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Moderate Democrats in Congress, seeking to keep their seats in red states, played a significant role in weakening oversight that led to recent bank failures.

While Democrats often tout their standing with the middle class and common folks, in this case those exhortations ring hollow. The middle class will once again be stuck paying for the mistakes of the privileged interests when it comes to the current banking fiasco.

An in-depth report by the Associated Press shows a handful of Senate Democrats were influenced by some $400 million in lobbying, hundreds of thousands in campaign money and other perks in supportive advertising.

The Democrats sided with Republicans in the Senate on a plan by GOP Sen. Mike Crapo, Idaho to retreat from the Dodd-Frank legislation tighter banking rules and oversight after the financial meltdown of 2008.

By 2017, smaller community banks had lobbied their members of Congress to reduce the size of banks subject to the regulation.

And their arguments did have merit, except in the final compromise bill, the bigger banks had to get something.

Silicon Valley Bank as among the midsized banks that escaped more stringent oversight. Its chairman and others were involved in lobbying the Democrats.

The revelations on lobbying in the Associated Press investigation were some of the most egregious efforts to restrain the oversight that continues to have reverberations in financial markets from bank safety to huge plunges in stocks that affect retirees 401ks.

In all, the Associated Press analysis determined through public records some $400 million was spent in the lobbying campaign to influence the legislation.

Democrat senators who helped pass the legislation gained campaign money from the banking industry.

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Montana Sen. John Tester received $302,770, while Sen. Heidi Heitkamp, of North Dakota, received $357,953 and Joe Donnelly of Indiana pulled in $265,349, according to the nonpartisan watchdog group, Open Secrets.

The American Bankers Association also spent $125,000 on an ad campaign thanking Tester for his work on the bill. The law firm that represented Silicon Valley Bank donated $10,800 to Tester.

In all, 17 Democrats voted with Republicans to reduce regulations, including mandatory stress tests that would likely have prevented the bank failures of the last few weeks. And, to be sure, Republicans share the blame.

Some Democrats, like Sen. Elizabeth Warren of Massachusetts, vehemently opposed the legislation.

Heitkamp, in an interview with the Associated Press, pushed back on the idea she was part of the problem. She blames the Federal Reserve instead, for lack of oversight.

In the end, Senate Majority Leader Chuck Schumer gave the moderate Senate Democrats permission to vote for the legislation, hoping it would draw votes in their conservative states with the community banks serving small businesses and farmers.

Turns out, only Tester won re-election in 2018 after the weakened rules were passed.

Protecting Americans from larger and powerful institutions that can put profits over people and influence laws that benefit the privileged and put taxpayers at risk should be one of the basic tenets of Congress. And while Republicans have long turned a blind eye to these kind of protections in the name of promoting business, Democrats have often been the firewall protecting consumers.

But in this case, Democrats were the difference on the vote weakening the banking system oversight and they must own it. So far, there is no push to reinstate the rules that cover banks like Silicon Valley, but Democrats could redeem themselves by doing so.

The Mankato (Minnesota) Free Press

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Editorial by The Mankato (MInnesota) Free Press | Democrats share ... - New Castle News