After Banks Bankroll Their Campaigns, House Members Push To Undermine Wall Street Transparency
Rep. Scott Garrett (R-NJ) is pushing a new bill — which was passed out of committee by a voice vote and is currently being considered by House leadership — titled the “Swap Execution Facility Clarification Act” that would weaken some of the financial regulations related to transparency in the derivatives market put into place by the Dodd-Frank financial reform bill passed last year.
As the New York Times’s Gretchen Morgenson explains, financial swaps have typically been made “one-on-one, over the telephone. The price is usually whatever the dealer says it is,” which provides little transparency. The Dodd-Frank bill sought to reform this by enacting new reporting and transparency requirements. Yet if Garrett’s bill is enacted, it would “bar the Securities and Exchange Commission and the [Commodity Futures Trading Commission] from requiring swap execution facilities to have a minimum number of participants or mandating displays of prices.” This would help gut transparency in the derivatives market.
Garrett has been closely tied to some of the nation’s biggest Wall Street institutions and other big banks. In the 2009-2010 campaign cycle, the securities and investment industry was the top contributor to his campaign, donating $234,610 to his campaign — more than half of this cash was given by Political Action Committees (PACs), which are formed with the express purpose of influencing lawmakers.
The industry continues to be a strong donor to Garrett in the 2012 election cycle, with the finance, insurance, and real estate industries (FIRE) donating $271,308 already (outspending the second-highest donor, lawyers and lobbyists, more than ten times).
In sponsoring this bill, Garrett is joined not only by five of his House Republican colleagues, but also by three Democrats. Co-sponsor Rep. Carolyn Maloney (D-NY) counts FIRE as two of the top three donors to her 2010 campaign, while FIRE accounts for the top 5 donors to Rep. Gregory Meeks’s (D-NY) 2010 campaign. FIRE represents the top two industries donating to co-sponsor Rep. Gwen Moore’s (D-WI) campaign, with Bank of America registering a PAC $10,000 contribution representing her top single donation. Morgenson also notes that Maloney told her she was concerned about “job losses on Wall Street” if the financial reform law was not amended.
The backers of Garrett’s bill overtly have very different philosophies, ranging from the Tea Party conservatism espoused by Rep. Michael Grimm (R-NY) to Moore’s championing of labor unionism. Yet major donations from Big Finance tie them all together as they try to undermine new laws designed to bring transparency to Wall Street and the financial sector. Fittingly, Dan Cohen and Ali Wolpert, two lobbyists representing the Depository Trust & Clearing Company, a financial firm, will be holding a fundraiser for Maloney next month.