Nel's New Day

June 28, 2017

Congress Churns Forward

Congress is getting ready for another vacation, gone for all next week for a week, before returning for a few days and disappearing for over a month. Trey Gowdy (R-SC) has taken over for Jason Chaffetz (R-UT) as head of the House Oversight Committee and announced that he won’t bother with any investigation into the involvement of people such as Michael Flynn and Jared Kushner with Russia. Gowdy also ruled out looking into whether Trump White House adviser Jared Kushner’s security clearance should be revoked. This is the same man who spent millions of dollars and hundreds of hours examining Hillary Clinton’s email server and four deaths in Benghazi.

Chaffetz won’t be back to Washington after the break; he submitted his resignation in April. He did leave a legacy by calling on Congress to declare a monthly $2,500 housing stipend for each congressional member, equivalent to two annual minimum-wage salaries. Chaffetz is the same person who told people that they could pay for their health insurance if they didn’t buy an iPhone. People who asked why Chaffetz had quit a year and a half before the end of his two-year term now have their answer. He starts on Fox network Saturday—the day that he begins “retirement.”

House Speaker Paul Ryan (R-WI) and chair of the Senate Armed Services Committee, John McCain (R-AZ), each met with Andriy Parubiy, founder of the neo-fascist Social-National Party of Ukraine that used Nazi ideology and Third Reich imagery. The SNPU banned non-Ukrainians and established a violently racist paramilitary group called the Patriot of Ukraine. Ryan called on “closer political, economic, and security relations between our legislatures,” and McCain said that he and Parubiy had a “good meeting.”

While the media concentrated on the egregious health care plan in the Senate and the Russian investigation into Dictator Donald Trump (DDT) and his colleagues, the House passed a near-repeal of the Dodd-Frank Act. When the act was signed into law in 2010, it attempted to limit the riskiest types of securities to keep the United States out of another recession like the one a decade ago. Current Secretary of Treasury Steve Mnuchin hates the Dodd-Frank Act because it keeps him from making more vast profits from disclosing on mortgages the way that he did before it went into effect.

Ironically the pro-Wall Street bill is called CHOICE Act. One part of it eliminates the Labor Department’s fiduciary rule, requiring brokers to act in the best interest of their clients when providing investment advice about retirement. The legislation would also stop the Federal Deposit Insurance Corp. from overseeing plans for banks with more than $50 billion in holding assets if they need to declare bankruptcy. It would also greatly lower capital requirements, a method of making bank safer by keeping them from loading up on debt.

Rep. Maxine Waters (D-CA) calls it the “Wrong Choice Act” because the anti-family, anti-consumer provisions block regulators from carrying out their jobs and allows big banks to ignore oversight. CHOICE allows banks to return to gambling in the market with federally guaranteed deposits and resume unlimited unfair banking practices to deceive customers. CHOICE permits unregulated payday and car-title loan sharks. If the bill passes, the president can fire the head of the Consumer Financial Protection Bureau (CFPB) and curb its oversight powers. The bill allows legislators to defund CFPB, the first step in doing away from it.

CFPB returned $11.8 billion to more than 29 million consumers defrauded by big banks, shady for-profit colleges, and debt collectors. Despite the banks’ record profits last year, they want to eliminate the rules that reduce foreclosures and protect borrowers.

The Dodd-Frank Act creates rules, processes, and organizations in the connected financial world of banks, hedge funds, mortgage originators, insurance companies, debt collectors, and payday lenders. Stripping away the pieces of Dodd-Frank is like mining by removing a mountain. With any luck, the CHOICE Act may not move through the Senate because eight Democrats would have to support it.

Before the Senate tackles CHOICE, it has to deal with the highly unpopular health care bill. Majority Leader Mitch McConnell (R-KY) has found $188 billion, and he’s madly talking with reluctant GOP senators to bribe them with backroom “side deals.” Conservatives no longer want to use money to reduce the deficit. If he gets any kind of consensus, then he has to rush the revised bill to the Congressional Budget Office for another scoring in order to vote in the last two weeks of July. The bill has to be passed in coordination with the House by September 30 in order to need only 50 votes, and the Senate is in recess for all of August.

