Operating under the philosophy that no profit ever is enough, the nation’s biggest banks want a engage in ever more risky fiscal games with a guarantee that American taxpayers once again will bail them out should they run into trouble. Thanks to a majority votes in the U.S. House and Senate and the cooperation of President Barack Obama, they got their wish last weekend.
In a move that smacks of the smoke-filled rooms of a bygone era, Wall Street lobbyists authored and successfully engineered the attachment of a totally unrelated provision to the 1,600-page bill to keep the government funded. With time running out and the threat of a government shutdown should the funding bill – with its egregious bail-out provision – be rejected, the President and some of the big banks’ heaviest hitters turned up the pressure. And enough members of Congress finally fell in line to .
Only a few years ago, Congress and the President were vowing that never again would Americans be put in the position of coming to rescue of banks deemed to big to fail. Now those banks are even bigger than they were at the time of the last financial collapse, and their greed remains unending.
The omnibus appropriations bill removed the Dodd Frank provision that required banks to place their riskiest activities – default swaps and trading commodities and derivatives among them – with separate entities so as to protect deposits guaranteed by the Federal Deposit Insurance Corp. In simple terms, it means that, should the risky behavior again bring down a bank, the taxpayers again will pay the bill. Simon Johnson, former chief economist of the International Monetary Fund, told The Washington Post that the banks “want to be able to take big risks where they get the upside and the taxpayer gets the potential downside.”
The attachment of a non-germane amendment to a mammoth bill – with no public hearings and no chance for further modification – is nothing new for Congress. Such measures often go unnoticed. But in this instance, the blatant disregard shown by the President and Congress to America’s taxpayers was in full public view. And it likely will come back to haunt us all.