THEY STILL ‘OWN THE PLACE’…. In April, during the unsuccessful drive to pass bankruptcy reforms provisions such as “cramdown,” Senate Majority Whip Dick Durbin (D-Ill.) was incredibly frustrated. At one point, Durbin conceded on a radio show, “[T]he banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.”
Nearly eight months later, Durbin continues to find evidence to bolster the argument.
In a little-noticed but potentially explosive remark last Friday, Senator Dick Durbin (D-Ill.) accused Republican leadership of signing a political pact with the banking industry: in exchange for help defeating a measure that would make it easier for homeowners to restructure failing mortgages, GOP leadership in the Senate would help banks defeat any additional efforts at regulatory reform.
The allegation of a quid pro quo was based on an email that Durbin received last spring after his amendment to allow judges to modify mortgages for homeowners who enter bankruptcy was defeated on the Senate floor. During a discussion to promote publicly-financed elections on Friday, the Illinois Democrat relayed that, shortly after the defeat of his “cram-down” amendment, a “banker friend” forwarded him the note from Tanya Wheeless, president & CEO of Arizona Bankers Association.
“I have contacted the market presidents for each of the three banks (Chase, Wells and Bank of America) and explained that in my humble opinion it’s a big mistake to cut a deal with Durbin and alienate our (in Arizona) Senator,” Wheeless’s email reads. “I also told them that I thought this would drive a wedge in our industry. [Senator Jon] Kyl has pointedly told them not to make a deal with Durbin and then come looking to Republicans when they need help on something like regulatory restructuring or systemic risk regulation.”
“I know the (sic) every state association will have to do what’s best for its members, but I have told my largest three members that if they cut this deal, AzBA will fight them on it. They may be willing to alienate Republican leadership, but I’m not quite there yet.”
Sam Stein summarized the problem: “The implication seems fairly clear: banks were being warned that if they negotiated with Durbin on cram-down, they were risking GOP support on regulatory reform.”