Compromise will be difficult: the far right wants no coverage mandates to lower premiums, and the right (called moderates) want more generous tax credits for the working class and less punitive Medicaid cuts. At least nine senators have said that they couldn’t vote for the present bill, and they’re split between those from states that expanded Medicaid and those who fought it. Sen. Ted Cruz (R-TX) wants permission for bare-bones plans that don’t offer much health care—back to life before the Affordable Care Act. McConnell continues to claim that Democrats won’t talk about the health care bill while Democrats are begging to be given a seat at the discussion table.

As could be expected, Democrats were upset about being left out of the process. In an odd twist, however, so were several Republicans. Those in the closed-door “listening sessions” reported that the leadership wouldn’t tell them what was and wasn’t on the table. They were just asked about what they could and couldn’t support. Some went so far as to say that the meetings were a box-checking exercise.  “I always believe legislation is best crafted through the normal order,” Sen. Susan Collins (R-ME) said. “I think it’s much better to have committee consideration of bills, public hearings and to have a full debate.” She was joined by a number of “moderate” GOP senators in calling on involvement of Democrats in the governing process.

The Senate has not had this type of closed-door partisan process to major legislation since before World War I, over a century ago. Don Ritchie, the historian emeritus of the Senate, said that Democratic leaders tried the same MO during the Great Depression, but senator revolted. A small revolt may be starting now as most GOP senators are non-committal about the bill. A  result of Senate support, people hate their version of Trumpcare even more than they hated the House bill. A USA Today poll reported 12 percent approval, and that newspaper is owned by Fox’s Rupert Murdoch. The House bill had gone as high as 20 percent approval.

The last time that members of Congress headed home for a recess, most of the Republicans refused to have town halls with their constituents. They will be increasingly reluctant this summer because the health care bills are causing far more anger than earlier—and the public was furious then. Some GOP legislators are using the shooting of Rep. Steve Scalise (R-LA) as an excuse to avoid their voters. Rep. Sean Patrick Maloney (D-NY) has an idea. During the last recess, he suggested that Democrats “adopt a district” as he did when he fielded questions in a town hall from constituents in a neighboring district after Rep. John Faso (R-NY) avoided any meetings. Rep. Reuben Gallego (D-AZ) “adopted” a neighboring district belonging to Rep. Martha McSally (R-AZ) when she wouldn’t host an event in her district. Maybe the idea will catch on this summer. Only two GOP senators—Jerry Moran (KS) and Bill Cassidy (LA) have scheduled town halls for the upcoming break.

A miracle did happen in the U.S. House during the past month! Republicans stood up for the environment! DDT’s budget eliminates more than 50 EPA programs, halves the scientific research, and decimates environmental enforcement and grants—in all, slashing $2.6 billion, 31 percent of the EPA’s budget. Rep. Mark Amodei (R-NV) wasn’t buying the agency’s secretary, Scott Pruitt, when he defended the cuts by saying they didn’t need the funding. Rep. David Joyce (R-OH) defended the Great Lakes, calling them “a national treasure” and asking if Pruitt thought that it’s “fair to expect states and local communities to shoulder the burden of caring for them.” Rep. Rodney Frelinghuysen (R-NJ) opposed the 30 percent cuts in the Superfund program, affecting over 100 hazardous waste sites in his state. Rep. Tom Cole (R-OK) objected to zeroing out several tribal environmental grants and programs. It’s a start!

December 22, 2014

GOP Members Break Pledge, Vote for Spending Bill

Filed under: Legislation — trp2011 @ 9:19 PM
Tags: , ,

In 2010, the House leadership made its “Pledge to America” that the GOP would not fill the must-pass government budget legislation with provisions having nothing to do with government funding. The pledge stated:

“We will end the practice of packaging unpopular bills with ‘must-pass’ legislation to circumvent the will of the American people. Instead, we will advance major legislation one issue at a time.”

The 1,600-page, $1.014 trillion spending bill violates that pledge in many ways. Rep. Bill Flores (R-TX) said he know that the current bill violates the promise, but they have to do it “to fix bad policy.” So much for promises made by conservatives.

