Obama’s ‘Terrible’ Financial Reform Scores Another Huge Victory

One of the most completely unknown aspects of the Wall Street collapse of 2008-2009 is the role non-banks played in it causing it. After the deregulation madness of the 90s, corporations like General Electric realized they could get away with murder playing in the financial markets. Why? Because they would be completely unregulated because they weren’t actually banks. This meant they could pretty much do whatever the hell they wanted and they did just that. It’s called “shadow banking” and it was a disaster for America.

But Dodd-Frank, the “useless” financial reform law, is continuing to push greedy corporations out of the banking business:

LONDON — General Electric said on Monday that it had agreed to sell its fleet-financing businesses in the United States, Mexico, Australia and New Zealand to Element Financial Corporation of Canada for $6.9 billion.

On Monday, G.E. also announced that it had separately signed a memorandum of understanding to possibly sell its fleet businesses in Europe to Arval, a unit of the French bank BNP Paribas and an alliance partner of Element’s.

The sale of the bulk of GE Capital Fleet Services represents the latest move in G.E.’s effort to retreat from banking and refocus on its industrial roots.

Just so we’re clear, G.E. isn’t running away from their once-massively profitable financial arm because they stopped making obscene amounts of money. They’re still profitable buuuuuut because of Dodd-Frank, they can’t manipulate markets with impunity anymore. Nor can they keep gambling and expect the government to bail them out. Dodd-Frank, among other things, forces “systematically important financial institutions” (aka Too Big To Fail) to keep enough money on hand to pay all of their debts in full if their gambling doesn’t pan out.

In other words, they can’t take reckless risks and then declare bankruptcy to avoid responsibility. Like I said the last time I wrote about this, if there’s one thing the 1% hates, it’s taking responsibility for their screw ups and risking their own money. Responsibility and risk is for the little people. But as long as Dodd-Frank forces the financial industry to act in a responsible manner, non-bank corporations are going to take their toys and go home in a snit. Boo. Hoo.

It may sound kind of obscure (it kind of is) and good luck getting the mainstream media to pay much attention to it, but G.E. being hounded out of the banking business is a huge deal for the stability of the financial industry.

Featured image via Flickr/The White House