4 Biggest Banks Win Big in Spending Bill
For generations after the Great Depression, the federal government made sure that banks firewalled their commercial operations from their investment businesses so that any risks they took wouldn’t hurt taxpayers. But Congress, with help from President Bill Clinton, in 1999 got rid of the 1930s-era Glass-Steagall Act and only a few years later, the worst financial crisis since the Great Depression unfolded on Wall Street, crippling the economy.
When Democrats controlled Congress in 2010, they tried to rein in some banking activities again under the Dodd-Frank law. The wide-ranging bill included a provision, the swaps push-out rule, which forced banks to relocate their risky derivatives trades to parts of their businesses that aren’t backed by the Federal Deposit Insurance Corp. (FDIC).
The four biggest U.S. banks, JPMorgan Chase, Bank of America, Citibank and Wells Fargo, have been working to get rid of this provision ever since. Lobbyists for JPMorgan Chase and Citigroup got the House and then the Senate to include the anti-push-out rule provision into their year-end budget plan and it will probably soon take effect. Even Chase CEO Jamie Dimon personally called legislators to urge them to vote for the proposal.
The amendment is opposed by both Republicans and Democrats. Senators David Vitter (R-Louisiana) and Sherrod Brown (D-Ohio) teamed up to say this about the banks’ effort to rollback the restriction: “If Wall Street banks want to gamble, Congress should force them to pay for their losses and not put the taxpayers on the hook for another bailout.”
To Learn More:
How Wall St. Got Its Way (by Dave Clarke, Kate Davidson and Jon Prior, Politico)
Furor Over Move to Aid Big Banks in Funding Bill (by Jonathan Weisman, New York Times)
Banks’ Lobbyists Help in Drafting Financial Bills (by Eric Lipton and Ben Protess, New York Times)
Big Bank Lobbyists Help Write Bank Regulation Bills for Congress (by Matt Bewig, AllGov)
5 Biggest Banks Gain another Victory in Control of $700 Trillion Derivatives Market (by Noel Brinkerhoff, AllGov)
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