The same old game

LITTLE ROCK — ONE OF the bright spots in Blanche Lincoln’s record of late has been her insistence on re-imposing some fiscal restraints on the country’s banks and investment houses. The kind of restraints that were imposed when the Great Depression hit, but that were left to crumble as time went on. Caution tends to be forgotten and safeguards neglected in calm seas. With painful results when a storm hits.A storm like the Panic of 2008-09, whose after-shocks still linger.

In trying to rebuild the wall between commercial and investment banks that the Glass-Steagall Act prudently erected in the 1930s, Senator Lincoln has been one of the champions of conservative, cautious banking. The kind the country needs to restore.

One of the precautions Senator Lincoln and her fellow re-reformers advocate is to increase capital requirements for banks and decrease any room for fudging. One way to do that would be to see that banks put up more of their own money to meet those requirements, and not count, say, “trust-preferred securities,” a mix of debt and equities, as capital. Good for the senator and, in the long run, good for the whole banking system. Better safe now, even at the cost of some expansion, than very sorry later.

Yes, let’s return to the New Deal in certain much needed respects, and understand what prompted its banking reforms. Preferably without needing a financial panic like that of 2008-09 to remind us.

But as anyone who’s followed Senator Lincoln’s savvy political rise might have been able to predict, she’s now making an exception to her proposal for one of her biggest political contributors: Wal-Mart. That little ol’, Arkansas-born-and-bred world power happens to pretty much own Arvest Bank, which might have to find additional capital if this reform goes through. So now the senior senator from Arkansas has decided to exempt banks with less than $15 billion in capital from her bill. The original bill, it seems, exempted banks with less than $10 billion in capital, and, sure enough, Arvest is the only Arkansas bank to fit neatly into that $10-billion to $15-billion range. What a coincidence.

One of her spokes flacks explains that the senator “believes the threshold should be high enough to ensure no bank in Arkansas is subject to these new rules . . . .” Call it the Homeboy Exception. It’s Miss Blanche’s equivalent of what Nebraska’s Ben Nelson carved out for Warren Buffett’s outfit, Berkshire Hathaway, in one version of the bill. Or what Mary Landrieu got for Louisiana in exchange for her support for Obamacare, a piece of lagniappe that came to be known informally as the Louisiana Purchase. And now Senator Lincoln has crafted the Wal-Mart Waiver.

THAT’S HOW the game is played, and Blanche Lincoln can play it with the best-or worst-of ’em. One piece of favoritism can follow another till what is billed as a great reform turns out to be not so great.

This exception for Arvest no doubt will be described as an attempt to level the playing field. But it’s about as level as a 90-degree angle, and will doubtless encourage equally blatant exceptions to the “reform” bill for other senators’ favorite interests. And campaign contributors. Senator Lincoln has reported a total of $85,700 in such contributions from Wal-Mart’s employees and political-action committee going back to 1992, as of the last time we and the Center for Responsive Politics checked.

One of the strongest arguments for re-electing Senator Lincoln this year is how well she knows the system.

One of the strongest arguments against re-electing Senator Lincoln this year is that she knows the system all too well.