These days, it’s hard to keep straight all of Congress’ efforts to build plutocracy — the further consolidation of the power of the richest Americans at the expense of the rest of us.

With the Senate passing a multi-trillion dollar job-killing giveaway of our tax dollars to the people and companies who need it least, you might have missed the bill moving through the Senate to deregulate Wall Street and consumer finance.

ADVERTISEMENT

Senator Crapo’s so-called “Economic Growth, Regulatory Relief and Consumer Protection Act” being marked up by the Senate Banking Committee Tuesday is a serious threat to the stability of our financial markets and our economy.

The excuse for the Crapo bill, like the deregulatory bills Congress passed in the 1990s that led to the disaster of 2008, is that it will stimulate economic growth by unleashing the financial sector. The reality, however, is that there is no evidence that financial regulations stymie economic growth.

Profits in the banking sector are soaring, but there is a lot of evidence that when you unleash finance, finance turns and bites the real economy.

What the Crapo bill will do is hurt working people. It would weaken protections against predatory, unaffordable mortgage lending of the type that blew up the U.S. economy in 2008. It would also broaden exemptions from the mortgage affordability requirements created by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

To make matters worse, the Crapo bill undermines safety and soundness requirements that apply to mid-size banks that collectively hold around $3.7 trillion in assets and were the recipients of $47 billion in bailouts during the last financial crisis.

It will also re-open the door to “proprietary trading,” or bank speculation in risky financial markets with taxpayer-backed funds, for banks with less than $10 billion in assets. This provision also includes a dangerous loophole that could allow much larger, systemically dangerous banks to engage in more extensive proprietary trading.

The key thing is there are no meaningful measures to keep even larger institutions from using these smaller ones as conduits. These kinds of dynamics could easily feed a systemic crisis that puts taxpayers at risk of being called on, once again, to bail out Wall Street.

It’s been seven short years since Congress passed Dodd-Frank to address some of the most egregious examples of dangerous Wall Street speculation and consumer abuse that came to light during the financial crisis.

Congress passed the Dodd-Frank Act because pretty much everyone from Alan Greenspan on realized that lax regulation of financial market actors was a leading cause of the 2008 financial crisis.

The AFL-CIO agrees with Sen. Elizabeth Warren Elizabeth WarrenHarris joins women's voter mobilization event also featuring Pelosi, Gloria Steinem, Jane Fonda Judd Gregg: The Kamala threat — the Californiaization of America GOP set to release controversial Biden report MORE (D-Mass.) that “we need more accountability to make sure big financial institutions don’t threaten the economy again.”

Strong financial regulations prevent crises and give investors confidence that they will be treated fairly and have legal recourse when they choose to invest in businesses that are poised to grow, create jobs and develop innovative products and services. This is the recipe for a strong economy. Not the race to the bottom that the Crapo bill will feed.

Fortunately, Sen. Sherrod Brown Sherrod Campbell BrownSenate Democrats release report alleging Trump admin undermined fair housing policies Bipartisan praise pours in after Ginsburg's death Emboldened Democrats haggle over 2021 agenda MORE (D-Ohio), the ranking Democrat on the Senate Banking Committee, has rightly called on the Senate to take a different direction: to build on the achievements of the Dodd-Frank Act, rather than undermining the stability of our financial system.

So this is a moment for policymakers to decide whose side they’re on: Are they in Washington to look out for the best interests of working people or to line the pockets of bank executives and Wall Street lobbyists?

Damon Silvers is policy director for the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the largest federation of unions in the United States.