From left: Sen. Joe Manchin (D-W.Va.), Photo by Drew Angerer/Getty Images; Sen. Heidi Heitkamp (D-N.D.), Photo by Chip Somodevilla/Getty Images; Sen. Claire McCaskill (D-Mo.), Photo by Allison Shelley/Getty Images.
By Alex Kotch
TYT Investigates has found that seven of the 17 Democratic-caucusing senators who voted to advance a financial deregulation bill on Tuesday have direct investments totaling as much as $2.5 million in the corporate stocks of companies that stand to benefit considerably from the bill in its current state, according to financial disclosure documents.
Sens. Heidi Heitkamp (D-N.D.), Claire McCaskill (D-Mo.), Joe Manchin (D-W.Va.), and others key to the bill’s advancement could all benefit financially from it. One hundred nineteen companies and trade groups including J. P. Morgan Chase, Bank of America, and Goldman Sachs registered to lobby on this bill in 2017.
Sen. Sherrod Brown (D-Ohio), ranking member of the Banking, Housing, and Urban Affairs Committee, had been the lead Democratic negotiator on the bill. But on November 1, he abandoned negotiations with Committee chairman Sen. Mike Crapo (R-Idaho). After months of trying, Brown couldn’t steer the planned bill into territory he was comfortable with—that is, a bill that primarily helps consumers and community banks.
Almost immediately after Brown left the talks, four moderate Democrats with much more favorable views of big banks took his place in the negotiations. Since then, with the help of Sens. Heitkamp, Jon Tester (D-Mont.), Mark Warner (D-Va.), and Joe Donnelly (D-Ind.), the bill crystallized into something critics, such as Sen. Bernie Sanders (I-Vt.), say is “a disaster.”
The bill now aids numerous large banks by raising the threshold for increased regulatory scrutiny by the Federal Reserve from $50 billion in assets to $250 billion. The Congressional Budget Office has said this will increase the chances that banks within this asset range will fail, and thus, necessitate more government bailouts. The CBO estimated that the bill will cost taxpayers $671 million over ten years because of increased risks.
The bill, S.2155, could also lead regulators to let some of the nation’s biggest banks, namely Citigroup and J. P. Morgan Chase, reduce leverage and engage in more risk, practices similar to those that caused the 2008 financial crash. Lawmakers changed the original wording of the bill to alter the definition of “custodial banks”—banks that focus more on safeguarding assets than on making loans—in a way that “could allow virtually any big bank to take advantage of the new rule,” according to David Dayen, who first reported this “carveout” for The Intercept. Other benefits for the banking giants in the bill include less rigorous and likely less frequent stress tests and the ability to count municipal bonds as “highly liquid assets,” which could be sold in a crisis.
An explainer from Brown’s office states, “This bill helps large banks that are making record profits. But despite its title [the Economic Growth, Regulatory Relief, and Consumer Protection Act], it does next to nothing to protect consumers or promote economic growth. . . . Just like the GOP tax bill, this bill is a giveaway to special interests that does nothing to put money in the pockets of working people.”
In addition to aiding large banks, S.2155 helps out manufactured-housing businesses and mortgage lenders, particularly three Berkshire Hathaway subsidiaries: Clayton Homes, the country’s biggest mobile-home company; and Vanderbilt Mortgage and 21st Mortgage, Clayton Homes’ top lenders. The bill lets manufactured-home sellers steer customers toward their own lending businesses and pressure borrowers into bad loans.
TYT previously reported that Heitkamp, the top Democratic author of the bill, and her husband own as much as $250,000 worth of stock in J. P. Morgan, the nation’s largest bank with nearly $2.6 trillion in assets. The couple owns between $230,000 and $600,000 in Berkshire Hathaway stock, in addition to Heitkamp’s up to $15,000 in E*Trade Financial Corporation, which had roughly $63 billion in assets as of December 2017.
Previously unreported is McCaskill’s husband’s investment in Berkshire Hathaway. McCaskill’s disclosure filings show the couple’s Berkshire Hathaway stock is worth at least $1,050,000. McCaskill is an original cosponsor of S.2155.
Sen. Gary Peters (D-Mich.), also an original cosponsor, and his spouse hold five stock investments worth up to $250,000 in big banks, including as much as $50,000 each in Bank of America ($2.3 trillion in assets), BB&T ($220 billion in assets), J. P. Morgan, The Bank of New York Mellon Corporation ($354 billion), and the Swiss bank UBS ($146 billion in U.S. assets), one of several foreign institutions set to profit from S.2155.
In April 2017, cosponsor Manchin’s spouse inherited up to $100,000 in Huntington Bancshares ($102 billion in assets) stock. Sen. Doug Jones (D-Ala.), a cosponsor, has up to $100,000 invested in Regions Financial Corporation, which has roughly $124 billion in assets. The spouse of Angus King (I-Maine), another cosponsor, owns between $15,000 and $50,000 in U.S. Bancorp ($459 billion in assets) stock. And cosponsor Sen. Tom Carper (D-Del.) has up to $45,000 invested in stocks from Bank of America, Goldman Sachs ($930 billion in assets), and Wells Fargo ($1.9 trillion in assets).
These figures do not include additional investments in money market and other funds managed by these financial institutions, nor do they include deposit accounts in these banks.
Heitkamp, Tester, Donnelly, Manchin, and McCaskill all face tough reelection battles this year in red states that went for President Donald Trump in 2016. Backing a largely Republican-supported bill could allow these candidates to boast to voters of “working across the aisle.”
Republican senators, who unanimously voted to advance S.2155, also have significant investments in some of the firms that will benefit. TYT previously reported that, for example, at the end of 2016, Sen. David Perdue (R-Ga.) owned up to $100,000 and Sen. John Kennedy (R-La.) owned up to $50,000 in J. P. Morgan corporate securities stock.
The offices of the six Democrats and one Independent whose investments are outlined in this article did not immediately respond to requests for comment.