Sen. Shelby Wants to Gut Financial Reform

Richard Shelby would most likely become chairman of the Senate Committee on Finance if Republicans take over the Senate. Shelby made it clear to ABC News that he plans to gut the Financial Reform bill.

"The bill is so sweeping and such a game changer in many ways that it's incumbent upon us to revisit it," Shelby said at the Reuters Washington Summit.

Yes, things were working so well before. That is why taxpayers were left paying for the bank bailout. Financial institutions were taking huge risks with naked credit default swaps. AIG sold too many naked CDS. AIG was unable to pay all the financial institutions that bought CDS. AIG nearly went under and other troubled financial institutions could not get the CDS revenue owed to them.

Federal Reserve Chairman Ben Bernake and Tresury Sec. had this revealing conversation about AIG.

On Wednesday, September 17th, a day after the Fed agreed to inject eighty-five billion dollars of taxpayers’ money into A.I.G., Bernanke asked Paulson to accompany him to Capitol Hill and make the case for a congressional bailout of the entire banking industry. “We can’t keep doing this,” Bernanke told Paulson. “Both because we at the Fed don’t have the necessary resources and for reasons of democratic legitimacy, it’s important that the Congress come in and take control of the situation.”

Shelby wants to maintain the status quo.

"I don't believe it's good for business, it's not good for the financial sector and ultimately I don't believe it's going to be good for credit for a lot of people who need it. It's gonna cost," Shelby said.

I have no problem with the free market and people making money. My concern is systemic risk that could cause a depression. There is a difference between encouraging free market growth and reckless financial practices. Shelby would be encouraging the latter.

Shelby has set his sights on the newly created Consumer Financial Protection Bureau.

"The consumer agency bothers me the most," said Shelby, who failed to reach a compromise with Democrats and voted against the bill. "I thought the creation of it and the way it was created was a mistake," he said.

Notice Shelby didn't offer an alternative to make sure that consumers aren't vulnerable to shady financial practices. It is absolute insanity for Republicans to think different results will be achieved using the same faulty financial practices.

Shelby saves his most wingnuttery attack for Elizabeth Warren.

"I believe she's got a big ax to grind and she's sharpening that ax," said Shelby. "I don't think that you need somebody in a position like that with all these preconceived ideas and I believe she has a lot of them."

Warren is serving the American people and not special interests. Warren hasn't been afraid to put Treasury Sec. Tim Geithner in the hot seat. Sen. Chris Dodd has been against Warren's nomination. Warren is scaring members of both political parties. She must be doing something right.

McConnell Caves on Financial Reform

Senate Minority Leader Mitch McConnell's strategy to not allow financial reform to be debated on the floor has proven to be a disaster. McConnell has finally caved.

A press release from McConnell's office:

“I appreciate the efforts of Sen. Shelby to work toward a bipartisan solution on an issue that will have an impact on nearly every American. The time afforded by my Republican colleagues and Sen. Ben Nelson was instrumental in gaining assurances from the Chairman that changes will be made to end taxpayer bailouts and the dangerous notion that certain financial institutions are too big to fail.

“Unfortunately, Sen. Shelby believes that continued talks on a number of provisions affecting Main Street will not bring the negotiators any closer to an agreement. Now that those bipartisan negotiations have ended, it is my hope that the majority’s avowed interest in improving this legislation on the Senate floor is genuine and the partisan gamesmanship is over. I remain deeply troubled by a number of provisions in this bill and will work aggressively in the days ahead to ensure that the majority does not use our mutual interest in regulating Wall Street to extend the federal government’s unwanted hand into Main Street.”

Greg Sargent spoke with a Republican Senate aide. Sargent reports Sen. Richard Shelby's strategy was to stall and get more concessions from the Democrats. The Democrats wouldn't give more concessions. Senate Democrats have forced Republicans to repeatedly vote against allowing a debate on the floor. Some Senate Republicans did not want to back McConnell on the filibuster. The short answer is McConnell could not keep his caucus together.

The political calculus for blocking financial reform is asinine. However, seen through McConnell's eyes it makes perfect sense. McConnell's seat is in a strongly red state. (However, McConnell faired less well than presidential candidate John McCain.) McConnell and Sen. John Cornyn made a deal with Wall Street executives to block financial reform.

From Fox Business:

During the meetings, both predicted that the Republicans will likely add at least six senate seats to their current total of 41, meaning they would come up just shy of control of the Senate. They predicted victories in Nevada, unseating the unpopular Senator Majority Leader Harry Reid, and said Republican Pat Toomey has a great shot at unseating Republican-turned-Democrat Arlen Specter in Pennsylvania.

They also said that they have a shot at taking control of the House by adding 40 additional seats to their current total. In New York State alone, the senators predicted a six-seat pickup.

But in order to assure those gains, and add even more, McConnell and Cornyn made it clear they need Wall Street's help. “There was no arm twisting but they did say that we should feel uncomfortable living in any country where one party has unfettered ability to pass anything including health care and anything else President Obama dreams up,” said another executive who was present.

McConnell does not care about his constituents. McConnell wants lobbying money and to be Majority Leader. His misreading of the public's contempt of Wall Street is proof of that.

Doing An Aravosis

John Aravosis is not loved by the members of Pushing Rope. Tas has riped Aravosis here and here. Aravosis has written two posts accusing Sen. Richard Shelby of being a pedophilia. The posts were Aravosis's lame attempts to illustrate Shelby's accusion that President Barack Obama is not an American citizen are baseless.

I have avoided blogging about the Shelby remark. Voters have already decided the accusation is groundless. Shelby can make all the innuendos he wants about Obama's citizenship. It is not going to make him more popular than Obama. Aravosis stoods to the same level of smears Glenn Reynolds and Michelle Malkin used against John Kerry's military service. The way to beat the Right is not by imitating it's most disreputable bloggers. Aravosis crossed the line of common sense and civil discourse. Sadly, it won't be the last time.