Monday, June 28, 2010

Scott Brown's "Mass Pass"

Pat Garofalo at Think Progress wrote an article discussing Massachusetts' Senator Scott Brown whittling away at the financial reform bill during the reconciling of the House and Senate versions of the bill.
As the conference committee reconciling the House and Senate versions of financial regulatory reform went through its marathon 20 hour negotiating session on Thursday night, an exception to the Volcker rule — which prevents banks from trading for their own benefit with federally insured dollars — was added at the behest of Sen. Scott Brown (R-MA). The exception, which was pushed by large Massachusetts-based financial firms State Street Corp. and Mass Mutual, allows banks to invest up to three percent of their capital in risky hedge funds and private equity firms and to continue managing those funds.

These exemptions could undermine the effectiveness of the rule, as State Street is a great example of a financial firm that specialized in relatively benign financial practices, but then became systemically important by building up a huge amount of credit risk and engaging in risky trading. Ultimately, it needed to be rescued by federal intervention.
The Midnight Review dubs this Scott Brown's "Mass Pass" and thanks him for representing corporate interests nationwide...

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