Sen. Mike Johanns Perfects the Art of Double-Speak on the Need for Financial Regulation
Sen. Mike Johanns (R-NE) appeared on C-SPAN's Washington Journal April 15th and discussed the financial reform bill which has reached an impasse due to Mitch McConnell's latest stunt. As Pat Garofalo at Think Progress' Wonk Room noted, this is the same guy who was saying this back in January -- Sen. Johanns: Consumer Protection Agency Constitutes A ‘Power Grab Over The Nation’s Economy’:
I noted earlier in the week that the Chamber of Commerce was ginning up opposition to the creation of an independent Consumer Financial Protection Agency (CFPA) by conducting a “fly-in” of small business owners, who were then led to pre-arranged anti-CFPA meetings. The false premise of the Chamber’s theatrics was that the CFPA would be harmful to small businesses.
One of the events that the Chamber organized was a discussion with Sen. Mike Johanns (R-NE), who made it clear that he doesn’t think much of the CFPA:
Johanns outlined his opposition to the CFPA proposal, arguing it would drive up costs on consumers and create an agency with a “potential power grab over the nation’s economy.”
Johanns is vastly overstating what the CFPA will be able to do, but he is right in the sense that the CFPA is meant to grab a bit of power for consumers away from the financial services industry and the regulators which it dominates. Right now, all the power in the regulatory structure lies with the banks, whose fees the regulators count on in order to survive. Giving some power back to consumers and protecting them from predatory practices is an okay shift in my book. Read on...
Every single caller on C-SPAN's Washington Journal was not happy about what's happened with the banks and he actually was asked a lot of really good questions (which is unusual because Washington Journal normally has a lot of callers that sound like they've been watching way too much Fox News). I know that politicians have the art of double speak down pat, but the Senator really took the cake with the responses he gave on the need for some regulation of the financial markets. He talked out of both sides of his mouth so badly it was pretty astounding, but then that seems to be the norm these days for Republicans.
You can watch the second half of the call-in segment below the fold.
Sen. Mike Johanns is asked about reinstituting Glass-Steagall Act. And his response is that he wouldn’t go there and says that financial institutions should not be allowed to become too big to fail and says the banks were over leveraged. He also says that there are huge gaps in the financial systems that need oversight. However, he doesn’t say who should be doing the oversight or address what should be done about financial institutions being too big to fail. His response is they need some “sensible” legislation that all sides can agree on.
An e-mailer writes in that Sen. Johanns has suggested regulating the derivatives market would be a job killer and notes that failing to regulate those markets has been a disaster and killed many jobs. Johanns gives a condescending response and says that the e-mailer made a blanket statement and he could “take that and say well all trading in derivatives is evil and needs to be ended”. He then says that we need to take a “sensible” approach to this and make sure the “vast majority” of the transactions to “be exposed to a clearing sort of process”. He adds this.
Johanns: I think if you go in the direction that this bill is headed and where you are suggesting you are going to have a huge and serious downside and we’ll regret the day that it happened and in ten years from now we’ll be asking ourselves “How did Singapore end up with all of this capitol formation that once existed in the United States?” and I think that would be the wrong course of action for our economy, not only today but for the future.
So I guess the Senator doesn't think this has happened already. The next caller asks Johanns where AIG was located. Johanns says he doesn’t know and the caller said they were located in London. He tells Johanns that we had all that development of capitol and it just vanished when the markets collapsed and that derivatives should only be used for things like trading on oil for people who are buying oil, crops for people who grow crops and they don’t need to be for “putting bets on burning down your neighbor’s house”.
Johanns says he disagrees with the caller and says the problem with AIG was the level of risk they took. Again, he says we need a “sensible” way to regulate that but still decries regulating derivatives and tells the caller that if we did “he’ll regret the day he ever argued that point”. Of course he completely ignores what the caller pointed out, that these companies are already global institutions.
In the second clip Johanns is asked if he supports the establishment of a consumer protection organization. Johanns says he supports consumer protection, as long as there isn’t another layer of government doing it. He goes on about how great the financial reform bill negotiations were going until it became “a political football”. He ignores the fact that its Mitch McConnell that decided to turn it into one. I'm sure President Obama saying he'd veto any financial reform without derivatives controls didn't help either.
The next caller asks him about the banks being too big to fail, McConnell and Boehner running to Wall Street for campaign money and reminds him that the banks would be putting up the funds for draw down if one of them did fail. She also tells him he’s just repeating Frank Luntz’s talking points.
Johanns replies that the banks get the money from the people and calls her argument “bait and switch” and says the Republicans intention is to end “too big to fail” and claims that the $50 billion bank liquidation fund would just encourage more banks to think they can continue to get bailed out with taxpayer dollars. The administration looks like they might be taking that talking point away from them shortly -- White House scrutinizes Senate bill's bank liquidation fund. I'm sure they still won't support the bill even if they remove the liquidation fund.
The next caller asks why we didn’t bring back some anti-trust laws and that the banks have just gotten bigger after the collapse of the financial markets last year. He never answers the callers question about bringing back anti-trust laws. Instead he goes on about how TARP was a bad idea and how he voted against it and says we need to limit the risk that the financial institutions were taking. His solution…
Johanns: Approaching this from a standpoint of having a panel of systemic risk analyzers if you will who can look across the company and say “Whoa, wait a second here, that’s way too much risk, that’s too dangerous for our economy”. We stop you right here. I think that kind of an approach makes sense. Again that gets back to kind of my core point here. We can do a great bill here. We can do it right. We can continue to grow our economy and create jobs and do the things that people want done. Let’s do it in a thoughtful, sensible sort of way. This isn’t a political football. This is very important to get done.
Of course he never explains who would be on this panel. I guess as long as it's no one from the government and they don't actually have any power to have their decisions enforced, he'll be fine with it. The Republicans just continue to show the public with each passing day that they cannot be taken seriously about anything, they will never negotiate with anyone in good faith and they have absolutely no interest in governing.