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Charles Schumer: Wall Street's Expensive Pal

Sen. Chuch Schumer
Roger Kisby | Getty Images
Sen. Chuch Schumer

It looks like Senators Charles Schumer and Kirsten Gillibrand have come back into the Wall Street fold.

On Tuesday, Schumer and Gillibrand joined 16 members of the New York state’s Congressional delegation to send a letter to financial regulators claiming that proposed Dodd-Frank rules governing derivatives could put U.S. banks at a competitive disadvantage to their foreign competitors.

This has annoyed Republicans like Senator Richard Shelby who point out that the anti-competitive aspects of Dodd-Frank’s derivative rules were well-known when the bill was being considered. But neither Gillibrand nor Schumer spoke up at the time.

“My first reaction up reading that letter was, ‘Are you kidding me?’” said one senior GOP official told Politico. “Not one person on this letter said anything at the time so it’s surprising to see them whimpering now. The conference committee votes were all so close, any group of Democrats could have changed things.”

If I were more cynical, I’d admire this brilliant bit of political machination. Schumer and Gillibrand passed the law that empowers regulators to impose costly rules. Now the banks that fear being subject to those rules must turn to the very lawmakers who passed them in order to get them watered-down.

By threatening to regulate Wall Street, Schumer and Gillibrand have made themselves even more important to Wall Street.

This strategy pays off beautifully for Schumer. He's the top recipient of Wall Street cash in the US Senate. Gillibrand is number two.

Ain’t democracy grand?

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