This weekend, Democrats plan to vote on their health care reform reconciliation package, which also includes student loan reform. The Student Aid and Fiscal Responsibility Act (SAFRA), which would cut billions of dollars in senseless subsidies to private student lenders, passed the House last year. As of yesterday, it has a corresponding senate counterpart, which will be included in the reconciliation bill.

Currently, the federal government gives billions of dollars to student lenders to originate loans, and then guarantees loan repayment up to 97 percent, so the lenders are essentially useless middlemen that aren’t exposed to any of the loan risk. This is corporate welfare at its finest. So in order to build opposition to the bill, both the lenders and Republicans in Congress have been borrowing a tactic from the health care debate by falsely characterizing student loan reform as a “Washington takeover” of lending.

But House Minority Leader John Boehner (R-OH) took this a step further last night, saying that student loan reform would actually “eliminate every bank in the country and all student loan lenders,” replacing them with the government:

Well, if you look at this student loan provision in there, they eliminate every bank in the country and all private student loan lenders so the government can do it instead.

This is just astoundingly wrong. On a very basic level, it could only be true if the sole thing banks did was make student loans, which is obviously not the case. The day after student loan reform passes, banks will still be there, cashing checks, taking deposits, making home loans, and on and on.

But the greater point Boehner was trying to make is that student loan reform is somehow a new expansion of government into the private economy. Sen. Mike Enzi (R-WY) echoed this sentiment yesterday, saying that student loan reform amounts to “seizing control of industries and squeezing out private competition.” But the government already provides the money for the loans and guarantees the lenders against loss, in addition to directly making millions of loans every year. So student lending is, for all intents and purposes, already a federal program.

In fact, the subsidized private program that Boehner and Enzi want to preserve is called the Federal Family Education Loan Program. By cutting the middlemen out of the process, the government will not only save billions of dollars to be used for deficit reduction, but will also have the money to increase Pell Grants and thus boost the number of college graduates. According to an analysis by CAP Senior Fellow Ulrich Boser, the boost in incomes due to student loan reform will top $100 billion.

And at the end of the day, the bill doesn’t even cut private lenders completely out of the loop, as they still would be contracted to service the loans (collect payments, etc.). But Boehner has decided that this is his week to go all out for the bankers — telling them to stand up to “punk staffers” trying to write new regulations — so it’s really not surprising that he’s willing to distort student loan reform to argue for his bank-friendly policies.

The American Bankers Association was in Washington this week for a governmental relations summit, giving 900 bankers ample opportunity to run around Capitol Hill trying to talk lawmakers into watering down financial regulatory reform. “We have a lot of work cut out for us,” said David Bochnowski, an Indiana bank executive. “Our job is to have an impact on the Hill.” “We need to shape what’s in and what’s out of any reform legislation,” Michigan banker Art Johnson added.

During the summit, the assembled crowd of bankers has received plenty of support from Republican lawmakers. “You’re all going to be lobbyists today. I know that’s a dirty word, but that’s what you’re doing,” said House Minority Leader John Boehner (R-OH), adding, “don’t let those little punk staffers take advantage of you and stand up for yourselves.”

One of the aspects of financial reform that the banks are most opposed to is the creation of a new entity charged with protecting consumers. And at the summit, Sen. Richard Shelby (R-AL), the Senate Banking Committee’s ranking member, told the assembled bankers exactly what they wanted to hear — that bank profits should always take priority over “consumer finance whatever“:

“Safety and soundness trumps everything,” Shelby said to loud applause. “It trumps the consumer finance whatever.”

This sounds exactly like Comptroller of the Currency John Dugan’s pronouncement this week that it’s “backwards” to put consumer protection above bank profits. These are really blatant examples of where conservatives are regarding regulation: they believe that financial institutions should be able to do literally anything they want, so long as it’s profitable. In fact, Shelby promised the bankers that “if there were 59 Senate Republicans ‘you wouldn’t have to worry‘ about a new consumer agency.”

And Shelby’s line about safety and soundness is precisely what the bankers wanted to hear. In fact, it was the line they were using themselves as they lobbied lawmakers to ditch the consumer protection agency, as this report from CNBC shows. Watch it:

Of course, if the bankers and their Republican allies truly believe that the banking industry can only make money by ripping off consumers, that’s a sorry sign. As Stephen Lubben put it at Credit Slips, “did toaster companies go out of business when the Consumer Product Safety Commission stopped letting them sell exploding toasters? I guess the ones who couldn’t make it selling legitimate toasters did — but the Senator can’t really be saying that America’s banking industry is like a shoddy toaster company, can he?”