Courtesy of Pam Martens
Yesterday the U.S. House of Representatives voted 258-159 to approve a rollback of provisions in the 2010 Dodd-Frank financial reform legislation that grew out of the epic financial collapse of 2008 – which ushered in the greatest economic bust since the Great Depression. The bill originated in the U.S. Senate and is now awaiting the signature of President Donald Trump, who is expected to quickly sign it.
If you are thinking that Congress would never have approved this rollback of reforms if Wall Street was still as dangerous as it was in 2008, think again. Members of Congress approved this dangerous giveaway to Wall Street because they simply can’t say no to Wall Street’s political donations, its lobbyists, and those high-paying jobs that might await them if they play their cards right.
The Washington Post called the rollback “the most significant scaling back of the rules to date.” The New York Times wrote in a front-page, above-the-fold headline that this was the “First Big Dodd-Frank Rollback.” Both of these inaccurate statements are evidence of the dark curtain that Wall Street bankers have drawn around their activities since crashing the U.S. financial system in 2008, receiving the largest taxpayer bailout in global history and then strolling away in their $5,000 Tom Ford suits with their get-out-of-jail-free cards from Eric Holder’s Justice Department tucked securely in their pocket.
The first major rollback of Dodd-Frank reforms occurred in December 2014. As we explained at the time:
“Citigroup is the Wall Street mega bank that forced the repeal of the Glass-Steagall Act in 1999; blew itself up as a result of the repeal in 2008; was propped back up with the largest taxpayer bailout in the history of the world even though it was insolvent and didn’t qualify for a bailout; has now written its own legislation to de-regulate itself; got the President of the United States to lobby for its passage; and received an up vote from both houses of Congress in less than a week.”
What Citigroup did in December 2014 was to have one of its toadies in Congress attach an amendment to the must-pass spending bill that would keep the government running. That amendment effectively repealed one of the most important provisions of the Dodd-Frank legislation: the section that would “push out” hundreds of trillions of dollars in derivatives from the commercial banking units of firms on Wall Street that are holding taxpayer-backstopped, Federally-insured deposits. By leaving the derivatives in the taxpayer-backstopped part of the Wall Street bank, the bank is still effectively allowed to continue gambling while using a taxpayer-subsidy to get a higher credit-rating for their risky derivative trades.
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