Hidden inside the spending bill are riders that bar federal funding for most abortions, federal and local funding for abortions in Washington, D.C., and fund for federal prisoners. The good news is that there are no new restrictions. Congress typically attaches abortion funding bans to appropriations measures since the first one, the Hyde Amendment, was passed in 1976. Abortion is legal; paying for it isn’t.

Another piece of good news is that the GOP failed to put the Abortion Non-Discrimination Act into the budget. The “non-discrimination” means that doctors, health insurance companies, and hospitals could discriminate against abortion services, going so far as allowing them to refuse information to women about abortion options. Conservatives also failed to stop tax benefits for small businesses that buy health plans covering abortion. The Title X Family Planning Program, helping low-income women avoid unwanted pregnancies, got the same $300 million as last year; the budget provides $101 million to the Teen Pregnancy Prevention Program and $600 million for international family planning programs.

The best news about saving a few of women’s reproductive rights in the spending bill is that Peace Corps members have access to abortion coverage in cases of rape or incest, or to save the pregnant woman’s life, the same coverage that most female federal employees have. Of 433 Peace Corps volunteers surveyed, 8.8 percent said they had been raped or sexually assaulted during their service.

Another plus for women was the bipartisan commission charged with laying out a plan to bring a women’s history museum “on or near” the National Mall. For almost two decades, Rep. Carolyn Maloney (D-NY) has pushed for the creation of a National Women’s History Museum there.

Sen. Elizabeth Warren (D-MA) was another winner because of the spending bill. She lost her push to deny the change to the Dodd-Frank bill that could leave U.S. taxpayers on the hook for a $303 billion bailout to the banks, but her campaign against it fortified progressive groups.

Her information about the provision being written by Citigroup lobbyists also got into the general media. Thanks to the banks, unstable financial entities, called custom swaps, will now be insured by the FDIC. Only the taxpayers will be on the hook when these fail. Citigroup is one of four banks (the others being Bank of America, Goldman Sachs, and JPMorgan Chase) that control more than 90 percent of the banking industry’s swaps market. These four banks gave an average of 2.6 to 3.1 times to House members and senators who voted in favor of the banks’ plan.

Federal employees, including the military, got a one-percent pay raise; cuts for military civilian personnel budget may result in layoffs. The Affordable Care Act kept its funding at 2014 levels. The moratorium on state and local online sales taxes on Internet access as continued for just one year.

Republicans can take pride in attaching a rider banning the closure of the prison at Guantanamo Bay and stops President Obama from transferring any of the detainees to the United States. It’s a rather hollow victory because the prison now holds only 132 detainees and 64 of them have already been approved for transfers. Recently four detainees were transferred to Afghanistan, the first time that any prisoners have gone to that country since 2009. President Obama has excellent reasons for closing out the prison:

“It is something that continues to inspire jihadists and extremists around the world, the fact that these folks are being held. It is contrary to our values, and it is wildly expensive. We’re spending millions for each individual there.”

One of the best news from the spending bill is that, other than funding Homeland Security only through February, it keeps the government open for another nine months to the end of September 2015. Lawmakers also failed to “defund” the president’s immigration orders, and immigration services won’t stop even if the GOP decides to shut down the government again.

On the minus side, “a House priority,” according to one GOP aide was the provision in the spending bill to stop the EPA from regulating the lead content of fishing tackle and firearms ammunition. The NRA fought to get it included which may make it a “constitutional” right to bear fishing tackle.

The spending bill also protects school children from consuming less salt and all the whole grains that were in the new standards. It does not, however, exempt schools from regulations if they lose money.

Last fall, conservatives, including Blue Dog Dems, fought changing the term “navigable waterways” to “water” to cut down on pollution. A provision in the bill stops the Army Corps of Engineers from regulating farm ponds and irrigation ditches under the Clean Water Act. The $740,000 in the budget bill for the USDA’s Biotechnology Regulatory Services gives the government more money to process applications for GMOs but not to study them. The government also cannot ask farmers to report emissions from their cattle or the manure lagoons. Although “the agriculture sector is the primary source” of methane emissions, the bill keeps ranchers from needing greenhouse gas permits for “methane emissions” produced by bovine flatulence or belching.

