Midnight Massacre Pending, Let’s Whip our Senators

The good news on the Senate financial reform bill these days is that we have a few provisions worth fighting for. Senator Blanche Lincoln (D-Ark.) has introduced one of the most important – a bold section in the Dodd bank reform bill (Section 716, colloquially known as 106) that will force the biggest banks to spin off their swaps (or derivatives) desks into a separate entity. That entity will be regulated and can remain part of the bank holding company, but it no longer has access to the Federal Reserve’s flow of funds, FDIC insurance and the taxpayer guarantee. Supporters include legendary economists and public policy experts such as Robert ReichJoseph StiglitzNouriel Roubini, and Michael Greenberger.

In one fell swoop, Lincoln’s measure will effectively protect taxpayers, downsize the behemoth banks, and end the federal guarantees behind big bank gambling. It’s the strongest structural reform measure in the bill. These swaps have previously helped the 5 largest banks grow to mega-size and then take down the country. The 5 of them – J.P. Morgan Chase, Citibank, Bank of America, Goldman Sachs and Morgan Stanley – account for 90 percent of these derivatives. Lincoln’s amendment will go right after the deals that Goldman Sachs is now being officially investigated for and Lincoln’s language is #1 on their hit list.

But the problem of course is that the Goldman Gang in Congress, like Senators Gregg and Chambliss, are lining up to strip this provision one way or other. They are being aided and abetted by conservative democrats like Indiana Senator Evan Bayh. Watch this smug interview where he talks about his hopes to defeat every good amendment. I, for one, am thrilled that he announced he will be retiring this year.

We have a right to know if our Senators will vote to end the federal funding of the Wall Street casino or vote to take Blanche Lincoln’s language out of the bill.

We know what we need to do — it’s time for a whip count and a little push and shove. We need to find out which senators will support real reform and which ones won’t. Just follow these three easy steps to make sure Senators work on our behalf. Please make your call today. It takes two minutes to reach out to two Senators.

1. Call (202) 224-3121 and ask for your Senators representing your state.

2. Ask them: “Does Senator XXXX support Blanche Lincoln’s proposal for spinning off swap desks?” and you can follow up with something like “I expect my Senator to support the Lincoln language and to reject any amendments that weaken derivatives reform in the bill, such as Senator Gregg’s amendment to kill Lincoln’s language.”

3. Report back if your Senator is for, against, undecided, leaning one way or the other, here in the comments. Details are really helpful. As soon as we hear from you, we’ll update our whip count.