Daryl and Todd:
In this case, a bipartisan collection of Wall Street-friendly congressmen pitched these bills to the Ag Committee as mere “technical corrections” that would prevent “unintended consequences.” In the House, the effort is led by Jim Himes, a former Goldman Sachs vice president who represents the Connecticut bedroom communities of Wall Street traders. Himes, who has aggressively defended the bills, was also just named the national finance chairman of the Democratic Congressional Campaign Committee, the campaign arm for House Democrats. So this effort to bestow gifts on Wall Street comes from the very congressman who has to raise money for his colleagues in the midterm elections, presumably from the same bankers he’s aiding. And of course, his role as finance chair makes him extremely important to his fellow members, who then trust him as he drops legislation to gut derivatives rules.
What we get in the end is a set of bills with Orwellian titles like the “Swaps Regulatory Improvement Act” and the “Inter-Affiliate Swap Clarification Act.” But amid all this improving and clarifying is a near-total rollback of the mild derivatives regulation that made it through Dodd-Frank. For example, HR 992, the aforementioned “Swaps Regulatory Improvement Act,” would virtually nullify Section 716 of Dodd-Frank, the so-called push-out rule. One of the bigger problems with the London Whale trade is that they gambled with “excess deposits,” funds deposited by ordinary Americans that had not been loaned out. JPMorgan was essentially gambling with FDIC-insured money, secure in the knowledge that major losses would be borne by the public while profits would stay in the bank. Section 716 would push out derivatives activity to a separate, fully regulated subsidiary backed by its own capital and responsible for its own risks, far from the insured deposits.
But HR 992 massively expands the exemptions to Section 716, allowing virtually any kind of derivative risk to remain housed inside the insured depository institutions. Marcus Stanley of Americans for Financial Reform writes that, “HR 992 is supported by major Wall Street banks for one simple reason – because it is cheaper for them to engage in derivatives dealing when their activities receive a public subsidy through access to the taxpayer-supported safety net.”
Hat tip to Terry Gaffney
Fox News has this new emphasis on black conservatives. This one’s crazy, even for Fox.
I went to hear him speak at the Constitution Center last night about the influence of money corruption in politics. I’m hoping to get a video up later. In the meantime, you can hear one of his speeches at TED. He’s really smart.
It’s always fun to start the day with a heapin’ helping of insane:
Of course I decry violence, etc., and yet I loved this.