Republicans Want To Jeopardize The Economy By Putting Wall Street Back In Charge Again

When President Obama took office on January 20, 2009, the economy was in free fall largely due to a financial crisis caused by the greed and recklessness of the bankers on Wall Street.  The bankers precipitated this crisis by investing heavily in bond funds consisting largely of subprime home loans.  Once the housing bubble burst, it took down the entire economy with it.

By January 2009, the U.S. (and the world) were going through the most severe financial crisis and recession since the Great Depression in the 1930s.  The U.S. economy was losing 800,000 jobs per month and GDP shrunk nearly 9% in the last quarter of 2008.  This Wall Street engineered recession cost the United States nearly $13 trillion in household wealth. We also lost 5.5 million jobs and unemployment peaked at 10%.

President Obama’s first act as President was to pass the Recovery Act of 2009 to stop the bleeding.  Nebraska Senator Ben Nelson played a big leadership role in the passage of this vital legislation.  The Recovery Act consisted of infrastructure projects, record investments in renewable energy and the largest middle class tax cut in history.

The 2009 Recovery Act has been unfairly maligned by the GOP and the mainstream media.  Unfortunately, President Obama and the Democrats in Washington allowed this stimulus bill to be deemed a failure even though it was very successful.

According to the non-partisan Congressional Budget Act, the 2009 Recovery Act created or saved 1 to 3 million jobs.  Furthermore, in a survey conducted by the University of Chicago, 80% of economists said that the Recovery Act was successful and that it ended the recession.

Here in Nebraska, the state’s budget was balanced in 2009-2010 with stimulus funds.  This injection of federal money into Nebraska prevented severe layoffs and program cuts that would have damaged an already ailing economy.

Once President Obama and the Democrats stabilized the economy with the Recovery Act, they took action to make sure another Wall Street induced economic crisis wouldn’t bring down the economy again.  In 2010, the Dodd Frank Act passed the Congress with the support of Ben Nelson.  This was the toughest and most far reaching Wall Street reform legislation since the 1930s.

The Dodd Frank Act – like the Recovery Act – has been falsely labeled a failure by the GOP and the mainstream press.  As it turned out – like the 2009 stimulus bill – the Wall Street reform bill has actually proven to be an unsung success.

The 2010 Wall Street reform law addresses the “too big to fail” problem by giving regulators the authority to subject the largest banks to extra regulation and to take control of the big banks if there is another financial crisis.  This additional authority to actually seize control of the big banks makes another bailout very unlikely.  The Dodd Frank law also requires Wall Street to keep more capital, thus reducing the prospect that excessive greed and speculation will lead to to bankruptcy.

This same banking act also created the Consumer Financial Protection Bureau (CFPB).  The idea for the CFPB originated with Elizabeth Warren and it has already substantially reduced abusive lending practices by the financial services industry.    As Nobel Prize Winning Economist Paul Krugman said: “Better consumer protection means fewer bad loans, and therefore a reduced risk of financial crisis.”   Moreover, the CFPB has cracked down on billions in excessive overdraft fees and has secured over $10 billion in relief for consumers since it’s inception in 2011.

Wall Street’s hostility to the Dodd-Frank Act is proof that it is working.  At the present time, Wall Street is spending millions of dollars in lobbying fees and campaign cash to either gut or completely repeal this needed reform of the Wall Street abuses that crashed the economy in 2008-09.  If a Republican President were to be elected this year, one of his top priorities would be repealing Dodd-Frank and putting Wall Street back in charge of the economy.

The four Republican members of Nebraska’s Congressional delegation are all on record in favor of the repeal of Dodd-Frank and deregulating the big banks again.  Apparently, they have decided to prioritize the interests of Wall Street over Main Street here in Nebraska.

The future of Wall Street reform will be on the ballot this year.  If a Democrat is elected President, Wall Street reform is here to stay and another financial crisis is very unlikely to happen.  However, if the Republicans manage to regain control of the White House and the Congress again, Dodd-Frank will be repealed and it will only be a matter of time until Wall Street destroys the economy again.  The history of the U.S. clearly demonstrates that if the big banks are deregulated, they will bring down the economy in an orgy of speculation and greed.

We Nebraska Democrats must make it clear that we are on the side of Main Street and the GOP is on the side of Wall Street.  We must remind the voters that the last time the GOP held all of the levers of power in Washington, they allowed the big banks to destroy the economy and bring about the deepest recession since the 1930s.  The GOP can only win this year if the voters forget about the failures of the Bush Administration.  We must tell the voters we must not hand over our country once again to the people and policies that crashed our economy before and that will destroy the progress that we’ve made since 2009.