Joint Statement: Budget Deal Must Not Include an Outrageous Wall Street Giveaway
As Congress considers rolling back a key provision of the Dodd-Frank financial reform law, the Americans for Financial Reform coalition of more than 200 organizations committed to building an ethical financial system and The Leadership Conference on Civil and Human Rights coalition of more than 200 national civil rights groups are calling on lawmakers to reject this sneak attack on a vital reform.
At the behest of Wall Street, Speaker John Boehner, and Senate Minority Leader Mitch McConnell, Congress is poised to approve an outrageous giveaway to the biggest banks. If the deal goes through, banks would once again be allowed to use insured deposits and other taxpayer subsidies and guarantees to gamble in the derivatives markets – a form of activity that was one of the drivers of the 2008 financial crisis and of the economic devastation that followed.
Under the Dodd-Frank financial reform law, bank holding companies must segregate, and independently fund, their riskiest and most exotic derivatives trading so that taxpayers no longer need fear being left on the hook for the bets that go wrong. Now, in a backroom deal buried deep in a stopgap government-funding measure, influential lawmakers seem prepared to do Wall Street’s bidding by including a measure – originally authored by lobbyists for Citigroup, the New York Times reports – that would undo this significant piece of Dodd-Frank.
Quote from Nancy Zirkin, executive vice president of The Leadership Conference on Civil and Human Rights
“The civil and human rights community does not want to see another Great Recession where working people, women, people of color, and low-income people get hurt worst and first while the federal government bails out Wall Street. What caused the Great Recession was banks playing fast and loose with other people’s money. Now that the economy is finally recovering, the banks once again want to take working people’s hard-earned money and gamble it on complex financial bets. It’s one thing for a company to use its own funds to take risks on exotic financial investments – it’s another thing altogether if they want to dip into the accounts of their customers and have their losses guaranteed by the federal government. Members of Congress must demand that this provision be taken out immediately.”
Quote from Lisa Donner, executive director of Americans for Financial Reform
“The section of Dodd-Frank that Congress is proposing to repeal was put in place to help prevent future bailouts of too big to fail banks. It cordons off the kinds of extraordinarily risky transactions that were at the heart of the financial crisis. Including this repeal in the budget is outrageous. It’s a giveaway to a tiny handful of the biggest Wall Street banks that puts the country’s financial and economic stability at risk.”
The Leadership Conference on Civil and Human Rights is a coalition charged by its diverse membership of more than 200 national organizations to promote and protect the rights of all persons in the United States. The Leadership Conference works toward an America as good as its ideals. For more information on The Leadership Conference and its 200-plus member organizations, visit www.civilrights.org.
Americans for Financial Reform is a nonpartisan and nonprofit coalition of more than 200 civil rights, consumer, labor, business, investor, faith-based, and civic and community groups. Formed in the wake of the 2008 crisis, we are working to lay the foundation for a strong, stable, and ethical financial system – one that serves the economy and the nation as a whole. The learn more about Americans for Financial Reform, visit www.ourfinancialsecurity.org.Tags: Derivatives, Wall Street Lobbying