The taxpayers will save money, however, because the bill continues a ban on spending money for portraits of Cabinet secretaries, Congress members, and other important people.

The IRS took a budget cut but was ordered to improve its 800 helpline services. It is also specifically prohibited from making any videos “unless the Service-Wide Video Editorial Board determines in advance that making the video is appropriate” and limited in its conference spending. The bill also cautions the IRS not to use any funds to target U.S. citizens for their First Amendment rights or “ideological beliefs.” Rep. Darrell Issa (R-CA) is pursuing the agency right down to the end of his term as committee chair.

The spending bill gave other agencies their congressional marching orders. The Department of Treasury cannot use any funds to redesign the one-dollar bill, nor can it build or operate a museum without permission. (But just the one-dollar bill.) The Department of Agriculture can’t use their funds to pay salaries and expenses for those who provide “nonrecourse marketing assistance loans for mohair” or to “procure processed poultry products imported into the United States from the People’s Republic of China for use in the school lunch program.”

The spending bill got bipartisan opposition: of the 40 senators who voted against the measure, 18 were Republicans and 21 were Democrats. One Independent voted against the measure. Three Republicans and one Democrat abstained. Four senators abstained.

House members pledged to not put non-budget items—like the ones above—into the must-pass appropriations bill. This is how they voted:

house vote

December 10, 2014

GOP Offers Sample of Next Two Years in Spending Bill

Filed under: Legislation — trp2011 @ 8:34 PM
Tags: , , ,

Without a renewal of government spending, the lights go off around the country in federal agencies in fewer than two days. Conservatives have been flexing their blackmail muscles by threatening to shut down the government again if they aren’t allowed to punish the president and get everything that they want. Today, the House tackled the “cromnibus,” a spending bill that encompasses 11 appropriations bills covering most of the government for the rest of fiscal 2015 and one continuing resolution that would fund the Department of Homeland Security through February.

One fight leading up to the bill was an argument over the renewal of the Terrorism Risk Insurance Act that supports businesses in case of an attack. Rep. Jeb Hensarling (R-TX) and Sen. Chuck Schumer (D-NY) were on the verge of an agreement, but Hensarling insisted on the repeal of a Dodd-Frank rule that ensures banks don’t engage in risky derivatives trading. If the provision becomes law, banks can then gamble with money insured by the FDIC leading to another taxpayer-funded bailout of big banks like the 2008 collapse. Wall Street institutions spent over $435.9 million this year to buy people in Congress, hoping that their investment pays off.

The $1.1 trillion dollar spending package has a number of problematic issues:

Campaign donations: One great benefit for Republicans is found on Page 1,599, four pages before the end of the 1,603-page bill. Sen. Mitch McConnell’s (R-KY) provision would increases the maximum amount lawmakers can solicit from individual donors for their party committees each election from $259,200 to $1,555,200, a 500-percent increase. Who needs the increases from the Supreme Court when you have Page 1,599. To sweeten this pot, the bill also blocks the president from requiring federal contractors to disclose their political donations. Each corporation is already making $760 for every donated $1; the bill would make this profit skyrocket.

Native American land giveaway: Last week, the House voted to transfer 2,400 of Apache ancestral and ceremonial lands in the Tonto National Forest to Resolution Copper of Rio Tinto, owned by an Australian-English mining company. This location is used for coming-of-age ceremonies for girls and sunrise dancers. The Native Americans would be sealed off from acorn grounds, medicinal plants, and prayer areas. When Apache leaders attended the White House Tribal National conference, they learned that the provision will be part of the spending bill.

Closed internet: While the Federal Communications Commission is gearing up to announce historic open Internet rules in early 2015 (hopefully), this bill would freeze their funding at $340 million. If passed, big telecoms, who gave millions to members of Congress this election, get their money back plus a lot more.

Loss of birth control: The “conscience clause” allows all employers to opt out of the requirement to provide birth control in its insurance policies—sort of a forerunner to GOP plans to pass restrictive anti-abortion legislation in the coming year.

