House Passed Citigroup’s Bill to Deregulate Recession-Contributing Derivatives Trading

The U.S. House of Representatives recently passed an 85-line bill entitled the Swaps Regulatory Improvement Act of which 70 lines were drafted by Citigroup including two key paragraphs, according to emails reviewed by The New York Times, which marked the eighth bill passed by the House in 2013 designed to weaken the 2010 Dodd-Frank Act. As explained by The Times, the bill is “part of a broader campaign in the House, among Republicans and business-friendly Democrats, to roll back elements of the 2010 Dodd-Frank Act, the most comprehensive regulatory overhaul since the Depression,” and the House’s subservience to Wall Street persists “even as federal regulators and prosecutors extract multibillion-dollar penalties from the nation’s biggest banks.” Citigroup’s bill “takes aim at one of the more contentious provisions in Dodd Frank, a requirement that banks ‘push out’ some derivatives trading into separate units that are not backed by the government’s insurance isolate this risky trading and to prevent government bailouts,” according to The Times. The Daily Kos contextualized the Swaps Regulatory Improvement Act as follows:

Under Dodd-Frank rules, banks are barred from using Federal Deposit Insurance Corporation (FDIC)-insured funds (that means funds insured by you, the average American depositor and taxpayer) to engage in the trading of certain types of high-risk derivatives (“swaps” are a type of derivative).  Remember derivatives, the risky financial instruments that were largely responsible for bringing down Countrywide Mortgages, Bear Stearns, AIG, Lehman Brothers, Washington Mutual, Wachovia and very nearly the Nation’s entire financial system? Well, big banks want your guarantee that you’ll help them out if their investments head south once again. In short, this bill socializes risk (we all pay for their gambles if they fail) and privatizes profit (they gain a whole lot with very little risk because of your guarantee).

In Florida, with the exception of five democrats [Alan Grayson (FL 9th), Kathy Castor (FL 14th), Alcee Hastings (FL 20th), Theodore Deutch (FL 21st), and Lois Frankel (FL 22nd)], every other U.S. representative in Florida voted for this bill, which are listed below. Even if this bill doesn’t become law (which is unlikely), the passage of such bills by the House creates a chilling effect on regulators responsible for establishing rules to enforce the 2010 Dodd-Frank Act. Although the below-listed Florida politicians (and every other politician that voted for this bill) should be held accountable for voting to use our tax dollars as insurance for the risky trades of banksters, such votes are the natural result of a systemic problem. As frankly stated to The Times by Democratic Representative Jim Himes of Connecticut (a former Goldman Sachs banker, supporter of the bill, and top recipient of Wall Street “donations”), “It’s appalling, it’s disgusting, it’s wasteful and it opens the possibility of conflicts of interest and corruption. It’s unfortunately the world we live in.” Until we require publicly-financed elections (or some libertarian alternative), politicians will continue to vote in the interest of their primary funders—large corporations and the elite.

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