Sen. Scott Brown: Banks should be Banks not Casinos

In his first Sunday show appearance since his stunning election to fill the seat of the late Teddy Kennedy last year, Sen. Scott Brown (R-Mass.) told CBS’s “Face the Nation” Sunday that he would join the rest of his Republican caucus to block the fatally-flawed bill Democrats are trying to shove through Congress to “reform” the banking system.

“There are a lot of things in the [Sen. Chris] Dodd bill that are just bad for small businesses,” Brown said.  “The present bill is not a good bill, period.”

Brown also said that accusations that Republicans were merely trying to obstruct the Obama agenda were false.

"Let’s stop playing games and let’s stop politicizing it," Brown said.

Sen. Republican Leader Mitch McConnell (R-Ky.) is not “saying no to financial reform,” Brown said. “We want banks to be banks. We don’t want them to be casinos.”

Republicans have been cut out of the process of writing the bill, prompting all 41 members of the Republican caucus — enough to filibuster the bill — to send a letter to Sen. Majority Leader Harry Reid (D-Nev.) demanding a bi-partisan process to formulate financial regulations.

Dear Leader Reid:

We encourage you to take a bipartisan and inclusive approach, rather than the partisan path you chose on health care.  

A bipartisan bill should address the damaging financial practices of big Wall Street firms and government-sponsored entities that led to unprecedented taxpayer bailouts and caused our government to take on enormous amounts of debt.  We simply cannot ask the American taxpayer to continue to subsidize this “too big to fail” policy.  We must ensure that Wall Street no longer believes or relies on Main Street to bail them out.  Inaction is not an option.  However, it is imperative that what we do does not worsen the current economic climate or codify the circumstances that led to the last financial crisis.

We are united in our opposition to the partisan legislation reported by the Senate Banking Committee.  As currently constructed, this bill allows for endless taxpayer bailouts of Wall Street and establishes new and unlimited regulatory powers that will stifle small businesses and community banks.  

This is a complex issue that could have unintended consequences on job growth, the ability of Americans and business owners to access credit, and the United States’ role as a worldwide leader in innovation and capital formation.  The consequences of this bill will reverberate across our economy for years to come.

We urge you to support the bipartisan negotiations by the Banking and Agriculture Committees.  We are confident that the Senate can overcome political tensions and provide a bipartisan approach to financial reform this year.

There is a lot not to like in the Democrat bill offered by retiring Senate Banking Committee Chairman Chris Dodd (D-Conn.).

The bill would create a permanent $50 billion slush fund to bail out failing companies, the fund being subsidized by fees.  The fund would not reimburse shareholders and would require the firing of a failing firm’s management, but creditors would likely receive a much better payoff from the fund than they would get from a bankruptcy court.

For instance, Goldman Sachs Group, Inc. received $12.9 billion — 100 cents on the dollar — in a government bailout as a creditor of AIG after its collapse.  Routinely, creditors through bankruptcy court receive less than 50 cents on the dollar. Goldman Sachs is a big supporter of the Democrats’ bill.

Fees on banks would not be the sole revenue source for this new permanent bailout fund. The bill is so broadly worded that any business extending credit for practically any purpose could be swept up in paying the fees.  And these fees would be passed on to the consumer.

(That’s assuming there’s anybody left at that point in this country who can afford to consume anything.)

The SEC filed charges last week against Goldman Sachs for allegedly betting against the investments they were making for their own clients.

House Republican Leader John Boehner says the SEC suit should bolster opposition to the Democrats’ finance bill.

“These are very serious charges against a key supporter of President Obama’s bill to create a permanent Wall Street bailout fund,” Boehner said.  “Despite President Obama’s rhetoric, his permanent bailout bill gives Goldman Sachs and other big Wall Street banks a perpetual, taxpayer-funded safety net by designating them ‘too big to fail.’”

According to Goldman Sachs gave Democrats 75% of its campaign donations in the 2008 election cycle totaling nearly $4.5 million.  Republicans in the same election cycle received just under $1.5 million.

President Obama received nearly $1 million in contributions from Goldman Sachs in the 2008 election cycle, a new record for a candidate from executives and employees of one company.  More at the link.