Tuesday, December 23, 2014

Congress gives bankers what they want in the spending bill

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 by Richard Mellor
Afscme local 444, retired
 As I pointed out in an earlier blog, the spending bill passed in Congress last week included a further offensive against workers’ pensions. Some readers may be aware that it also contained a provision that eliminated the rule in the Dodd-Frank act that forbade the trading of derivatives that have government backing like deposit insurance. That rule made sense from the taxpayer’s point of view.  Why should we not be able to curb what can be very dubious trades that are backed by taxpayer money?

The bankers didn’t like that provision any more than they like workers receiving pensions we can live on so they launched an all out offensive against the rule introducing a provision in the spending bill repealing it that was said to have been written buy Citigroup.  This is where are laws come from---institutions like Citigroup. Capital should have free reign even when the losses are covered by public finds.

They were successful in their efforts and the provision barring the trades was killed in the spending bill Congress passed. “The provision enables the big banks once again to use insured deposits and other taxpayer subsidies and guarantees to gamble in the derivatives markets—the very type of business that drove the 2008 financial crisis and the economic devastation that followed.” Writes Steve Denning at Forbes. Leading the charge was JP Morgan and its head man, Jamie Dimon.  JP Morgan is the nation’s largest bank and despite paying almost $18 billion over the past two years for various illegalities including dodgy bond sales, currency manipulation and keeping mum about Bernie Madoff’s Ponzi scheme, the bank made $17.9 billion last year and $16.8 billion through the first nine months of 2014 according to Bloomberg Business Week.

Dimon’s argument was that the rule made, “…life expensive and unduly complicated for banks.”, according to Business Week. He made this argument to the legislators of the two Wall Street parties in Congress. Dimon met with two of the bankers’ political representatives in Congress, Senator Orrin Hatch of Utah and House Financial Services Committee Chairman, Jeb Hensarling of Texas. In addition, Dimon lobbied many others. 

I find the comments about Dimon’s success from some quarters rather uninformative. The liberal economist Jared Bernstein who was Joe Biden’s economic advisor and a long-time associate of the liberal Economic Policy Institute, told BusinessWeek, “Even if those people screw up demonstrably, their influence doesn’t seem to be dented much at all.”.  Ted Kaufman, a Delaware Democrat who has made some efforts to limit the size of banks attributes Dimon’s ability to sway the politicians to him being “Teflon coated.”

Why is Bernstein surprised? He is only right in that the influence of the bankers even after screwing up big time almost driving the capitalist system into the abyss isn’t “dented much at all” as far as the members of Congress and the two wall Street parties are concerned. For workers and the middle class, the poor and most Americans, the Bankers are still hated, mistrusted and held responsible for the Great Recession that began in 2007.

Kaufman’s comment is just plain childish.  It’s quite obvious why Dimon was able to persuade lawmakers to eliminate a provision in the spending bill harmful to banks, speculators, money traders and other wasters, JP Morgan spent more on lobbying (bribing) this year than any other bank.  If you include them all, there’s a lot of political payola going on. Coincidentally, JP Morgan’s employees and political action committees, “…have been the biggest source of campaign contributions to Hensarling over his career.” It’s nothing to do with Teflon, sharp talk or intelligence on the part of Dimon. You grease the right palms you get the right laws passed. That’s how American democracy works.

Meanwhile Dimon says that, “…people are wrong to see Wall Street as a bunch of tough, greedy fighters. ‘We’re more like lovers, We want to compromise and get things done.’”

The combined wealth of the Forbes 400 in 2014 is $2.29 trillion, enough to solve global poverty. Dimon earns about $25 million a year and like all of them, has his fingers in much of the government pie. What inhumane people these characters are. And they profess to be religious too and probably go to church as part of their public charade.

If all goes well they might go down the same road the Romanovs did.

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