Defunding ACORN: Another ludicrous, continued fight from the far right is against the Association of Community Organizations for Reform Now (ACORN), an anti-poverty nonprofit staffed by low-income people. A bill this past week would deny ACORN any funds. ACORN folded four and a half years ago with no hint of resurrection. With the Congressional majority next year, the GOP can successfully pass this bill, and the president will probably sign it—because THERE IS NO ACORN!

Big government control of Washington, D.C.: Residents of Washington, D.C pay federal taxes but have no control over their laws because Congress controls the city’s policies. After declaring that the city cannot have the gun-sense laws that they want, GOP congressional members have decided to stop Washington’s legalization of up to two ounces of marijuana for adult recreational use. Democrats don’t care about the city’s new law, and Republicans believe in small federal government with local control—unless they don’t like how the locals control themselves. The bill doesn’t overturn the marijuana law, but it prevents Washington from spending any time or resources to get permission from Congress.

Rep. Andy Harris (R-MD) spearheaded the bill because of possible health risks. The question here might be whether a GOP Congress will try to overturn the new laws in Alaska, Colorado, and Oregon, and Washington state that legalized recreationalized marijuana. Or the 23 other states that have legalized medical and/or decriminatized marijuana use, including Harris’ home state of Maryland. [Green – recreational/medical; dark blue – medical/decriminalized; light blue – medical; teal – decriminalized]


Decreased truck safety: A proposed rider would remove truck drivers’ safety requirements which mandate the time periods of truckers’ rest periods. Taking away these requirements would extend the maximum time per week from 70 to 82 hours. Sen. Susan Collins (R-ME) has been vocal about an increase in the hours because the American Trucking Associations’ lobby has convinced her that fewer hours means more trucks on the road during daylight hours. Last summer, a Walmart tractor trailer crash put comedian Tracy Morgan into a coma, killed his friend, and left two other passengers of the struck limousine with serious injuries. Kevin Roper, the truck driver, had gone 24 hours without sleeping.

Cuts to IRS: In revenge against a misguided believe that the IRS attacked conservative PACs, the GOP has cut enforcement funding in the bill’s provisions to under $4.9 billion, the second significant cut in two years. The cuts would benefit the fat cats that the GOP represents because reduced funding means decreased investigation into income tax fraud.

Benefits to the wealthy: Another cut would also benefit the wealthy if the budget for the Commodity Futures Trading Commission (CFTC) loses $30 million from last year, down to $250 million. It also requires 20 percent of the budget to be used for information technology which decreases money for staff to regulate the financial industry. The CFTC is already unstaffed.

Increasing homelessness: The homeless and low-income families would suffer from the loss of $300 million for permanent supportive housing programs for the homeless and funding for low-income housing would be kept flat.

Cuts to student loan: The $303 million cut from Pell Grants for low-income college students would be given to student loan debt collectors. At this time, the Pell program is operating at a surplus, but last year’s money-shuffling created a shortfall in payments to the companies.

Environment: The GOP has taken whacks at the environment, including a $60 million-cut for the EPA staff in cleaning up Superfund sites and enforcing basic public health protections to 1989 levels. Other provisions would block prohibition of funds to regulate lead in ammunition and fishing, to help developing nations deal with climate change through the Green Climate Fund, and to “implement or enforce” standards for light bulb efficiency.

There is good news for the Pentagon and Israel.  The Pentagon can buy 38 F-35 Joint Strike Fighters, nine more than last year; and Israel gets $619.8, including $175 million for the Iron Dome missile-defense system to add to the $225 million that the U.S. gave the Iron Dome just four months ago. The F-35 weapons system flies only in good weather, and computers lack software necessary for combat. Last summer, one of the $100-million-dollar behemoths caught fire and was destroyed. Luckily for Lockheed Martin, the U.S. keeps pouring money into its mistakes.

Moving to the absurd, the cromnibus bill requires the Secretary of Defense to report to congressional defense committees the progress in carrying out revised grooming standards. The issue emerged when black female service members stated that descriptions of certain hair styles were “offensive and discriminatory.” Obviously this is as important as keeping the homeless without shelter.

