Senate Republicans Place Big Bank Apologist On Banking Committee

By Ian Millhiser

ThinkProgress’ Ian Milhiser noted yesterday that Senate Republicans put Sen. Mike “noun, verb, unconstitutional” Lee (R-UT) on the Judiciary Committee, despite his radical ignorance regarding constitutional matters. But that wasn’t the only committee assignment for which the GOP decided that fealty to ideology was more important that acknowledging reality.

Sen. Pat Toomey (R-PA) was one of the financial industry’s biggest apologists during November’s campaign, opposing the Dodd-Frank financial reform law while claiming that derivative deals were “non-risky,” even as they cost schools and cities all across the country (including many in Pennsylvania) millions of dollars. And Toomey has been totally unrepentant about his personal role in deregulating the financial industry.

In 2000, former Sen. Phil “mental recession” Gramm (R-TX) attached the Commodity Futures Modernization Act to an unrelated, 11,000 appropriations bill. The CFMA ensured that the growing market in over-the-counter derivatives, including credit default swaps, stayed entirely unregulated. Toomey — then a member of the House of Representatives — voted for that bill, and said that he would do it again, inaccurately claiming that the legislation “did absolutely nothing to cause the financial crisis.”

So, naturally, Republicans have seen fit to name Toomey to the Senate Banking Committee, which has oversight of the nation’s financial regulatory laws. The committee was instrumental in crafting Dodd-Frank.

Here’s what the Financial Crisis Inquiry Commission — which released its final report yesterday — had to say about the bill Toomey claims did nothing to bring about the financial crisis:

The CFMA effectively shielded OTC derivatives from virtually all regulation or oversight. Subsequently, other laws enabled the expansion of the market…The OTC derivatives market boomed. At year-end 2000, when the CFMA was passed, the notional amount of OTC derivatives outstanding globally was $95.2 trillion, and the gross market value was $3.2 trillion. In the seven and a half years from then until June 2008, when the market peaked, outstanding OTC derivatives increased more than sevenfold to a notional amount of $672.6 trillion; their gross market value was $20.3 trillion.

Ultimately, the FCIC concluded, derivatives “were at the center of the storm.” And yet, Republicans put someone on the Banking Committee who has said that he would go back and deregulate those instruments all over again if he could.

In the course of his career, Toomey’s collected almost $2.5 million from the finance industry. He was also the the president of the Wall Street front group Club for Growthfrom 2005-2009.

VIDEO: Bank Lobbyists Huddle For Another Secret Meeting With GOP Senators

By Lee Fang

Earlier today, President Obama traveled to New York to tell the nation’s most influential bankers to call off their “battalions of financial industry lobbyists” and embrace a new regulatory structure meant to avert another economic crisis. But around the same time back in Washington, D.C., bank lobbyists hosted a fundraiser for Senate Republicans, including Sen. John Cornyn (R-TX), who has become the Republican liaison for Wall Street fundraising.

The invitation to the fundraiser, obtained by the Party Time blog of the Sunlight Foundation, shows that the it was hosted by lobbyists Wendy Grubb, Kirsten Chadwick, Scott Reed, and a variety of corporate PACs. Grubb is a top lobbyist for Citigroup, a bank that took taxpayer TARP funds and has yet to repay them. Chadwick, a former staffer to Rep. Roy Blunt (R-MO), is a lobbyist for Zurich Financial Group, a financial services conglomerate.

ThinkProgress, along with several other journalists, waited outside of the fundraiser at the National Republican Senatorial Committee (NRSC) building. Sen. Richard Burr (R-NC) walked quickly past reporters into his car, refusing to take questions. Both Sens. Cornyn and George Lemieux (R-FL) dodged reporters by driving into the NRSC’s underground lot. Although ThinkProgress tried to ask both GOP lawmakers and the other attendees of the fundraiser about regulation reform legislation, only Charlie Black spoke to us. Black is a longtime corporate lobbyist who now represents a variety of investment banks, including Goldman Sachs, within a trade group called the “Securities Industry and Financial Markets Association.”

