Sometime this week, over a dozen Senate Democrats will likely vote with Republicans to roll back regulations of Wall Street. Many of them hail from red states where President Trump won handily in 2016, so the conventional wisdom in Washington holds that siding with the progressives who oppose the bill would not be a good look.
Unfortunately, that kind of thinking isn't just cowardly. It's dumb.
There are lots of ways to be bipartisan. But bipartisanship that helps Wall Street is the last kind of bipartisanship anyone who wants to get re-elected should engage in.
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Let's begin with the bill itself. It's the Economic Growth, Regulatory Relief, and Consumer Protection Act, co-sponsored by Senate Banking Committee Chair Mike Crapo (R-Idaho), and his fellow committee member Sen. Jon Tester (D-Mont.). It would dismantle a number of regulatory guardrails imposed on "mid-sized" banks (i.e. those worth $50 billion to $250 billion) after the 2008 financial crisis. It would also soften rules that prevent toxic mortgages and other forms of consumer abuse. It even ends a requirement that many banks report demographic information to help regulators fight racial discrimination in lending.
Why would any Democrat support this thing? The official argument is that it helps out smaller banks who weren't responsible for the Great Recession. But this ignores that fact that plenty of banks besides, say, the 10 or so biggest, played significant roles in various financial crises over the last few decades.
Besides that skimpy policy fig leaf, there's also a call for cross-party cooperation. "I hope that our bipartisan work can rub off on the rest of Congress," Tester said, trying to burnish his bipartisan bonafides. After Sen. Elizabeth Warren (D-Mass.) lacerated her colleagues for supporting the bill, an anonymous Democratic aide shot back, "You want Dems to win in all 50 states, on the condition that senators from North Dakota and Montana agree with the senior senator from Massachusetts on everything, all the time?"
This is a completely blinkered point. Montanans and North Dakotans aren't itching to let bankers sell toxic mortgages again. In fact, if anything binds most Americans together, it's their mutual hatred of the banks.
As of mid 2017, only 32 percent of all Americans, including only 36 percent of Republicans, trusted banks as an institution. As one Coloradan put it, the banks "are still pushing for deregulation and they are going to get us right back to where we were with the financial crisis."
If you're a Democrat looking to boost your prospects in a red state, why wouldn't you tap into that lingering anger? After all, Trump did. During his campaign, Trump accused Wall Street of "getting away with murder." One of his most infamous campaign ads said political and economic elites "bled our country dry," set to images of bank CEOs and the New York Stock Exchange. Trump made noise about breaking up the big banks and hiking taxes on hedge fund managers. He even relentlessly tarred Hillary Clinton as "a Wall Street puppet."
Of course, since taking office, Trump changed his tune. He helped undo multiple rules protecting ordinary Americans from financial predation and stocked his Cabinet with Goldman Sachs alumni like Treasury Secretary Steven Mnuchin and outgoing chief economic advisor Gary Cohn. The president has also cut taxes for the wealthy and big corporations, and rescinded regulations that stop employers from exploiting their workers. Now he wants to pass Crapo's bill to cut banks a break.
So Trump's populist anti-Wall Street stance was a total con job. But that's precisely the point. Trump undercut the Obama coalition and claimed the GOP mantle by suggesting he'd walk onto Wall Street and start bashing heads. Why on Earth would red-state Democratic senators think they'll win brownie points with their constituents by echoing his broken promise?
Perhaps they're very confused about what their bill does. Or perhaps they're being remarkably clear-eyed about who their most important constituents are. After all, Tester was one of the top three beneficiaries of commercial bank donations in the 2018 campaign cycle. The other two were Sens. Heidi Heitkamp (D-N.D.) and Joe Donnelly (D-Ind.), both backers of Crapo's bill.
The Democratic senators preparing to vote for this thing are either Wall Street toadies or complete political naifs. I leave it to readers to decide which is more likely. And which is worse.
