Posted on 12/11/2014 10:42:21 AM PST by Laissez-faire capitalist
A Republican has joined Democrats in criticizing the inclusion of a partial repeal of the Dodd-Frank financial reform law in legislation funding the government.
Sen. David Vitter (R-La.) signed on to a letter with Sen. Sherrod Brown (D-Ohio) that calls on congressional leaders to scrap portions of the $1.1 trillion "cromnibus" that relax restrictions on banks trading financial derivatives.
The pair argued in the letter that there is "broad bipartisan support" for removing that particular language.
Brown and Vitter, who have worked together in the past on bills to limit big banks, argued that the language was unfairly jammed into the 1,603 page bill without proper debate.
"Congress should not gamble on a possible government shutdown by attempting to tuck this controversial provision into a spending bill without having been considered by the committees of jurisdiction, where it can be subjected to a transparent and vigorous debate," they wrote.
The language at stake would repeal a portion of the 2010 financial reform law that bars banks from trading risky financial derivatives within the portion of their institution that is guaranteed by the Federal Deposit Insurance Corporation.
Critics of the provision argue removing that prohibition could expose taxpayers to risks if banks trade in derivatives and end up collapsing, requiring and FDIC rescue.
"If Wall Street wants to gamble," Congress should force them to pay for their losses," they wrote.
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(Excerpt) Read more at thehill.com ...
good
If banksters want to gamble, then they can set up separate subsidiaries where they can gamble all they want to with these “swaps.”
But they need to do so without FDIC protection. And thus a taxpayer funded bailout will continue to be out of the question if they gamble and go belly up.
They misspelled “Cronybus.”
I thought he frequented prostitutes. I didn't know he was one.
I’m opposed to a bailout for the banks, paid for by the taxpayers.
That’s a definition of corporate welfare.
If they want to invest in risky venture, that’s fine on their dime.
They just should not expect me to cover their losses.
All of Dodd Frank needs to be repealed. The big banks and brokerage houses should be allowed to do what they want and then when they make bad decisions they fail and go out of business just like anybody else with a bad business plan. All of this government regulation is killing our free trade economy.
The GOP needs to strip this rider part out of Cronybus, as keeping this provision in will take the heat off of Hillary.
IOW, Hillary has weaknesses that could keep many liberals from coming out to vote for her, and one of those weaknesses is that she is too cozy with banks for similar reasons.... (Now, I am not anti-bank, nor should the GOP even think of becoming anti-bank -— as banks, small businesses, and corporations all serve a purpose in society) .... The MSM will forget every area where Hillary is cozy with banks, and focus all of their reporting on how the GOP sold-out the Tea Party on the issue of banker bailouts, how the GOP forget how upset Americans were over the banker bailouts of 2008, and on and on.
IOW, Hillary will be able to sail through on this issue, which will end up splitting the GOP worse than it is now.
No, all of Dodd-Frank should not be repealed.
They should be allowed to do what they want - with their own money, not ours. Why should they get FDIC protection when they engage in risky derivative swaps?
Why is that they want to privatize profits but socialize the losses? Because they are quasi-capitalists who want private gains when the derivative swaps net big returns, but then they wax socialistic when they lose big on these swaps and want a bailout.
In the end, keep the part of Dodd-Frank that says that banks and others institutions that want to engage in derivative swaps must set up separate subsidiaries where they can knock themselves out making big bucks, but they do so without FDIC protection (taxpayer funded bailout).
Vitter did right by being opposed to a repeal of a small part of Dodd-Frank.
Banks shouldn't be required to pay for deposit insurance from the federal government if the federal government isn't going to make good on their claims.
If you pay your premiums every year and your car gets totalled, is your insurance company "bailing" you out at others' expense for making good on your policy?
Hardly.
That’s a definition of corporate welfare.
Only if welfare recipients pay money into the welfare fund.
If they want to invest in risky venture, that’s fine on their dime.
It's precisely the opposite.
It's clear that most people who post on these threads do not know what credit derivatives are.
But when I take a deposit as a bank, I agree to pay the depositor interest and I also pay deposit insurance.
I use the deposited money to make a loan, and I compete with other banks for the business.
By being involved in the lending business at all, I am taking on risk. And it is necessary risk taking for the economy to function.
Thoise risks are generally defaults on loans and interest rate movements.
I can buy insurance (that is, credit derivatives) on interest rates in order to reduce risk.
They just should not expect me to cover their losses.
They should expect the people who sold them insurance to pay their claims.
This phraseology betrays you as being as ill-informed as the liberal journalist who uses phrases like "dangerous automatic revolvers."
Removing the part of Dodd-Frank that requires big banks, and other institutions to set up subsidiaries where they can swap derivatives all they want, but cannot get a taxpayer bailout if they go belly up, would be yet another disaster for America and the GOP, and could prove politically fatal for any GOP candidate in 2016.
I guess you think that some parts of the economy should get to be “too big to fail.”
You are conflating depositors with everyone else. Regular Joe depositors (who should be covered by FDIC) aren't in a position to tank an entire economy vis-a-vis derivative swaps.
Secondly, you are comparing apples to oranges by comparing car insurance to FDIC insurance, because the big banks don't need to nor do they have to engage in derivative swaps.
IOW, why should insurance companies pay for someone totaling their car if they were driving it at 175 mph? If banks want to go pedal to the metal, then they can do so on their own, but if they car and burn they shouldn't ask others to pay when they take out multiple cars and run people over when they were driving at 175 mph.
Again, it is clear that you do not understand what a credit derivative is, how one works, or what its purpose is.
If a bank does not use interest rate swaps to manage its deposit risk, it is simply being irresponsible.
Preventing deposit-taking banks from protecting themselves against interest rate volatility is terrible, terrible policy and puts depositors at risk in the face of not just interest rate volatility, but from other investors who will take advantage of deposits not being properly risk-managed.
The US had this argument, and everything was covered by both the left and the right on this subject, and most still didn't like taxpayer-funded bailout for big banks.
The Tea Party didn't buy the talk people proffered then in favor of what you support and they won't buy it now.
Take your RINOism elsewhere.
Deposit insurance is not a bailout.
I guess you think that some parts of the economy should get to be “too big to fail.”
Completely separate issue from deposit insurance.
You are conflating depositors with everyone else.
Nope. I am talking about deposit insurance, and the ability of banks to properly manage those deposits as custodians.
Secondly, you are comparing apples to oranges by comparing car insurance to FDIC insurance, because the big banks don't need to nor do they have to engage in derivative swaps.
They absolutely must manage interest rate risk, unless you believe that interest rates never move, ever.
IOW, why should insurance companies pay for someone totaling their car if they were driving it at 175 mph?
Risk management is the polar opposite of driving at 175mph.
Not hedging interest rate risk would be the financial equivalent of driving 175mph.
here's the resulting conundrum: how do you manage risk for depositors, when you decide to single them out as the only stakeholders in the bank whom the bank does not protect?
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