The big banks would like to say “thank you” for your money. No, not the money you keep in your checking and savings accounts. We’re talking about the money you send to the federal government in the form of taxes.
On Tuesday evening, the House of Representatives added a provision to a “must pass” spending bill that loosens some of the provisions of the Dodd-Frank financial reforms, and guarantees that banks that need future taxpayer funded bailouts will get them. If that doesn’t sound outrageous enough to you, consider this: the legislation was largely written by Citigroup.
Mother Jones reports that the bill guts one provision of the Dodd-Frank reforms that the big banks hate; the so-called “push out rule.” That rule requires that banks that want to deal in derivatives and other risky financial instruments must do so by moving those transactions to non-bank affiliates that are not protected by the Federal Deposit Insurance Corporation (FDIC). The move would make those non-bank entities less likely to receive government bailouts.
The original bill was passed by the House over a year ago. Democrats’ hands were not completely clean on it, either. Two Democrats sponsored the bill, and 70 Democrats voted for it in the House in 2013. The bill was considered dead after the Senate failed to act on it. But on Tuesday evening the Citigroup written language found its way into a bill that had to be passed to avoid a government shutdown.
The Citigroup written language has some Democrats crying “foul.”
The New York Times found in 2013 that almost all of the language of the original bill was written by Citigroup lobbyists. Mother Jones provides the following graphic, showing how closely one section of the bill mirrors the language written by Citigroup.
The language in the bill will primarily benefit the largest banks in the country: Citibank, Wells Fargo, JP Morgan Chase, Bank Of America, and Goldman Sachs. Some Democratic leaders are outraged.
Nancy Pelosi issued the following statement on her web site.
Once more, Republicans are working to stack the deck for the special interests against everyone else. Buried in the more than 1,600 pages of the omnibus package Republicans posted in the dead of night are provisions to put hard-working taxpayers back on the hook for Wall Street’s riskiest behavior. This provision, allowing big banks to gamble with money insured by the FDIC, opens the door to another taxpayer-funded bailout of big banks – forcing middle class families to bear the burden of Wall Street’s mistakes.
According to The Huffington Post, Senator Elizabeth Warren said, “The House of Representatives is about to show us the worst of government for the rich and powerful.”
Senator Richard Durbin echoed her concern. “[It’s] an awful invitation for another financial disaster. A number of us are very concerned,” he told reporters.
Republicans, and some Democrats, can’t wait to start dismantling the Dodd-Frank law. This bill is the first crack in the wall designed to protect the public from the excesses of Citigroup and the large banks. With Republicans taking control of all of congress in January, be prepared — the worst is almost certainly yet to come.
Image courtesy of Personal Money Service