Merkley, Levin: Free the Volcker Rule
May 18, 2010
Faced with Losing Vote on Amendment, Wall Street Lobbyists and Republicans Try to Rig the Result
WASHINGTON, D.C. – Today, Senate Republicans refused to allow a vote on a long-anticipated amendment to the Wall Street accountability bill that will ban the high-risk trading that brought our economy to the brink of meltdown. The amendment’s chief sponsors, Oregon Senator Jeff Merkley and Michigan Senator Carl Levin, today called on Republicans to stop protecting Wall Street lobbyists and allow the amendment to come up for a vote.
“We got into this financial crisis because Wall Street set the rules to benefit itself, and now with an assist from Senate Republicans, they’re doing it again,” said Merkley. “Obviously the lobbyists are afraid they’ll lose this vote, and in typical Wall Street fashion their solution, with help from Senate Republicans, is to rig the result. Main Street is being shut out of this debate. It is time to stop letting Wall Street call the shots – let this amendment have a vote.”
“The long arm of Wall Street reached directly into the Senate chamber today,” Levin said. “By blocking us from even debating this amendment, the Republican leadership is carrying Wall Street's water and standing in the way of real reform.”
Despite repeated efforts by Dodd to reach agreement on a vote on the amendment, Republican Leadership refused to agree to even a 60-vote supermajority requirement on a day that two Democrats are absent. Under Senate rules, votes on amendments must be agreed to by unanimous consent. For weeks, the Merkley-Levin amendment has been one of the handful of amendments expected to be at the center of debate on the legislation.
The Merkley-Levin amendment, implementing the so-called “Volcker Rule” named after the former Fed chairman, would restrict proprietary trading at banks and other large, important financial institutions. By keeping our banks and other large, complex financial institutions away from these risky activities, the bill will help protect taxpayers from bailouts and the damage to the economy that comes from the failure of critical financial institutions. At the same time, the bill leaves plenty of space for smaller firms to do speculative trading, but outside of taxpayer-supported commercial banks. Specifically, the bill:
• Bars banks, bank holding companies, and their affiliates and subsidiaries from engaging in high risk speculation involving any stock, bond, option, commodity, derivative, or other security or financial instrument. Also bars those entities from investing in a hedge fund or private equity fund.
• Requires massive, systemically-critical nonbank financial institutions (i.e., giant Wall Street investment houses whose failure will damage the banking system and access to credit) to set aside additional capital to decrease the risk posed by speculative trading.
• Prohibits conflicts of interest such as we saw when Goldman Sachs bet against the packages of securities they assembled and sold to their clients.