Likely Dem VP Pick Loves Big Banks, Hates Regs

Roughly an hour before the post you're reading got posted, multiple sources had confirmed that the likely Democratic VP pick will be Virginia Senator Tim Kaine. For those watching to see if Hillary Clinton was serious about her apparent shift left as the primary wound down, Kaine is the anti-Warren, the antithesis of Sanders, and a walking course reversal to Clinton's recent rejection of the TPP and plans to reign in Wall Street. 

Kaine.jpgWall Street banks throw an ungodly big pile at politicians. They get people like Tim Kaine in return. As he was rising in the frontrunner veep ranks, Kaine wrote a letter to Janet Yellen, currency comptroller Thomas Curry, and FDIC chair Martin Gruenberg urging them to treat big banks more favorably, and stop forcing them to "calculate and report their liquidity--a critical measure of risk--on a daily basis. As Zach Carter, senior political editor at Huffington Post writes, Kaine, who "has championed the Trans-Pacific Partnership . . " is 

publicly siding with bank deregulation advocates at the height of Clinton’s veepstakes. The big bank letter would help major firms including Capital One, PNC Bank and U.S. Bank, all of which control hundreds of billions of dollars in assets. Such large “regional banks,” Kaine writes, are being discriminated against based solely on the fact that they are so big.

But wait--isn't Clinton worried about appeasing Sanders supporters? If so, why would she pick a bank stooge as VP? Because, as David Dayen points out at the Intercept, "Kaine, if selected, could now help woo fundraising dollars away from Republicans, because he’s able to point to his support for financial industry causes." Selection of Kaine would be a strategic judgment that Wall Street money mattered more than appeasing the Bernistas and others who want Clinton to continue to oppose the TPP and push financial reform, such as it is. 

Kaine's second signature went on a letter to the Consumer Financial Protection Bureau, also signed, Dayen says, 

. . . by a bipartisan coalition of 16 Democrats and every Republican senator, asked that the consumer agency “carefully tailor its regulations” to exempt community banks and credit unions. It posits these smaller banks as “essential to spurring economic growth and prosperity at a local level.” While this seems benign, tailoring rules that exempt large classes of financial institutions leaves consumers vulnerable to deceptive practices. A rule of this type could allow community banks and credit unions to sell high-risk mortgages or personal loans without the disclosure and ability to pay rules in place across the industry. The fact that the entire Republican caucus, from Ted Cruz and Mike Lee to Mitch McConnell, supports this idea suggests that it’s not necessarily a bipartisan measure but a Republican desire that a few Democrats agree with. Kaine counts himself among those Democrats.
In an interconnected financial system, a large regional bank that gets into trouble has as much chance of creating ripple effects as a mega-bank. It’s unclear why they should be exempted from regulations deemed appropriate for all facets of the financial sector.

The letter to the CFPB reads in part: " . . . community banks and credit unions serve as pillars of their communities, providing the capital and access to credit that families and small businesses need to grow." And who can argue with that? But except in North Dakota, community banks are dying. Without a robust economy or a public bank to prop it up, being a small bank is hard with or without regulation, and of course, there are sometimes crooked bankers in private banks of any size. Regulation may also have the effect of putting community banks on an equal playing field. And maybe regulations do need to be smarter, but I think my idea of that--and yours--is likely to be a lot different than Tim Kaine's. 

Kaine is also engaging the CFPB on payday lenders. The agency has proposed a set of weak rules for these loan sharks, which won't cap their 350%-plus interest rates. These outfits really are as bad as people say they are, but according to Carter: 

As Kaine joins the deregulatory fight, several other lawmakers are pushing the CFPB in the opposite direction. On Wednesday, 28 senators sent a letter to the agency urging them to toughen up their new rule against abusive payday lending. Kaine didn’t sign it. A spokesperson for Kaine told HuffPost that Kaine is working on his own separate “Virginia-focused” letter on payday lending in support of the CFPB rule that he hopes will come out before the election.


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