Republicans still pushing deregulation of Wall Street
by David Atkins
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Following on Digby’s post below about Republicans being unmoored from anything like responsible governance, there’s also this:
he House Appropriations Committee approved an agriculture budgeting bill last month that would significantly restructure the U.S. bank regulatory regime as part of a GOP effort to protect Wall Street’s offshore trading in derivatives — the complex financial products at the heart of the 2008 economic meltdown.
Republicans in Congress have been pressuring regulators for years to exempt derivatives that U.S. companies sell overseas from the new rules set by the 2010 Dodd-Frank financial reform law. For much of 2013, the deregulatory drive enjoyed bipartisan support in the House, with lawmakers casting their efforts as an attempt to harmonize U.S. law with international regulations. But financial reform advocates have attacked the initiative for padding Wall Street profits at the expense of important public protections, and Democratic support has eroded.
In June, the House passed a bill that would completely exempt from U.S. oversight derivatives sold through the nine most popular foreign derivatives jurisdictions. The legislation is occasionally derided as the “London Whale Loophole Act” on Capitol Hill — a reference to the overseas trades that cost JPMorgan Chase more than $6 billion in 2012. London was the epicenter of much of the derivatives trading by U.S. financial firms leading up the 2008 crash, including AIG’s infamous Financial Products division. If banks can simply route trades through loosely regulated overseas affiliates, financial reform advocates warn, the most critical aspects of Dodd-Frank will be effectively nullified.
The “London Whale Loophole Act” faces opposition from Senate Democrats and President Barack Obama, so it’s unlikely to be signed into law. But June’s House Agriculture Committee funding bill has much stronger prospects for passage, since it’s tied to approximately $19 billion in other spending. That bill would require the Commodities Futures Trading Commission — the agency with responsibility for more than 90 percent of the derivatives market — to negotiate its regulations with the Securities and Exchange Commission, which oversees the remainder of the derivatives business.
These are people who looked at the financial crisis of 2008 and didn’t see a problem to be solved, but a small bump in the road and an opportunity for the wealthy to make even more money in an increasingly unstable system. They simply don’t care.
It’s also a good reminder that as bad as so many neoliberal Democrats may be on financial sector issues, there’s still a world of difference between the two parties even on that front.
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