actually make the hamburgers, they get nothing. They get survival money. In fact, one of the CEOs—they like to defend themselves by saying, “Well, a lot of our people are just part-time.” Well, they’re strategically part-time. They won’t let—people want full-time jobs, but these big companies say, “No, we’re only going to let you get a certain number of hours, because if you go past that, we’re going to have to give you benefits, and that’s going to cost us money, and we don’t want to pay you anything.” So, they usually—they’re pointing to the reason for the ratio, but that reason is something that they have engineered. They also say, “Well, a lot of our workers are overseas.” Well, that’s because they go to places where the wage, environment and human rights records are poor, so that they can exploit those workers even more.


So, none of their explanations make any sense. It is greed. But it’s worse than that. If it was just greed, we’d be OK. If all they did with all that money is by consumer items, that wouldn’t be great, but it would be one thing. But they buy political influence with it, they merge with it, and they ruin the economy and our society with this practice that they’re engaging in. And we have got to have Americans get hip to anti-trust legislation, all this offshoring going on and campaign finance reform. We’ve got to stop them from using this excess profit to buy elections to put in a compliant politicians for themselves.


JUAN GONZÁLEZ: And, Keith Ellison, I’m wondering whether your study was able to see any change in the last few years in terms of the spread of the fight for $15 and the living wage movements around the country as more and more voters and referendums and city councils are passing legislation to raise the minimum wage—




JUAN GONZÁLEZ: —whether you’ve been able to see an impact on that in terms of the past few years?


REP. KEITH ELLISON: Well, not in our study. But I can assure you, having been on many picket lines with workers for the fight for $15 and so forth, it is making an important difference. But you know, Juan, it’s not—we’re not changing the minimum wage in Congress. We’re doing it at ballot initiatives in the states. Teachers are going out on strike. But, you know, the instruments of government, of our democracy, are not working for working people. They’re working for the very rich and the huge corporations. And that’s why people are dissatisfied. That’s how you end up with a Trump in the presidency, because people are just so dissatisfied, they need some kind of change. And they’ll seek it wherever they can find it. If we want a healthy society, a healthy democracy, we have got to bring that ratio back into some kind of reasonable proportion. And, you know, 300 to one certainly is not reasonable. A thousand to one is absolutely absurd. Five thousand to one is an obscenity. And we’ve got to do something about it.


AMY GOODMAN: Bernie Sanders tweeted, “Amazon founder Jeff Bezos’ wealth increases by $275 million every single day. Meanwhile, Amazon workers have to rely on food stamps and public assistance just to survive. This is what a rigged economy is all about,” Sanders tweeted.


REP. KEITH ELLISON: Right. Well, you know, they call people like Bernie, you know, kind of a lefty or whatever, or out there or somehow not in the mainstream. He’s right in the mainstream. You talk to Americans all over this country, and they will agree with Bernie that this is not an acceptable situation. You talk—you knock on doors, and you talk to people in the church basements, the VFW halls, the hair shops, and you tell them these numbers, and they are absolutely outraged.


The only people who don’t seem to be aware of it is these folks voting for this big banking bill that we just saw yesterday. But we’re closed off because, you know, the big—these people who benefit from these policies, like deregulating banks and big tax cuts for the wealthy, they use the money to influence the political scene in Washington and in state capitols around the country. That is what’s happening. That’s why there’s this massive disconnect between the average American and what’s going on in the capitols around the country and in the nation’s Capitol.


JUAN GONZÁLEZ: Well, Keith Ellison, this month Hillary Clinton said that she lost the election in part because of the Democrats being socialists. Paul Street of Consortium News recently wrote[2], quote, “In an interview with Time Inc. brands executive Alan Murray this month, she said that her economic policies were ‘probably’ a tough sell with primary voters: [quote] ’It’s hard to know, but I mean if you’re in the Iowa caucuses and 41 percent of Democrats are socialists or self-described socialists, and I’m asked ‘Are you a capitalist?’ and I say, ‘Yes, but with appropriate regulation and appropriate accountability.’ You know, that probably gets lost in the ‘Oh my gosh, she’s a capitalist!’” Besides the fact that the Clintons are emblematic of deregulating, Democrats taking apart Glass-Steagall, is the Democratic Party base getting more critical of capitalism? And do you expect the Democratic Party to reflect that?


REP. KEITH ELLISON: You know what? The Democratic base is not into any fixed ideology. They’re into trying to make sure that their kids can go to college or seek their dreams. They’re into putting food on the table. They’re into going to the doctor. They’re into retirement. That’s what they’re into. And we have an economy that is saying that that’s not going to be available to them. And so, you know, you can put a label on it if you want to, but at the end of the day you’ve got to have an economy that works for working people.


Now, you know, there’s a recent study that came out that showed that about 43 percent of all Americans cannot afford their lives. Now, does that make sense in the richest country in the history of the world? America is richer than it’s ever been. The United States of America gross domestic product per capita is at an all-time high. And yet, we can’t afford to send kids to college, we can’t fix Flint water, we can’t do all these things. It’s ridiculous. It is a matter of decisions being made by policymakers who are often put in place by the very corporations that want benefits from them. That’s the problem. And so we’ve got to do something about it. We’ve got to organize on the ground. We’ve got to put candidates in there who are going to be responsive to the needs of the American people.


Now, again, you know, some folks want to put labels on it. I’ll put it like this: If a candidate won’t go to states like Wisconsin, only touches on Michigan, barely goes into the central part of Pennsylvania, how do you expect them to win? You’ve got to talk to the people. And if you do talk to them, you’ll hear that they’re not making it in this economy, and it’s because of the rules that have been written in Washington and in state capitols around this country. That is the heart of the problem.


AMY GOODMAN: Democratic Congress member Keith Ellison, thanks so much for being with us, first Muslim member of Congress, also deputy chair of the Democratic National Committee, or DNC. Thanks for joining us from Capitol Hill.




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