All seems to be quiet tonight before a possible vote tomorrow. Passing the bill may be difficult if Democrats oppose it because the conservatives think that the bill doesn’t provide sufficient punishment for the president. The Tea Party strategy may be to pass a Continuing Resolution that funds the government for one month before the GOP strips the country of the resources that it gives to the wealthy.

April 10, 2013

Stop U.S. Bank ‘Bank Ins’

Economics are one of my weak points. I know just a tiny bit more about this field than sports, about which I know nothing. But with the stock market shooting up like a meteor, the GOP budget plan shooting the majority of individual income in the United States down into the center of the world, I decided to pay attention to this article, “The Wall Street Ticking Time Bomb That Could Blow Up Your Bank Account,” by Ellen Brown.

She definitely got my attention with the describing the “bail in” which took place in the two bankrupt Cyprus banks, especially because all the big monitory control groups okayed this. “Bail out,” much resented by people across the United States, means that the government uses taxpayer money to give all those “too big to fail” banks that gamble away their own capital. “Bail in” means that banks “recapitalize” themselves by taking their creditors’ funds deposited in their banks. It just skips the middle process of getting people’s money from the government. This policy is already in the works for the United Kingdom, Canada, New Zealand, Australia,–and the United States.

Why are banks in trouble? It has to do with derivatives, a word that always confuses me. From what I can understand, the problem with derivatives is that they can change in value from one moment to the next because they are a contract based on assets that change—commodities, bonds, interest rates, etc.

Because derivatives can shift in value from one instant to the next, the Glass-Steagall Act of 1933 tried to prevent another Great Depression by stopping banks from gambling with depositor funds. In 1999 Congress removed that barrier, meaning that banks could take money from savings accounts and gamble them away in the derivative market. The loss of the derivatives goes to the bank; the owner of the contract takes the collateral—i.e., your savings or retirement account.

In 2008, to save the banks—and all the personal accounts in them—the government “loaned” them $700 billion in taxpayer funds. Think what it would take to save the banks now. The FDIC insurance fund, which covers all those bank deposits under $200,000 has only $25 billion. Two banks, JPMorgan and Bank of America, each have over $1 trillion in deposits, and total deposits covered by FDIC insurance are about $9 trillion. Bloomberg stated in November 2011 that Bank of America’s holding company had almost $75 trillion in derivatives, and 71% were held in its depository arm; while J.P. Morgan had $79 trillion in derivatives, and 99% were in its depository arm. The cash calculated to be at risk from derivatives from all sources is at least $12 trillion.

When the FDIC (Federal Deposit Insurance Corporation) runs out of money, Section 716 of the Dodd Frank Act prevents more taxpayer funds bailing out a bank because of a bad derivatives gamble. That means no more $700 billion taxpayer bail outs, moving the banks on to bail ins.

Legally a bank owns our money the second we put in into their bank. We become “unsecured creditors” holding IOUs, promises to pay. Until recently, the bank was obligated to pay our money back on demand.  Four months ago, the FDIC and the Bank of England (BOE) put out a document, “Resolving Globally Active, Systemically Important, Financial Institutions.” Under the FDIC-BOE plan, our IOUs are converted into “bank equity.”  The bank gets the money, and we get stock in the bank. When our IOUs are converted to bank stock, they are no longer subject to insurance protection. Instead, the deposits will be “at risk” and vulnerable to being wiped out. As “unsecured creditors,” depositors are put below interbank claims. The function of the FDIC may have been changed to confiscate deposits to save the big banks.

The only mention of “depositors” in the FDIC-BOE directive as it pertains to U.S. policy is in paragraph 47: “The authorities recognize the need for effective communication to depositors, making it clear that their deposits will be protected.” There is no indication of how the depositors will be protected if the assets are gone. The derivatives claimants are first in line, before the depositors. There is no rescue from taxpayers because Congress stopped that alternative. The FDIC has only $25 billion.

“Secured creditors,” including state and local governments, are also in trouble because many of them keep revenues in Wall Street banks with smaller local banks lacking the capacity to handle such complex business. Although U.S. banks are required to pledge collateral for any deposits of public funds, the derivative claims have super-priority over other claimants, including other secured creditors.

