Wall Street Holds Government Hostage to Finance Its Gambling
Dec. 10, 2014
Wall Street Holds Government Hostage to Finance Its Gambling
Note: U.S. congressional leaders included text in the omnibus appropriations bill that would reverse critical financial reform initiatives and weaken consumer protections. The spending bill is considered “must-pass” legislation since the U.S. is facing another government shutdown if funding is not secured by Thursday.
WASHINGTON, D.C. – Public Citizen denounces Wall Street’s exploitation of the must-pass government spending bill to reverse crucial reforms in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Specifically, “riders” – or unrelated measures – were tacked on to various sections of the spending bill filed late Tuesday. These riders will, among other things, permit banks to continue gambling in the derivatives market under the banner of taxpayer-insured Federal Deposit Insurance Corporation (FDIC) banks.
“Wall Street and its Capitol Hill captives cravenly hold the entire government hostage so they can continue socially irresponsible speculation,” said Bartlett Naylor, financial policy advocate for Public Citizen’s Congress Watch division.
Derivatives, including a specific type referred to as “swaps,” are highly risky investments. A “swaps push-out rule” was a key component of the 2010 Dodd-Frank law. That rule requires financial institutions to conduct speculation through swaps in separate affiliates from the FDIC-insured banks, using separate affiliate capital.
“Wall Street’s lobbyists wrote this legislation,” added Naylor. “After committing massive fraud, after helping crash the world economy and after surviving only with a taxpayer bailout, Big Banks now want a return trip to Las Vegas.”
Separately, a terrorism insurance bill contains another extraneous “rider” gift to Wall Street. That provision eliminates basic safeguards known as margin requirements, which assure that financial institutions are not overly leveraged in debt.
“Washington insiders may be calling this the ‘cromnibus,’ but it’s more like a ‘cramnibus’ with all of its riders,” Naylor said. “Congressional leaders must remove these provisions that gut needed financial reforms such as those in the Dodd-Frank law, which are passed through democratic debate and compromise, not via rushed, last-minute deals like this.”
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