During the financial reform debate, Rep. Spencer Bachus (R-AL) — who will become chairman of the House Financial Services Committee in the 112th Congress — continually criticized the reform effort. He falsely characterized the legislation that ultimately became the Dodd-Frank financial reform law as creating “permanent bailout authority,” and he staunchly opposed the creation of the new Consumer Financial Protection Bureau.
Now that he’ll be taking the Financial Services committee gavel, Bachus has telegraphed his intention to weaken some of the bill’s most important sections, including derivatives reform and rules meant to prevent banks from making risky trades with federally insured dollars.
In an interview with The Birmingham News, Bachus made it clear why he opposed stricter regulations for banks in the wake of a huge financial crisis largely caused by Wall Street excess and a lack of prudent regulation. In Bachus’ estimation, the government’s role is not to protect consumers and the wider economy through regulating financial activity, but to simply “serve the banks”:
Bachus, in an interview Wednesday night, said he brings a “main street” perspective to the committee, as opposed to Wall Street. “In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks,” he said.
According to the article, Bachus later tried to clarify that what he meant was “regulators should set the parameters in which banks operate but not micromanage them.”
Bachus is far from the only Republican on the Financial Services Committee who feels that consumers and regulators should be subservient to the banks. Rep. Jeb Hensarling (R-TX), for instance, has said that bank profits should always trump consumer protections. But rarely has a Republican lawmaker laid out so starkly just whose interests he believes Washington is supposed to be protecting.
Back in October, Bachus told a crowd of 100 financial services industry lobbyists that banks should really be making campaign contributions to Republicans, because Democrats “hammered” the banks by enacting the Dodd-Frank financial regulatory reform law. The banks responded by giving more heavily to Republicans than Democrats in the home stretch to November’s election. And it seems that Bachus is now fully prepared to give them what they paid for.