Everyone who’s been paying attention pretty much already knows that the recently-passed, “bipartisan” spending bill was a present for Wall Street. Quietly folded into the spending bill was a provision that allows pre-2008 recession levels of bad bank behavior.
Jim Hightower, a populist writer and radio host, reported that the spending bill was a provision that protects Wall Street speculators by having their derivatives insured with taxpayer money. In a nutshell, a derivative is like a bet placed on a stock or security based upon its expectation of success.
The derivatives market was a veritable money train for Wall Street players and was the leading cause for the economy tanking in 2008.
“The derivatives market has done so much damage to our economy and is nothing more than a very high-stakes casino – except that casinos have to abide by regulations,” said Sen. Maria Cantwell (D-WA) in 2010. “Even in Las Vegas at the Blackjack tables, both the House and the player have to have capital behind their bets. But we allow Wall Street to continue to operate in the dark…”
Before the Dodd-Frank Act was passed in 2010, Wall Street bankers were making these gambles, and when the economy tanked in 2008, taxpayer cash was used to bail out the banks. Dodd-Frank ensured that taxpayer money would be safe from being used for bailouts. However, the spending bill provision negates Dodd-Frank by putting taxpayer money again at risk by allowing it to be used by Wall Street bankers.
Another intriguing detail about the anti-Dodd Frank provision is that Citigroup executives authored that very provisions and was sold by Republican Rep. Kevin Yoder. The financial industry is by far Yoder’s biggest donor. Therefore, he wanted to help his Wall Street buddies.
The relationship between Congressional members and Wall Street is dangerous and continues to undermine the good of the People. And with the GOP in full control of the House and Senate, we can expect more of this corporate favoritism followed by Wall Street’s bad behavior.