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6:30 pm - 05/18/2017
Trump Treasury backs away from talk of breaking up big banks

The Trump administration on Thursday distanced itself from a populist push to break up the nation's biggest banks after months of publicly flirting with the idea.

Treasury Secretary Steven Mnuchin emphatically rejected that move during a Senate hearing in response to a question by Sen. Elizabeth Warren (D-Mass.).

Warren pressed him on what the administration meant by repeatedly saying it was open to an updated version of the Depression-era Glass-Steagall law, which separated commercial and investment banking.

Mnuchin, a finance industry veteran who's leading the administration's drive to overhaul Wall Street regulations, said splitting up the banks "would be a huge mistake."


That set off a testy exchange with Warren, who questioned how the administration could speak favorably of Glass-Steagall without supporting the breakup of the banks, which was at the heart of the law before it was repealed in 1999.

"This is like something straight out of George Orwell," Warren said during the Senate Banking Committee hearing.

Mnuchin's comments put more daylight between the administration and the anti-Wall Street rhetoric that was a centerpiece of Trump's winning campaign. The GOP party platform even included a pledge that stated, "We support reinstating the Glass-Steagall Act of 1933, which prohibits commercial banks from engaging in high-risk investment."

Yet Mnuchin's testimony raised more questions about what administration officials have in mind by promoting what they call a "21st Century Glass-Steagall" — branding that Warren had previously adopted for a bill that would force banks to cease certain activities.

Early this month, National Economic Council Director Gary Cohn, a former president of Goldman Sachs, suggested in a private meeting with bankers that the administration's definition of Glass-Steagall was merely developing different sets of rules for large and small banks, according to people familiar with the discussion.

"If we had supported a full Glass-Steagall, we would have said at the time that we believed in Glass-Steagall, not a 21st Century Glass-Steagall," Mnuchin said on Thursday.

He said the Trump team was "very clear in differentiating it." But many in the finance industry have been on high alert about the president embracing a breakup of the banks because the administration had not defined its position.

For Warren, a potential 2020 presidential contender, the revelation marked one more opportunity to attack President Donald Trump for abandoning a populist movement that ushered him into office and embracing policies more in line with Wall Street's agenda.

"When it was politically convenient for Donald Trump and for the Republicans to say they were in favor of Glass-Steagall, then they were in favor of Glass-Steagall," Warren said in a rare scrum with reporters outside the hearing room. "But now that the giant financial institutions have been in to visit them, they've decided to reverse that 180 degrees."

Senate Banking Chairman Mike Crapo (R-Idaho) said in an interview that Mnuchin's comments did not constitute a new position from the administration.

"Separating the function of investment banking from deposit banking and making sure there are adequate protections there was something I think most members of Congress were willing to look at, and it's what I actually think they're talking about," he said. "But the notion of an absolute Glass-Steagall, which was what he discussed today, is not something I think the administration has ever said that they supported."

http://www.politico.com/story/2017/05/18/steven-mnuchin-trump-treasury-break-up-big-banks-238567

FCC kicks off effort to roll back net neutrality rules

Scandal isn't slowing down one part of the Republican agenda: The Federal Communications Commission took the first formal step toward dismantling Obama-era net neutrality rules Thursday, kicking off what's likely to be a bitter and months-long lobbying battle over the future of internet regulation.

The commission voted along party lines to begin the process of rolling back the rules, which require internet service providers like Verizon and Comcast to treat all web traffic equally. The telecom industry has criticized the rules as burdensome and unnecessary regulations, but supporters among startups and online tech companies say they ensure ISPs don't abuse their position as internet gatekeepers to favor some websites over others. The net neutrality order, passed by the FCC's then-Democratic majority in 2015, represents one of the signature policy achievements of the Obama administration.

Republican FCC Chairman Ajit Pai has sharply criticized the net neutrality rules, and since being appointed chairman by President Donald Trump in January, he's moved quickly to scrap the legal foundation of the order. He argues that the FCC, in applying utility-style regulation to ISPs, was too heavy-handed and threatened the longstanding tradition of government keeping its hands off the internet.


"Today’s notice is the start of a new chapter in the public discussion about how we can best maintain a free and open internet while making sure that ISPs have strong incentives to bring next-generation networks and services to all Americans," Pai said at the commission meeting.

Net neutrality supporters argue that the rules provide important protections for consumers who may not have many options in buying internet service and also allow online companies to thrive, increasing consumer demand for broadband services.

Democratic Commissioner Mignon Clyburn spoke in fiery opposition to the proposal, calling it a “political rush job.” She challenged the assertion that the rules have hampered investment, and said she doesn’t believe the the rules prohibiting ISPs from blocking, throttling or paid prioritization will survive the proceeding.

"While the majority engages in flowery rhetoric, about light-touch regulation and so on, the endgame appears to be no-touch regulation and a wholescale destruction of the FCC’s public interest authority in the 21st century,” Clyburn said during the commission debate.

The Internet Association, whose members include online companies such as Google and Facebook that favor the existing net neutrality rules, took exception to today's action and said they remain opposed.

"ISPs should not be able to use their position as gatekeepers to prioritize their own content over others," association President & CEO Michael Beckerman said in a statement. "Internet companies stand with consumers, startups and other beneficiaries of the ecosystem in our fight to maintain a free and open internet."

Meanwhile, internet providers including Comcast cheered the decision to begin rolling back Title II regulations on ISPs. Comcast also pledged to support ”strong, legally enforceable net neutrality protections” in a blog post by David L. Cohen, senior executive vice president and chief diversity officer.

“Especially in the current heated political climate, we must come together, from across the aisle, both public and private sector, to find common ground that protects consumers on the core elements of net neutrality without unnecessary and harmful regulatory overreach,” Cohen said.

Senate Commerce Committee Chairman John Thune (R-S.D.), in remarks today on the Senate floor, called for legislation to seal the net neutrality changes into law, which would make it harder for a subsequent administration to change them again.

The FCC's action Thursday doesn't repeal the rules yet but instead launches a lengthy proceeding that will pit ISPs and conservative groups, which back Pai's efforts, against left-leaning digital activists and leading tech companies that say the net neutrality rules are crucial to creating a level playing field online. Already, the debate has begun to echo the bitter fight over the issue two years ago, and the number of public comments filed in the proceeding has skyrocketed to 1.6 million at last count.

HBO host John Oliver, whose viral 2014 segment on net neutrality flooded the FCC's website with comments during the earlier debate, returned to the issue this month to skewer Pai's proposal. His show generated a new wave of comments. But after the FCC website appeared to sputter under the load, officials there blamed the malfunction on a bombardment of malicious traffic.

The fight quickly turned ugly, with racist messages aimed at Pai's Indian heritage in the online docket and accusations of spam bots filing a barrage of anti-net neutrality comments.

Pai’s proposal would eliminate the rules' legal foundation — which allows the FCC to impose utility-style regulation originally written for telephone companies — and jettison a provision giving the FCC broad authority to oversee ISP behavior. It also seeks public input on whether to modify or eliminate rules preventing ISPs from blocking or throttling web traffic, or negotiating paid deals with websites for so-called internet fast lanes.

Unlike his Democratic predecessor, Pai released the full text of his proposal ahead of the agency’s vote, giving an early jump-start to the fight as groups on both sides launched online campaigns.

Following Thursday's vote, the commission will seek more comment over the summer before putting together a final set of net neutrality rules, likely in the fall. Pai has said he wants to complete the rulemaking process this year.

http://www.politico.com/story/2017/05/18/fcc-net-neutrality-rules-238529
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