My old friend Bill Kaplan had this commentary posted on Wis.Opinion.com recently, and the unfolding banker-induced foreclosure scandal makes the need for Feingold-style bank regulations all the more prescient:
Why Senator Feingold?
By Bill Kaplan
The column below reflects the views of the author, and these opinions are neither endorsed nor supported by WisOpinion.com .
The banking – Wall Street – housing bubble was collective irrational madness. Financial institutions peddled unsound home loans, packaged as bonds. These investments were sold as creditworthy, profitable and safe. But bankers and brokers knew otherwise, and bought credit default swaps (insurance) to protect themselves when the bonds went bad. Predictably the façade collapsed. The housing bubble with ever skyrocketing prices burst in 2007 under President Bush with catastrophic consequences.
Deindustrialization and U.S. factory jobs going abroad got much worse, with over two million manufacturing jobs nationally and 63,000 in Wisconsin lost. Income inequality looks like the 1920s. And, many with little savings face record levels of educational, housing and medical debt. Voters are anxious, fearful and angry. But should madness beget more madness?
Voters tell pollsters they want independent politicians not under the thumb of special interests, who will watch out for regular folks, work with their political opposites and even defy their own party. Then Wisconsin Senator Russ Feingold is your man. He is the quintessential maverick and populist, rooted in Wisconsin history and tradition.
Senator Feingold has always fought for the common good, no matter who is president or which political party controls Congress.
Deregulation that began under President Clinton helped produce the 2007 financial implosion. The Clinton administration supported the GOP-led repeal of the Glass-Steagall Act, which had successfully regulated financial institutions by separating commercial Main Street banks from investment Wall Street banks, so federally insured banks would not be involved with risky speculation. (In the 1920s National City Bank – now Citigroup – then the largest U.S. bank, repackaged bad loans from Latin America and sold them as safe investments
Such schemes led to a stock bubble and the 1929 crash.) Senator Feingold was one of eight senators who voted against repeal in 1999. So big got bigger and harder to regulate Then in 2008 under President Bush, Citigroup was bailed out by the Troubled Asset Relief Program (TARP) and the Federal Reserve when its mortgage-backed securities went bad. There’s more.
* Senator Feingold voted against the Bush-sponsored TARP. He called for the Bush administration and Congress to “offset the cost of the proposed bailout so that taxpayers don’t get saddled with it….including asking Wall Street to bear at least some of the cost….add meaningful provisions to help families facing foreclosure….and address the deeply flawed regulatory structure that paved the way for this crisis.” Bush, a deregulator, did not listen.
President Obama was willing to regulate financial institutions. And, there is much that is good in the financial reform bill that passed. But Feingold fought to make it stronger by supporting a bipartisan amendment to “restore the Glass-Steagall firewall between Wall Street and Main Street” and other amendments to impose “strict limits on the size of financial institutions” and to end some of the worst abuses of credit-default swaps. His amendments lost and so the final bill failed “Feingold’s test for real reform.” He voted no, but fights on.
-- Kaplan wrote a guest column from Washington, D.C. for the Wisconsin State Journal 1995-2009.