Why Jon Tester And His Cheerleaders Are Wrong About The Banking Bill

by William Skink

Back in March, Jon Tester defended his vote on the banking bill by claiming he was helping community banks:

Senator Jon Tester called a press conference yesterday after the banking de-regulation bill he co-sponsored passed the Senate. The bill rolls back restrictions for some banks enacted in the Dodd-Frank Act, which was passed in the wake of the financial crisis of 2008.

Tester’s bill was popular with Senate Republicans, and won support from 15 other Democrats.

“Our bipartisan bill will cut the unnecessary red tape for small community banks and credit unions in Montana, so that families, small businesses and farmers and ranchers are able to access the capital and the business loans that they need to expand their operation or survive through a difficult time,” Tester says. “Our bill will remove regulations for banks on main street, while holding Wall Street banks accountable.”

Tester says his bill helps small banks by freeing them from the cost of complying with expensive regulations in the Dodd-Frank law. Dodd-Frank places tighter restrictions on banks with more than $50 billion in assets. Tester’s bill removes those restrictions on banks with up to $250 billion in assets.

Tester got plenty of criticism for this vote, so of course Democrat partisan Don Pogreba jumped in to do his duty and lament how poor Jon Tester was getting unnecessarily dinged from the left for selling out to big banks:

Frankly, Tester may be wrong about the need for this repeal, but his vote is to protect the viability of smaller banks in Montana who simply could not compete with larger institutions more able to process and manage the requirements Dodd-Frank placed on them. If anything, Tester’s vote helps level the playing field between those larger banks and the smaller institutions that serve us. To argue that Tester’s vote is a giveaway to megabanks is to ignore both his record and the literal text of the bill.

So, is Tester and his cheerleaders correct? Or, were the critics correct? Let’s go now to this Intercept piece, titled Bill Aimed at Saving Community Banks Is Already Killing Them. This article gets into the actual nuts and bolts of the bill and explains why some of the provisions passed with the help of Democrats like Tester will actually have the opposite effect on community banks:

A separate Crapo bill provision should also spur merger activity. Section 207 increases the Federal Reserve’s “small bank holding company” threshold from $1 billion to $3 billion. Banks that are eligible for this designation can operate with higher levels of debt than would otherwise be permitted. That, again, broadens headspace for hundreds of banks at the smaller end to combine without losing this significant benefit, which enables them to juice returns by using other people’s money. Half of all buyers and nearly all of the sellers in bank M&A deals since 2010 were below $1 billion in assets, according to the investment firm FJ Capital Management.

The increased pool of cash-flush buyers should blunt the mild regulatory relief in the Crapo bill for smaller banks. “It’ll be less expensive to operate a community bank,” said Brown, who is an M&A lawyer. “But the fact is, they have an aging shareholder base, an aging management and board, and a lot of them want out.” And more buyers chasing deals means higher prices, making selling out even more attractive. It’s like a Silicon Valley startup exit strategy, applied to community banks.

SO, TESTER’S CONCERN — that a more concentrated banking sector will pull out of rural America, leaving large chunks of the country behind — is made, if anything, worse by the bill he supports.

It look like the critics were correct, and Tester and his cheerleaders are wrong. Instead of helping community banks, Tester has made it easier for them to be gobbled up.

Despite this, plenty of Democrats will still fall in line to vote for Jon Tester. They either don’t know or don’t care that Tester is deceiving them in order to help a banking industry that was never held accountable for nearly bringing down the global economy 8 years ago.

I have a smidgen of sympathy for the average voter’s propensity to be manipulated. People are busy trying to make ends meet and don’t always have the luxury to read up about issues. But the supposed progressives doing the cheerleading for a deceitful politician like Tester? I have no sympathy for them.

Don’t expect the Montana Post to acknowledge that Tester deceived them and the banking bill is doing the opposite of what he said it would. It is not their intent to actually inform voters about what their chosen candidates are doing. Nope, a truly informed voter would understand people do not impact policy, and public opinion doesn’t matter to politicians.

Politicians do what the big time donors and lobbyists tell them to do. Jon Tester is evidence of this, a sad reality you won’t hear about from his cheerleaders.

About Travis Mateer

I'm an artist and citizen journalist living and writing in Montana. You can contact me here: willskink at yahoo dot com
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