I continue to tell my audiences the large banks have a “stranglehold” on our country and that “The Dodd-Frank provisions attempting to place controls on the large banks have been systematically gutted …”
As 2015 comes to a close all eyes in Washington D.C. are looking at a critical deadline which looms over Congress, our ever problematic funding bill, and evidence of that “stranglehold” is again revealed.
Last year, our largest banks lobbied hard to get provisions passed in the year-end funding bill that would give them more latitude to forge ahead with risky trading. This move, largely engineered by Citigroup, was a provision that partially gutted the Dodd-Frank prohibition against the TBTF banks using insured depositors’ money to gamble with risky derivatives.
The Dodd-Frank regulation was intended to hold banks accountable by mandating they establish subsidiary companies to do their trading using their own money; not federally insured deposits. The provision, jammed through Congress at the last minute in 2014, eliminated these rules so that this kind of risky financial trading could be kept within the banks.
Senator Elizabeth Warren (D-Ma) was incensed (as was I) and she demanded tougher legislation and a halt to the TBTF Hijacking Congress by dictating to them what bills should be passed. This was especially important in light of the 2008 debacle and the bailouts significantly caused by risky trading
Well it looks as if the large banks are again running at full speed. These self-serving provisions passed last year have apparently allowed approximately $10 trillion of toxic swaps (notional amount) to occur, funded by insured depositors’ money. And the largest banks are again lobbying for more provisions this year end that will further gut those Dodd- Frank provisions which limit what they do.
Senator Warren is once again being very vociferous regarding the TBTF provisions. But she may be losing ground as other Democrats are swayed favorably for the provisions proposed. But there is stiff competition and opposition. Senate Banking Chairman, Richard Shelby of Alabama is attempting to include the regulatory overhaul in the year end appropriations bill. It looks as if critics of Dodd- Frank are establishing a strong track record of chipping away at it, slowly and surely.
Republicans are also backing legislation to soften certain parts of the reform and are determined to insert the changes into the spending bill that must be passed by December 11th in order to avoid another government shutdown. The good news, Jacob J. Lew, the secretary of the Treasury was adamant, “I have publicly made clear that my recommendations to the president would be that if there are legislative measures that will roll back the clock, that would take us back to where we were before the financial crisis; I would recommend a veto”.
Senators Warren and Rep. Elijah E. Cummings (D-Md), Ranking Member of the House Committee on Oversight and Government Reform, have asked the Government Accountability Office to investigate the impact of the repeal of additional Dodd-Frank provisions.
And so as the year ends, President Obama may be forced into a decision of shutting down the government to protect the rules of those who rule Wall Street. So how is it possible that the same financial institutions who were bailed out by our own government can wield such power that they can dictate to our government what bills should be passed?
Our financial institutions absolutely do not have the safeguards in place that will allow them to take on more risk, as the last financial crisis showed. Yet our own regulatory agencies either don’t care or are asleep at the switch, allowing those who want to benefit to keep chipping away at the very regulations that could prevent another 2008 debacle.
We are passively sitting back and allowing the large banks to increase their lobbying and gut Dodd-Frank, just so they can put more money, a lot more money, into their own pockets. Who suffers? Smaller banks, business and the American taxpayer.
Like Senator Warren and Representative Cummings I too warn we are headed down a slippery path that could well lead to an even worse fiasco than 2008.
We have a week to go. That week may be decisive and politicking may decide the ‘vote” one way or the other. Let’s see if our legislators have the integrity and fortitude to resist being pandered to by the Too Big To Fail! Our countries’ financial well-being is truly at stake!
[tweetthis]Are we close to an even worse fiasco than 2008? ~@RichardMBowen #tbtf #wallstreet [/tweetthis]
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Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.
This is the sort of important legislation that is flown under the radar of the majority of the American people. Although very late in the day…wonder if there is any chance 60 minutes might do a feature on this. Hopefully, there are still a fair number of Americans who watch that program rather than Sunday Night Football…..