Friday, May 14, 2010

REPUBLICAN CORRUPTION STILL STANDARD OPERATING PROCEDURE



The White House Blog

Putting the Economy at Risk to Protect Wall Street Profits
Posted by Dan Pfeiffer on May 12, 2010 at 05:20 PM EDT
When it comes to trying to defeat financial reform, Wall Street lobbyists just won’t give up. This afternoon the Senate began consideration of a Republican effort to wipe out the strong derivatives provisions written by Senators Lincoln and Dodd in the Senate’s financial reform bill.

Here’s the bottom line: the Republican substitute has weak standards for major market players and no transparent trading. It doesn’t require major firms to hold capital against their derivatives transactions, doesn’t require an open and transparent market, and doesn’t regulate the next AIG or ENRON.

So what does the substitute amendment do? It keeps risky derivatives trading in the dark and strips the Senate bill of provisions that would help prevent the build-up of risk that threatened the financial system in the financial crisis. It strips provisions that make the derivatives market safer and more transparent. It deletes whistleblower protections. It weakens rules on conflicts of interest. It eliminates a requirement that cleared transactions be publicly reported. And it deletes new authority for the SEC to set position limits – leaving room for Wall Street’s manipulation and abuse.

Derivatives exist to help businesses manage risk. They can help airline companies protect against an unexpected rise in fuel prices and they can help farmers lock in a price for their produce.

But derivatives can also allow big financial firms make large, risky bets in the shadows. For example, because of a lack of transparency in the derivatives market, AIG was allowed to place hundreds of billions of dollars in bets without the money to back them up if the bets went bad. And in the end, AIG built up so much risk through derivatives that it put the entire financial system at risk.

The Dodd bill would help prevent excessive risk in derivatives from threatening the system again.

In place of the unregulated market we have today, the Dodd bill would bring the derivates markets into the open. It would subject derivatives dealers to strong, comprehensive oversight with robust capital and margin buffers. And it would require that all standard derivatives be traded on exchanges or other electronic trading platforms.

Despite the enormous damage wrought by unregulated derivatives trading, Wall Street lobbyists are spending millions of dollars to weaken reform with loopholes and carve-outs that would exempt large derivatives traders from the rules of the road. The lobbyist might keep fighting, but it’s up to the Senate to show which side they are on, and throughout this process reform for the American people have won. We hope the Senate keeps up this winning streak and defeats this dangerous amendment.

Dan Pfeiffer is White House Communications Director

6 comments:

  1. The Republicans, Teeluck, if they're nothing else, are totally tone-deaf. First by opposing Sotomayor, then by mucking up (as in opposing things that THEY themselves once supported) health care, and now by opposing financial reform, they could in fact be blowing a big opportunity in 2010. While this may not at all trouble other people, it troubles me. This, in that, yes, I like to see both parties act maturely/put the country first. Hey, maybe they could start by standing up to Rush. That would be a big help, I think.

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  2. I think the Obama administration should first explain why Summers, Geithner, Bernanke, and others are running this so-called recovery. His financial team are the ones that helped get us here in the first place. They are all connected to Goldman Sachs and the other Casino Houses.
    Wall St. runs this country. Not the other way around.
    The Too Big To Fail[TBTF] Banks are bigger than before. The Fed will do as they please.

    Keep your eyes out for the IMF [SDR's].IMO: That is where the [clue] to the puzzle is.

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  3. Will, I am totally enjoying the fact that they are self destructing with their actions, as far as Rush is concerned, the only time he gets more than 3% of an audience is when the Pres mentions him, he is washed up and they should just ignore him. He has become pathetic.

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  4. RZ, I share the same concerns as you do, but we can only try to keep them in line with our protests, because they are the only game in town...at the end of the day, the banks will still be there when this administration is gone, so if we have a few gains by the time they leave, I count myself lucky. An economy is built on the Financial Industry, so we are really pawns, like it or not.

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  5. Of course, the republicans who run the bank I work for are crying "this will kill us! It'll put us out of business!"

    Nonsense. People still have to stick their money somewhere.

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  6. Bee, so true, They really mean that they may not get as fat a bonus...

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