Welfare for big banks gets bipartisan support

Conservatives are opposed to government welfare, and liberals are opposed to big business, so you would think that one thing they would be able to agree on is opposition to government welfare for big business.

But Democrats and Republicans in Congress are just the opposite.  They just enacted a budget bill stuffed with benefits for big business, including a provision that allows big banks to gamble on  with government-insured deposits.

Senator Elizabeth Warren, in a speech recorded in the video above, told how Citicorp leveraged its influence in Congress and the executive branch to bring this about.

Letting a bank such as Citicorp put insured deposits into inherently risky speculations, such as swaps and derivatives, is the equivalent of me wanting to bet my saving Las Vegas casinos and expecting the government to compensate me for my losses.

This is not was federal deposit insurance was intended to do.   Deposit insurance was intended to cover normal banking activity in the real economy, such as home mortgages, auto insurance loans and business loans.

Federal deposit insurance never was intended to cover swaps and derivatives, which are just bets on which way the markets will go.  They are not backed by real collateral and they do not contribute to the real economy.

If rich people want to risk their wealth this way, that’s their privilege, but there is no reason why I, as an American taxpayer, should want to pull them out.

Senator Elizabeth Warren, one of the main opponents of this giveaway, was a Republican in her early adult life, and there is nothing she said that a principled Republican of the old school would not have agreed with.  But Wall Street is so entrenched in government that any challenge to its power seems radical and left-wing.

∞∞∞

Dodd-Frank Budget Fight Proves Democrats Are a Bunch of Stuffed Suits by Matt Taibbi for Rolling Stone.

Just how did banks get that big win in Washington? by Kevin G. Hall for McClatchey newspapers.  Short answer: Money never sleeps.

Cromnibus Pension Provisions Gut Forty Years of Pension Policy, Allow Existing Pensions to be Slashed by Lambert Strether for Naked Capitalism.   Another bad provision of the budget bill.  And who knows what else has been slipped into it?

CRominbus Disaster Signals a Sad New Normal in D.C. by David Dayan for Fiscal Times.  [added 12/17/14]  More on bad provisions of the bill.

Here’s What Democrats Got Out of the Cromnibus by Kevin Drum of Rolling Stone.

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4 Responses to “Welfare for big banks gets bipartisan support”

  1. Ben Franklin Says:

    The rape of annuitized and formerly concrete pensions is not just a possibility. It is certain. The fact that 30 dem senators voted for this travesty makes their lifetime pensions fair game. I suggest if Warren really wants to shake things up, she will push for legislation cutting the Platinum Parachutes.

    Like

  2. prayerwarriorpsychicnot Says:

    Reblogged this on Citizens, not serfs.

    Like

  3. danallosso Says:

    Reblogged this on dan allosso's blog and commented:
    This blogger is appalled that the American taxpayer may be called on once again to bail out Wall Street, after a Citigroup-written rider in the Cromnibus Bill eases restrictions on derivatives. Do you know who the biggest single shareholder of Citigroup stock is? After Blackrock (5% holdings, dispersed among its mutual funds), the biggest single shareholder is the Abu Dhabi Investment Authority, with a 4.9% stake. In a security whose ownership is as widely dispersed as Citi, this is a very influential, if not controlling stake in the company. I’m sure the oil sheiks of the UAE are pleased with their representatives in Congress!

    Like

  4. Mike Says:

    “We don’t need better politicians, we need a better electorate” – Christopher Hitchens

    Like

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