In October, 2008 financial markets lost a combined TEN TRILLION DOLLARS in value in an epic meltdown triggered by the failure of venerable Wall Street firm Lehman Brothers. Specifically, Lehman Brothers had enormous positions in unregulated derivatives, complex, opaque financial instruments which turned out to be incredibly unstable...money which might as well have been made from flash paper. The rest is history...the world economy followed Lehman Brothers right down the drain, trillions more in wealth were lost, millions lost their jobs, homes, or both, and much of the rest of the world still remains at or near recession six years later. http://www.investopedia.com/...
To help prevent a recurrance of that failure, the Dodd-Frank financial reform law requires financial firms to refrain from gambling in derivatives within the same subsidiaries which are insured by the FDIC. If they gamble and lose, fine...tax payers are no longer on the hook to bail out that company. That's an enormous step toward preventing Great Recession 2.0. All the risk is on investors in those firms, and if they gamble and lose it's their loss.
Evidently Republicans aren't happy with that situation. They're determined to socialize risk and put US tax payers back on the hook for a TARP 2.0 with the new “Cromnibus” bill now in Congress. As they'e done so many times before, Conservatives are determined to play brinksmanship to get something that's bad for hard working Americans.
Senator Elizabeth Warren deserves enormous credit for finding this corrupt provision by which Wall Street might once again steal the hopes and dreams of the American middle class, and for working to convince lawmakers that this bomb, this weapon against hard working Americans must be removed from the bill.
“Who does Congress work for?” Warren said in a speech on the Senate floor Wednesday afternoon. “Does it work for the millionaires, the billionaires, the giant companies with their armies of lobbyists and lawyers, or does it work for all the people?”
Warren’s call went further than House Minority Leader Nancy Pelosi, who said Wednesday that she is “deeply troubled” by the banking measure. The Democratic discontent with the measure could make passing the bill more difficult, as House Speaker John Boehner is not expected to have enough votes on his own.
Warren, a popular figure on the left, told Democrats to withhold their support for the funding bill until the Wall Street provisions are removed. Warren, a fierce opponent of Wall Street, is a populist who has supported reforming banks for years.
“Now, the House of Representatives is about to show us the worst of government for the rich and powerful,” she continued. “The House is about to vote on a budget deal, a deal negotiated behind closed doors that slips in a provision that would let derivatives traders on Wall Street gamble with taxpayer money and get bailed out by the government when their risky bets threaten to blow up our financial system.”
She acknowledged that bipartisan House and Senate negotiators have worked “long and hard” on the spending bill, and that Senate leadership “deserve great credit for preventing the House from carrying out some of their more aggressive … fantasies about dismantling even more pieces of financial reform.”
“But this provision goes too far,” she added.
Read more:
http://www.politico.com/...
One's first impulse might be to exclaim “didn't Republicans learn from the last time this failed?”, but that misses the point. They learned plenty. The rich got richer. Everyone else got poorer. Conservatives continue to claim Bill Clinton is responsible for the whole mess because he signed bills which were WRITTEN BY REPUBLICANS to end Glass-Steagall separations and forbid regulation of derivatives, and the GOP hasn't suffered at the polls whatsoever.
Why wouldn't they run that same play again?