Claire McCaskill ‘helped shape’ a very bad banking bill

Missouri Sen. Claire McCaskill was not just another of the 16 Democrats (plus one independent) who voted with every Republican in Congress to weaken bank rules this week.

In a news release, she bragged that she “helped shape” the “sweeping financial legislation” that if it becomes law, will be “cutting burdensome regulation.”

All true: She did, it is and it will. But to whose benefit?

Those struggling community banks, you say?

Yes, but in exactly the same way that McCaskill’s campaign said the recent tax cut “overwhelmingly favors the ultra-wealthy while middle-class Missourians get crumbs.”

If anything, I might see the role of community banks in overly heroic terms. My grandfather co-founded one of those in our small town in Southern Illinois. My dad loved to tell the story about how, during the 1930 run on the bank that temporarily closed it, his father was the last person to withdraw what was left of his money, after every one of his customers. My dad later ran the place, too, and to me, he was George Bailey without a dark side, so I need no convincing on the big difference that those small institutions can make.

But the banking sector as a whole had record profits last year, so we should all be so downtrodden. You’re not going to believe this, but banks were also among the biggest beneficiaries of the tax cut. They’ve already been paying out more dividends to shareholders than at any time since the FDIC started keeping track in 1984. Wells Fargo just announced a 36 percent raise for its CEO, even after the company’s multiple recent scandals over opening millions of fake accounts and signing customers up for car insurance they never asked for.

Yet we’re supposed to just forget the unpleasantness of a decade ago, and loosen the law meant to protect taxpayers from another crisis and more bailouts?

As for the little guys, it’s true that the consolidation that long preceded the post-financial meltdown Dodd-Frank protections has continued, with some 900 small banks merging or going under in the last three years, according to the American Bankers Association.

Higher compliance costs under the 2010 reforms hit them hardest. And they do need regulatory relief, even though small institutions, too, are doing better than OK these days, with fourth-quarter profits up 17 percent, according to the FDIC.

Still, there’s no justification I’ve been able to glean for the parts of this Dodd-Frank rewrite that significantly raise the bar on which banks need the strictest oversight. It gives the two dozen biggest banks just below Bank of America and JPMorgan Chase an unearned break from the level of oversight they so obviously need.

So McCaskill’s claim that the bill “keeps in place the restrictions on large Wall Street banks such as Goldman Sachs and J.P. Morgan” is technically true, but awfully misleading.

McCaskill, who is in a tough re-election race this year, highlights that she worked to include protection against identity theft in the law. But not surprisingly, she makes no mention of the fact that the bill would exempt many small banks from having to report the more detailed data on lenders required under Dodd-Frank, and that’s a red-alert of a problem because that change would without question hurt the enforcement of fair-lending requirements.

So why did so many Democrats join their Republican colleagues? Bipartisanship, they say. As in, they’ve gotten the same donations from the industry that those across the aisle have?

In the last year, McCaskill received more money from the financial services, insurance and real estate industries than any other lawmaker except House Speaker Paul Ryan, with a take of $1.6 million. Over the last five years, she received financial services donations that made her the No. 4 recipient among the 16 Democrats who voted to unburden the industry. Her $809,000 over that period also comes in ahead of her GOP counterpart, Sen. Roy Blunt, who received $801,307.

House Republicans want an even more aggressive rollback of Dodd-Frank, and we should all hope that spares us from a bill that would do some good and more harm.

This story was originally published March 15, 2018 at 6:39 PM with the headline "Claire McCaskill ‘helped shape’ a very bad banking bill."