ThinkProgress attempted to talk to the attendees of the event, but everyone other than Black refused to even provide their names. The video below, produced by Victor Zapanta, documents our failed attempts to get fundraiser attendees to talk about the event as they fled the scene:

Last week, Republican Leader Sen. Mitch McConnell (R-KY) met with elite hedge fund managers to enlist “Wall Street’s help” in bankrolling Republican campaigns this year. Shortly after the meeting, McConnell pledged to block financial reform and blasted it using an absurd talking point refuted by members of his own party. Last night, Karl Rove secretly met with the U.S. Chamber of Commerce, another trade group that represents big banks and opposes reform.

Senate Majority Leader Harry Reid (D-NV) challenged Republicans to stop doing “the big bankers’ bidding.” With GOP Senators still running to bank lobbyists for campaign cash, the public will find out where lawmakers stand as the Senate takes up reform next week.

Six Democrats Side With Banks, Ask For ‘Alternative’ To Landmark Student Lending Reform

By Zaid Jilani One of the greatest hardships facing America’s college students is student debt; the average student in the class of 2008 graduated with $23,000 of debt, “a figure 25 percent higher than what their older brothers and sisters owed when they graduated from college in 2004.”

To tackle this student debt crisis, last year the House of Representatives passed the Student Aid and Fiscal Responsibility Act (SAFRA), which expands and improves successful student aid programs like the Pell Grant and the Perkins Loan program, and eliminates billions of dollars in subsidies to wasteful private lenders by arranging loans directly with students instead of through bank middlemen.

The Senate is currently deliberating over its own version of the bill, and it is one Senate floor vote away from being signed into law by the President. However, the student lending industry has launched an “aggressive lobbying campaign” of senators representing states where big lenders are based, scaremongering about job losses resulting from passing SAFRA. Now, it appears that their lobbying is paying off, as six Democratic senators have written to Sen. Tom Harkin (D-IA), chairman of the Senate Health, Education, Labor and Pensions Committee, asking him to “consider potential alternative legislative proposals” to SAFRA’s major lending reforms:

Six Democrats signaled deep concerns with their chamber’s student lending reform bill on Tuesday, imploring party leaders to “consider potential alternative legislative proposals” in the coming days.

That could spell trouble for Sen. Tom Harkin (D-Iowa), the chairman of the Senate Health, Education, Labor and Pensions Committee, and other Democratic leaders, who once hoped to advance the Student Aid and Fiscal Responsibility Act to the president’s desk using the chamber’s 50-vote reconciliation process.

In a brief letter dated Tuesday, Democratic Sens. Bill Nelson (Fl.), Tom Carper (Del.), Blanche Lincoln (Ark.), Jim Webb (Va.), Mark Warner (Va.) and Ben Nelson (Neb.) describe reform to the country’s “higher education funding” system as a “priority.” But the group…also express concerns the Senate’s lending bill could ultimately result in local job loss.

While the senators may be claiming that passing SAFRA would result in job losses in their states, the truth is that it would be minimal at worst. The fact is that only 30,000 people at most are employed in the student lending industry. And because the companies would still be in charge of servicing all the government issued loans, servicing jobs could actually increase. For example, “Nelnet (Ben Nelson’s biggest donor) saw their servicing revenues [increase] 13% in 2009 as a result of a contract they won to service student loans for the Department of Education.”

One way to avoid a filibuster by Republicans and lender-friendly Democrats is to pass SAFRA with the health care legislation in one reconciliation bill. The Hill reports that “a Democratic official familiar with negotiations” over the student lending bill has told them that the leadership has already decided to “pair [the] overhaul of student lending with healthcare reform,” although Senate Majority Leader Harry Reid’s (D-NV) office says “no final decision has been made.” Using reconciliation for a major education reform bill would hardly be without precedent. In 2007, the Senate passed the College Cost Reduction Act of 2007 through the reconciliation process by an overwhelmingly bipartisan vote of 79-12.