Bank bailouts. It is one of those
issues where the left meets the right. Something so universally despised from
the tea party to Occupy that for a politician to come within ten feet of the
issue might be to eventually risk a primary challenge. Just ask Eric Cantor.
With that in mind, this is one of the
few times Americans for Limited Government finds itself in agreement with Sen.
Elizabeth Warren (D-Mass.) and House Minority Leader Rep. Nancy Pelosi
(D-Calif.).
Specifically, Warren and Pelosi were
complaining Section 630 of the omnibus legislation allowing derivatives
traders, including foreign banks, to be eligible for Federal Deposit Insurance Corporation bailouts.
Besides taking apart the Dodd-Frank swaps push-out rule, the legislation
itself expanded the definition of “covered depository institution” to include
an “agency of a foreign bank” and “foreign banking organization (as such term
is defined under Regulation K of the Board of
Governors of the Federal Reserve System).”
So, presumably, banks in Europe that
bet poorly on Greek government debt or China’s credit bubble might be eligible
for bailouts under the provision.
Warren and Pelosi were right to
complain that this got inserted into the omnibus.
Politically, the provision is dangerous
for Republicans, since it simply looks like another TARP vote, something the
conservative base of the GOP rightly opposed.
Which brings us to House leadership
that put in the provision in the first place, thereby jeopardizing passage of
the budget and risking a government shutdown they were guaranteed to get blamed
for.
You see, prior to the provision’s
insertion, House Speaker Rep. John Boehner (R-Ohio) was counting on Pelosi and
her caucus to support getting the budget across the finish line. After it
became a political hot potato — led by Warren in the Senate and Pelosi in the
House — Democrats pulled their support for the bill.
In the meantime, Republican leaders
temporarily lacked the votes of their own conference because they refused to
include a provision halting the President’s executive amnesty for up to 4.5
million illegal immigrants with U.S.-born children, even as a separate item.
Turns out, when you try to please
nobody, you end up pleasing nobody.
And so, at 2PM Eastern Standard Time on
December 11, the House went into a long recess while leaders and the White
House were still attempting to cobble together the votes necessary to pass the
omnibus.
All this, and not even to really bail
out foreign banks.
As the New York Times’ Peter Eavis
notes,
the real benefit for banks by including this in the omnibus was “Banks can make
more money from derivatives trading by doing it in their insured subsidiaries.
These subsidiaries usually have higher credit ratings than other parts of the
bank, in part because of their implied government support. And the higher
ratings enable the banks to get better terms in the derivatives bets they make
with their trading partners, bolstering the banks’ profits.”
Was that really worth risking
everything else for?
At least if there had been a provision
defunding Obama’s executive amnesty — say, as a separate item from the omnibus
directed at just those agencies that would have implemented the program — even
if such a measure lacked the votes in the Senate, Republicans could have
claimed the moral high ground. That they were fighting to stave off a
constitutional crisis of Obama’s making.
Instead, House leaders who included the
bank bailout jeopardized their entire bill in what will become 2014’s version
of a bridge to nowhere. Eventually, the omnibus passed, but it makes one wonder
whether making Elizabeth Warren a perceived white knight was in anybody’s
interests.
Robert Romano is the senior editor of
Americans for Limited Government.
Source:http://netrightdaily.com/2014/12/foreign-bank-bailout-almost-brought-omnibus-knees/
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