A mere five years after the 2008 financial crisis the United States House of Representatives has voted to virtually guarantee another one. With bipartisan support, the House voted to rollback provisions of the Dodd-Frank bill and allow Too Big To Fail banks to trade derivatives in units that are guaranteed by the federal government – not only promoting risky behavior but putting the government on the hook for backstopping such risky trades.
Yes, that’s right. Now you get to be Wall Street’s underwriter.
The House of Representatives, with bipartisan support, passed legislation on Wednesday that would roll back a major element of the 2010 law intended to strengthen the nation’s financial regulations by allowing big banks like Citigroup and JPMorgan Chase to continue to handle most types of derivatives trades in house.
The bill, which passed by a 292-122 vote, would repeal a requirement in the Dodd-Frank law that big banks “push out” some derivatives trading into separate units that are not backed by the government’s insurance fund.
Is this a new record here in the United States of Amnesia? It only took five years for us to forget the crash. But don’t worry, it was bipartisan and Citigroup even lent a hand by, you know, writing the bills.
But the vote Wednesday, which included the support of 70 House Democrats, followed months of intense lobbying by Wall Street banks. The banks and lawmakers who support the proposal hope that the bipartisan support the bill received in the House will send a strong message to the administration to tread carefully as it drafts the remaining regulations necessary to fully enforce Dodd-Frank.
In fact, emails reviewed by The New York Times show that Citigroup lobbyists drafted more than 70 of the 85 lines of the House bill, as they tried to develop language that Democrats and Republicans on the Financial Services Committee could support.
Third Party? We don’t even have two.
What’s left to be said at this point? Wall Street runs this place. Hopefully the fear of tempting fate with another crash will prevent the Senate and President Obama from signing these monstrosities.
Photo by JSquish under Creative Commons license