The most telling headline about the Bank Lobbyist Act the Senate will vote on as soon as Wednesday evening or Thursday morning comes from the Wall Street Journal. It reads, “The Surprisingly Large Winners in a Bill to Help Small Banks: Huge custody banks like BNY Mellon and State Street would be among the biggest beneficiaries.”
Three of the biggest winners, in a bill meant to help small and midsize banks, are anything but. […]
Another group of banks that dwarf these small lenders stand to get a healthy profit boost if the bill goes through, they being Bank of New York Mellon, with $372 billion of assets on its balance sheet; State Street, with $238 billion; and Northern Trust Corp., at $139 billion. These banks are more important than they might seem because they manage or have under custody trillions of dollars of assets.
These so-called custody banks specialize in safekeeping the securities of institutional investors like mutual funds. Under the bill, they would be able to exclude some deposits they hold at the Federal Reserve or other central banks from their total assets when calculating total leverage. No other banks, big or small, get such a benefit.
This bill isn’t just about small community banks and credit unions, as the senators supporting it—including 17 in the Democratic caucus—would have you believe. One of the guys who wrote the original Dodd-Frank law that the Senate is hellbent on rolling back even says so. Here’s former Connecticut Sen. Chris Dodd calling out what he calls the bill’s “fatal flaw”: “[T]he proposed $250 billion threshold is too high and raises the danger of a cascading economic effect. […] Unless this asset threshold is lowered, I cannot support this bill.”
The author of the law they are changing here is backed by the Wall Street Journal in blowing the cover off of the “community bank” bullshit supporters are hiding under while scrambling to pass this bill. Of course, the CBO already did that when it said that the bill would make it more likely that there would be furture bank bailouts if it passes. The very fact that the bill would make racial discrimination in lending easier should be enough for every Democrat to reject the bill. It apparently is not. But maybe the fact that it’s not just about community banks will help convince them.