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Christmas comes early for banking corporations 

The newly passed spending bill sets a naughty precedent

Hey there, taxpayer! Crossed Wells Fargo and Bank of America off of your gifts list yet? Actually, you have, and you're not going to be happy when you get the bill.

This weekend the Senate passed a $1.1 trillion spending bill that glided through the House last week with little to no debate, despite its measures that rolled back vital financial reforms, including Wall Street regulation and campaign financing rules.

Nicknamed "cromnibus," the legislation combined a traditional omnibus spending bill with a continuing resolution. It funds most of the government until September, the next fiscal year, but will only fund the Department of Homeland Security through February, when Republicans will seek to limit President Obama's recent executive actions on immigration reform. Though meant to fund the government and avoid a shutdown, it contained controversial provisions that gut the financial industry safeguards enacted after the Great Recession, and triple the amount wealthy donors can give to party candidates.

In the banking world, high-risk derivatives can be used to speculate on anything from fluctuations in interest rates to fuel costs. Too-big-to-fail banks indulging in this form of elevated gambling worsened the collapse of 2007 exponentially, but received government bailouts to recover. In 2010, the landmark Dodd-Frank law was enacted to make sure this wouldn't happen again. It required banks to put their riskiest derivatives-trading activities into banking affiliates that aren't insured with taxpayer money. Currently, banks that want to gamble on them have to use their own money to do so. Thanks to the new spending bill, that will change come January. We're back to supporting the Wall Street casino where when banks win, they win, but when they lose, we lose.

This backroom deal, originally written by Citigroup lobbyists, according to the New York Times, was buried deep in the government spending bill that had to pass midnight Dec. 11 or risk a government shutdown. Republican cronies and their weak-willed Democrat counterparts backed it under cover of night, with minimal debate, to mitigate accountability.

Retired House Democrat Barney Frank, one half of the team that gave us the Dodd-Frank law, led a valiant fight against the cromnibus measure, saying before the vote that it would "only take an hour to take that provision out and re-vote."

In a Dec. 10th conference call, he, along with Sen. Jeff Merkley (D-OR), member of the Senate Committee on Banking, Housing and Urban Affairs; AFL-CIO policy director Damon Silvers; Nancy Zirkin, executive vice president of The Leadership Conference on Civil and Human Rights; and Lisa Donner, executive director of Americans for Financial Reform, outlined the dangers of the spending-bill provision.

But with GOP backing and the aggressive lobbying and arm-twisting of several Democrats, the deal passed the House. Predictably, North Carolina Republicans including Patrick McHenry, the chief deputy whip, voted for the bill, though Republican Rep. Walter Jones broke ranks with a "No" vote. On the Democrat side, Representatives G.K. Butterfield, Mike McIntyre and Alma Adams voted against it, in spite of calls by President Obama to whip up support for the measure, ostensibly to avoid another shutdown. The biggest surprise was from Homeland Security subcommittee ranking member David E. Price, a Democrat, who voted a reluctant "Yes."

Price, who represents North Carolina's 4th District, told reporters the day before that he would be voting "No." He released a statement Dec. 11 saying the flip-flop "was not an easy choice for me and many other members," but that he supported it because Republican leaders "would not remove these objectionable provisions and might instead give up on the omnibus bill and bring us to the brink of another government shutdown."

He needn't have worried, due to a dramatic turn of events in the Senate. Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell agreed Friday to table debate until Monday, giving lawmakers the weekend off, but a small delegate of Republicans, led by Sen. Ted Cruz (R-Texas), decided to derail that plan. Despite the GOP play to defund Homeland Security in February — and therefore stop Obama's immigration reform for undocumented workers — Cruz and company chose to draw a line in the sand Friday night, forcing a marathon weekend session.

The move infuriated Cruz's Republican colleagues. By forcing senators to stay in session, Reid was able to begin the process of confirming 24 Obama nominees for federal judgeships and top positions at government agencies. Under the original plan, Reid would have had to start processing nominees Monday evening, with many of their ranks leaving town before all the nominees could be confirmed.

In what looks suspiciously like a fair exchange, the Senate approved the $1.1 trillion spending measure 56-40.

"What Cruz did aided and abetted us getting nominations," Sen. Charles E. Schumer (D-N.Y.) said Saturday, and the biggest Wall Street banks are once again on their way to making highly risky gambles, knowing they will be bailed out by taxpayers if things go wrong again. Welcome to the up-close and ugly legislative process.

While the provisions themselves are nasty and irresponsible, the worst part is the manner in which they were inserted in the spending bill and passed into law. A direct assault with open-floor debate allows for questioning, investigation and democracy.

"Taking significant steps to remove key points without being able to vote or discuss them is outrageous. It's a roadmap to the stealth unwinding of financial reform," Frank said on the Dec. 10th conference call.

The collapse of the economy in 2008 put tens of millions of Americans out of work, including in Charlotte where unemployment reached above 12 percent in 2009, and in ensuing years has kept wages falling and stagnant.

Damon Silver, the AFL-CIO's policy director, said derivatives were not inherently destructive, but they played a role "over the past 30 years as the derivatives markets have grown, in every major financial glitch from the trust scandal in the early '90s to the hedge fund scandal in the late '90s to Enron in 2001 to the financial crisis of 2008-2009."

Because derivatives can be almost anything, it's dangerous for them to be part of a federally insured bank. Dodd-Frank addressed ways the financial system was made to fail and ensured that failure would not again be put on the backs of American workers. Reforming Dodd-Frank in this area invites catastrophe, Silver said.

Nancy Zerkin, executive vice president of the Leadership Conference on Civil Rights, said, "It's impossible to build public trust when they see last-minute, backroom deals like this being made under the threat of another federal government shutdown. We do not want to wake up in 10 years and face another bank bailout."

To jam such a provision in without open debate provided cover to lawmakers who otherwise would have to answer to their constituents. Instead, lawmakers decided to repeal these protections without oversight and give Wall Street a big, fat, early Christmas gift on your tab.

"In a democracy, things should be put up into the open for debate before the people," Frank said. "Egregious things happen when things happen in the night."

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