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Wall Street Had a Merry Christmas. The New Year's Still Up For Grabs.

By       Message Richard Eskow       (Page 1 of 2 pages)     Permalink    (# of views)   No comments

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Reprinted from Campaign For America's Future

Sen. Sherrod Brown (D-Ohio) discusses his upcoming role on the Senate Banking Committee (from The Zero Hour).

They're calling it a "Christmas gift" for Wall Street. Last week the Federal Reserve announced that it's giving U.S. banks yet another extension on the "Volcker Rule" provision in the Dodd-Frank financial reform bill. As a result of this latest decision, banks won't have to comply until mid-2017.

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The Dodd-Frank bill was passed in 2010.

Banks wanted a delay because they claimed they needed the time to prepare. Does anybody really think the nation's largest and most powerful financial institutions need seven years to restructure the casino-like aspect of their operations? It would be easier to imagine them doing in seven days -- at least if there were money to be made from it.

What's really going on? For one thing, every year that the rule is delayed is another year the banks can maximize their earnings. But the game may be even deeper than that. The Fed delay makes a kind of sense -- if you believe Congress plans to revoke the Volcker Rule altogether.

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The Ghost of Big-Bank Futures

It's almost as if Wall Street's been expecting a break all along -- but then, maybe it has. After all, instead of shoring up Dodd-Frank by restoring Glass-Steagall and breaking up too-big-to-fail banks, lawmakers have looked the other way. The Fed and other regulators have routinely dragged their feet on the rule-making that accompanies a law like Dodd-Frank. The Justice Department has ignored overwhelming evidence of banker criminality and given a free pass to lawbreakers on Wall Street.

And this month Congress ran the same game it's used in the past: It attached a corporate-friendly provision to a "must pass" bill, using the implicit threat of a shutdown and the shallow reporting of a compliant news media to slip its machinations past the American people.

This time it was the "cromnibus" funding measure, and the corporate giveaway was the "Citigroup" amendment -- literally written by lobbyists for that bank. The amendment revoked a provision removing taxpayer insurance protection from risky derivatives investments by large financial institutions. That provision, originally set to take effect in 2013, had been delayed until July of 2015. Now it won't take effect at all.

If you want a dark glimpse of the coming year for this holiday season, the "cronybus" deal points its bony finger toward 2015 like the Ghost of Christmas Future. Ask not for whom the bell tolls. It tolls for thee ... and thy economy.

Running Out the Clock

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It's government of Wall Street, by Wall Street, and for Wall Street. The lesson of the "Citigroup amendment," which only benefited a handful of our largest banks, seems to be this: If the rule-making is delayed long enough, there's a good chance Congress will eventually repeal the rule altogether -- that is, if it gets in the way of Wall Street's profits.

At the close of last year, Citigroup held $63.5 trillion in derivatives, and $62.3 trillion was protected by Federal insurance. That's "trillions," with a "t." And while the bank isn't on the hook for the full amount, you can believe that these bets involve enormous sums of money.

We're on the hook for those sums too -- and now that's not going to change.

Whose Fed?

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Host of 'The Breakdown,' Writer, and Senior Fellow, Campaign for America's Future

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