Courtesy of Pam Martens
The Federal Reserve Building in Washington, D.C.
Based on every meaningful investigation into the epic financial crash of 2008 that resulted in the worst economic crisis in the U.S. since the Great Depression, derivatives that were concentrated at Wall Street’s largest banks played a central role in the crisis. And yet, 11 years later, neither Federal regulators nor Congress have meaningfully reined in these risks.
Three years ago we reported on President Obama’s press conference of March 7, 2016 where Obama overtly misled the American people about how Wall Street banks were complying with the 2010 Dodd-Frank financial reform legislation that mandated that the banks’ trillions of dollars in dangerous derivatives be centrally cleared rather than traded as opaque private contracts between two counterparties.
President Obama stated during this press conference that “you have clearinghouses that account for the vast majority of trades taking place.” That wasn’t true then and it’s still not true, nine long years after the Dodd-Frank legislation was signed into law.
Siting two seats away from Obama at that press conference was Mary Jo White, then Chair of the Securities and Exchange Commission (SEC). Sitting directly across the conference table from Obama was Thomas Curry, then head of the Office of the Comptroller of the Currency (OCC). Both White and Curry had to know that the President’s statement was false, and yet, they made no effort to correct the public record.
It wasn’t that Obama was off by a small margin of error. It was that the President of the United States had flipped the truth on its head. Instead of the majority of derivatives being centrally cleared, the vast majority were still shrouded in darkness.
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