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The Schumer Three-Step – WSJ.com

May 31, 2011

REVIEW & OUTLOOK JUNE 1, 2011

The Schumer Three-Step

How to vote for a law and then raise money by deploring its results.

Another day, and another cheerleader for the 2010 Dodd-Frank financial reform law is deploring its 2011 impact. This time it’s New York Senator Chuck Schumer, who has spearheaded a letter from 18 Empire State Members of Congress to the heads of several Beltway financial regulators.

Various esteemed Democratic lawmakers, suddenly concerned about the consequences of their actions, write in the letter that new derivatives rules “will inevitably result in significant competitive disadvantages for U.S. firms operating globally.” Then comes the real howler, when the letter writers claim that “the proposals are inconsistent with Congressional intent.” As if any of these folks didn’t understand that they were transferring enormous discretion to regulators to reshape derivatives and other financial markets.

Apparently it’s now dawning on the New York Democrats that if U.S. financial houses are forced to demand lots of cash collateral from creditworthy derivatives customers overseas, but foreign banks aren’t, those customers will choose the cheaper alternative. Like Federal Reserve officials who have only recently highlighted flaws in clearinghouses mandated by the law, lawmakers who voted for Dodd-Frank are increasingly eager to criticize it now that it’s too late to make much difference.

Mr. Schumer’s whine in a meaningless letter is especially notable because he could have killed Dodd-Frank last summer. Passed after a close Senate cloture vote shortly before the August recess in an election year, the law would still be just a gleam in Barney Frank’s eye if Mr. Schumer had chosen to join the opposition.

We should also note that several Republicans who didn’t support Dodd-Frank—Representative Peter King and several House freshmen—also signed the letter urging regulatory restraint.

But with Mr. Schumer, who voted to inflict this burden on an economy still struggling with high unemployment and slow growth, this is an all-too familiar pattern of behavior that can be summarized as follows:

Step One: Vote for destructive law.

Step Two: Complain about said law, while doing nothing to repeal it.

Step Three: Raise campaign money by showing to business community the volume of said complaints.

via Review & Outlook: The Schumer Three-Step – WSJ.com.

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