We are such sheep. The system is so rigged and corrupt it is beyond belief and we “the people” do nothing but stare blankly at our TV and computer screens, bend over and receive our collective punishment of anal “re-hydration”, after-all clearly this is not torture. Right?
As the CRomnibus becomes law, many rank-and-file liberals have wondered how Democrats, needing to reconnect with the public after another midterm debacle, could in their first order of business help roll back a key Wall Street reform. The answer lies in the nature of this rollback, along with the real lack of communication between lawmakers ostensibly on the same side.
- First of all, it’s worth mentioning that the CRomnibus was a horrible bill even without weakening Dodd-Frank. It was loaded with favors to wealthy and well-connected special interests, and its very existence, as a must-pass, short-term budget bill larded up with unrelated policy riders that will last forever, sets a dangerous precedent for the future.
The so-called swaps push-out provision of Dodd-Frank, Section 716, forced commercial banks that trade certain risky types of derivatives to split them off into a separately capitalized subsidiary, uncovered by FDIC deposit insurance. Those attempting to downplay Section 716’s importance, like Paul Krugman, highlight the fact that uninsured institutions like Lehman Brothers played a critical role in the last crisis, and that risk can cascade through an interconnected financial system no matter where those risks are initially housed. This theory actually made it easier to get the rider through Congress, giving lawmakers a plausible story that the provision wasn’t central to reform.