Just in Time for the Holidays, Another Wall Street Giveaway

Posted on by FASHIONISLANDBLOG

In what is being criticized as yet another capitulation to Wall Street—and just in time for the holidays—the Federal Reserve on Thursday announced it will give investment banks a one-year extension to implement a key aspect of the Dodd/Frank financial reform act, known as the Volcker Rule, enacted in the aftermath of the 2008 economic crisis.

As Bloomberg reports:

The Volcker Rule, named after former Fed chair Paul Volcker, was designed to curb some of the practices which led to the ’08 collapse and demands that banks refrain from using their clients’ deposits to engage in risky, speculative investment activities. Though the rule as written and enacted was full of loopholes inserted at the behest of Wall Street lobbyists, the banks have continued to claim they need more time to “unwind” their investments to conform with the law. Thursday’s order by the Fed was a consent to the banks’ demands, but critics worry that the year extension is not about giving financial firms more time to comply with the rules, but rather, more time to kill it off entirely.

SCROLL TO CONTINUE WITH CONTENT

As the Huffington Post‘s Zach Carter reports, the extension “gives financial lobbyists more time to kill the new regulation before it goes into effect.”

Carter spoke with progressive Democrats in Congress who expressed outrage over the Fed’s decision.

“Every day—every single day—we are at risk of a market meltdown that would wreck our economy even worse than the 2008 crash did, or even than the 1929 crash did,” Rep. Alan Grayson (D-Fla.) told HuffPost. “Six years after the fact, we have taken no significant action to reduce the Wall Street gambling or ‘too big to fail’ concentration that caused the 2008 crash. If we can’t even implement the Volcker Rule, an extremely modest effort to stave off total disaster, then total disaster is exactly what we can expect.”

Thursday’s decision comes less than a week after both chambers of Congress passed a spending bill that included other large giveaways to Wall Street, including passage of a measure that was literally written by CitiGroup lobbyists. Those concerned about a continued weakening of the already weak rules that govern Wall Street say that with the upcoming Republican-controlled Congress, this trend is likely to continue, if not worsen.

“The Wall Street Casino is alive and well,” said Sen. Jeff Merkley (D-Ore.), who co-authored the Volcker Rule statute with Sen. Carl Levin (D-Mich.). “Last week it was Congress granting the big banks the right to keep trading on banned risky derivatives with government backing. Today it is the Fed granting big banks two more years to make big bets through direct ownership of private equity and hedge funds. It all amounts to the same thing – spineless accommodation of the big banks’ desire to run taxpayer-subsidized hedge funds. This is wrong for taxpayers and it is wrong for the stability of our banking system. We expect more of the Federal Reserve.”

Our work is licensed under a Creative Commons Attribution-Share Alike 3.0 License. Feel free to republish and share widely.

Click Here: Golf special

Leave a Reply