----- Original Message ----- From: John Hermann <[EMAIL PROTECTED]> To: John Hermann <[EMAIL PROTECTED]> Sent: Sunday, 7 November 1999 9:20 PM Subject: Teflon Bob and Banking Deregulation > Economic Reform Australia > ERA EMAIL NETWORK > > Date: Sat, 6 Nov 1999 > > > Teflon Bob and Banking Deregulation > By Russell Mokhiber and Robert Weissman > > Few top government officials, whether elected or appointed, have managed > to emerge as unscathed from a half dozen years in the Washington, D.C. > spotlight as former Treasury Secretary Robert Rubin. And Rubin did better > than escape without scratches -- he ended his term of office with his > image enhanced. > > Wall Street and the financial press practically beatified him for his role > in overseeing the global economy through difficult times and working in > tandem with Federal Reserve Chair Alan Greenspan to keep the U.S. economy > working smoothly. > > Rubin helped precipitate the Asian financial crisis which has inflicted > untold suffering on tens of millions, orchestrated the bailout of foreign > bankers and investors in connection with the Mexican and Asian financial > disasters, and crafted or helped implement domestic policies that ensured > the overwhelming portion of benefits from economic growth would go to the > rich -- but none of this managed to sully the reputation of the Secretary > Rubin. > > Now Teflon Bob appears on the verge of demonstrating that his immunity to > criticism makes Ronald Reagan look like he was coated with bubble gum. > > When he stepped down from his Treasury post this past summer, Rubin left > unfinished a legislative effort to re-write the nation's banking laws. > Misnamed "financial modernization" legislation was really a deregulatory > initiative -- reminiscent of the S&L deregulation that led to a corporate > crime spree, the collapse of the industry and the subsequent taxpayer > bailout of epic proportions. > > The centerpiece of the deregulatory bill, which different fragments of the > finance industry have pushed for a decade and a half, is the repeal of the > revered Glass-Steagall Act, which bars the common ownership of banks on > the one hand, and insurance companies and securities firms on the other. > > Although powerful interests have long backed the legislation, it has > repeatedly failed to make it through Congress because of a maze of > intra-industry disputes, turf fights between different parts of the > federal regulatory structure, and the concerted efforts of consumer and > community development advocates. > > Another failure seemed possible or likely this fall, especially as Senate > Banking Chair Phil Gramm, R-Texas, refused to compromise on privacy and > community development issues. > > Another failure, however, was not acceptable to one company above all -- > Citigroup. The product of the merger between Citibank and Travelers, > Citigroup is operating in apparent violation of the bar on common > ownership of banking, and insurance and securities, thanks to a loophole > that provides for a two-year transition period. > > Enter Robert Rubin. According to a report in the New York Times, Rubin > helped broker the final compromise language on financial deregulation. > > And while he was brokering a deal between Congress and the White House, he > was also, according to the New York Times account, negotiating his own > deal with Citigroup. A few days after the banking deal was finalized, > Citigroup announced it was hiring Rubin as a de facto co-chair of the > corporation. > > This chronology and these arrangements raise serious issues about whether > federal ethics statutes and informal Clinton administration rules have > been violated. > > Rubin told the New York Times that he was proud of his work in preserving > the Community Reinvestment Act (CRA -- an important law that requires > banks to make loans in minority and lower-income communities in which they > do business). In fact, the final version of the bill significantly weakens > CRA: there will be no ongoing sanctions against holding company banks that > fail to meet CRA standards, it will lessen the number of CRA examinations, > and provisions of the bill will discourage community groups from > challenging banks' CRA records. > > And the weakening of the CRA is only one element of the finance industry's > deregulatory wish list which is included in the compromise legislation. > The bill will: > > * Pave the way for a new round of record-shattering financial industry > mergers, dangerously concentrating political and economic power; > > * Create too-big-to-fail institutions that are someday likely to drain the > public treasury as taxpayers bail out imperiled financial giants to > protect the stability of the nation's banking system; > > * Leave financial regulatory authority spread among a half dozen federal > and 50 state agencies, all uncoordinated, that will be overmatched by the > soon-to-be financial goliaths; > > * Facilitate the rip-off of mutual fund insurance policy holders by > permitting mutual insurance funds to switch domicile states -- thereby > enabling them to locate in states where they can convert to for-profit, > stockholder companies without properly reimbursing mutual policyholders (a > conversion of tens of billions of dollars); > > * Aggressively intrude on consumer privacy (and promote a still-greater > intensification of direct marketing), thanks to provisions permitting the > new financial giants to share finance, health, consumer and other personal > information among affiliates; and > > * Allow banks to continue to deny services to the poor (Congress rejected > an amendment requiring banks to provide "lifeline accounts" to the poor, > so they would have refuge from check-cashing operations and the > underground economy). > > Robert Rubin helped deliver this ticking time bomb of a bill to Wall > Street, first while in Treasury and then while in negotiations to land a > top spot at the finance industry's largest and highest-profile company. He > may well escape unscathed yet again, but it is sure to blow up on the rest > of us. > > > Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime > Reporter. Robert Weissman is editor of the Washington, D.C.-based > Multinational Monitor. They are co-authors of Corporate Predators: The > Hunt for MegaProfits and the Attack on Democracy (Monroe, Maine: Common > Courage Press, 1999; http://www.corporatepredators.org) > > --------------------------------------------------- > > > > > > > > ---------------------------------------------------------------- This is the Neither public email list, open for the public and general discussion. To unsubscribe click here Mailto:[EMAIL PROTECTED]?Subject=unsubscribe To subscribe click here Mailto:[EMAIL PROTECTED]?Subject=subscribe For information on [EMAIL PROTECTED] http://www.neither.org/lists/public-list.htm For archives http://www.mail-archive.com/[email protected]