Harvard Law Professor Mark Row maintains that the super-priority status of derivatives needs to be repealed. He writes:

“. . . [D]erivatives counterparties, . . . unlike most other secured creditors, can seize and immediately liquidate collateral, readily net out gains and losses in their dealings with the bankrupt, terminate their contracts with the bankrupt, and keep both preferential eve-of-bankruptcy payments and fraudulent conveyances they obtained from the debtor, all in ways that favor them over the bankrupt’s other creditors.

“. . . [W]hen we subsidize derivatives and similar financial activity via bankruptcy benefits unavailable to other creditors, we get more of the activity than we otherwise would. Repeal would induce these burgeoning financial markets to better recognize the risks of counterparty financial failure, which in turn should dampen the possibility of another AIG-, Bear Stearns-, or Lehman Brothers-style financial meltdown, thereby helping to maintain systemic financial stability.”

In The New Financial Deal: Understanding the Dodd-Frank Act and Its (Unintended) Consequences, David Skeel calls the Dodd-Frank policy approach “corporatism”–a partnership between government and corporations. Congress has made no attempt in the legislation to reduce the size of the big banks or to undermine the implicit subsidy provided by the knowledge that they will be bailed out in the event of trouble.

Skeel also blames the Lehman bankruptcy of 2008 on the bankruptcy exemption for derivatives. When the bank seemed to be in trouble, the derivatives owners all made their claims, causing a run on the collateral before it ran out. According to Skeel, the problem could be resolved by eliminating the derivatives exemption from the stay of proceedings that a bankruptcy court applies to other contracts to prevent this sort of run.

Other ways to block the Wall Street asset grab:

  • Restore the Glass-Steagall Act separating depository banking from investment banking. (H.R. 129)
  • Break up the giant derivatives banks.  (Bernie Sanders’ “too big to jail” legislation)
  • Nationalize the “too big too fail” banks as recommended in the New York Times. (Gar Alperovitz)
  • Make derivatives illegal, as they were between 1936 and 1982 under the Commodities Exchange Act. They can be unwound by simply netting them out, declaring them null and void.  As noted by Paul Craig Roberts, “the only major effect of closing out or netting all the swaps (mostly over-the-counter contracts between counter-parties) would be to take $230 trillion of leveraged risk out of the financial system.”
  • Support the Harkin-Whitehouse bill to impose a financial transactions tax on Wall Street trading.  Among other uses, a tax on all trades might supplement the FDIC insurance fund to cover another derivatives disaster.
  • Establish postal savings banks as government-guaranteed depositories for individual savings. Many countries have public savings banks, which became particularly popular after savings in private banks were wiped out in the banking crisis of the late 1990s.
  • Establish publicly-owned banks to be depositories of public monies, following the lead of North Dakota, the only state to completely escape the 2008 banking crisis. North Dakota does not keep its revenues in Wall Street banks but deposits them, by law, in the state-owned Bank of North Dakota.  The bank has a mandate to serve the public, and it does not gamble in derivatives.

The Volcker Rule, part of the Dodd Frank Act that keeps banks from making some speculative investments, doesn’t go into effect for over a year. U.S. banks are fighting it, lobbyists are trying to postpone the date, and there may not be enough money to monitor it.

If you think that banks are responsible entities, think about the way that Jamie Dimon misled investors and regulators to lose over $6 billion for JP Morgan Chase. According to Sen. Carl Levin (D-MI) regarding the Senate investigation into Dimon, JP Morgan had “a trading operation that piled on risk, ignored limits on risk taking, hid losses, dodged oversight and misinformed the public.”

Google the subject of “bail-in,” and you’ll find a pile of articles that indicate there is no problem about people in the United States losing their bank deposits. That’s what the banks said during the Great Depression right before they permanently closed their doors.

This morning my partner and I talked about when the next Wall Street financial disaster would occur. I’m guessing that it will be in a little over a year—just in time for the GOP to blame the Democrats on Wall Street problems in order to get votes. Now might be the time to stop worrying about the national budget and think about what happens if we lose their bank deposits.


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