Wednesday, December 10, 2014

Wall Street Lobbyists: Pass Bill Deregulating Derivatives — Or We Will Shut Down Government

Via Isaiah Poole at Campaign for America's Future, we have the following from Zach Carter at Huffington Post:
According to multiple Democratic sources, banks are pushing hard to include the controversial provision in funding legislation that would keep the government operating after Dec. 11. Top negotiators in the House are taking the derivatives provision seriously, and may include it in the final bill, the sources said.

The bank perks are not a traditional budget item. They would allow financial institutions to trade certain financial derivatives from subsidiaries that are insured by the Federal Deposit Insurance Corp. -- potentially putting taxpayers on the hook for losses caused by the risky contracts. Big Wall Street banks had typically traded derivatives from these FDIC-backed units, but the 2010 Dodd-Frank financial reform law required them to move many of the transactions to other subsidiaries that are not insured by taxpayers.

The more things change, the more the changes are reversed by Republicans. Derivatives are arguably a major cause of the Wall Street collapse of 2008. They are inherently risky and under Dodd-Frank are currently not government-backed; see Wikipedia for a summary and list of the risks. Wikipedia concludes
[The loss] comes to a staggering $39.5 billion, the majority in the last decade after the Commodity Futures Modernization Act of 2000 was passed.
GOP Santa
Wikipedia is not known for allowing disputed content to remain unchallenged for long: almost everyone except the Wall Street fraudsters agrees the risks of unregulated derivatives are unacceptable. But Wall Street wants them back, with bells on... i.e., with FDIC backing. Your tax dollars at work, for Wall Street!

And the Party of No says Yes! Yes! Yes! to reviving them, or else they'll take their marbles and go home.

Campaign for America's Future has a petition. I signed it; what about you?

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