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Citigroup Becomes Its Own Self-Serving Lawmaker

Economy Memo Pad

Citigroup Becomes Its Own Self-Serving Lawmaker


Congress, which has long been so tied up in a partisan knot by right-wing extremists that it has been unable to move, suddenly sprang loose at the end of the year and put on a phenomenal show of acrobatic lawmaking.

In one big, bipartisan spending bill, our legislative gymnasts pulled off a breathtaking, flat-footed backflip for Wall Street, and then set a dizzying new height record for the amount of money deep-pocketed donors can give to the two major political parties. It was the best scratch-my-back performance you never saw. You and I didn’t see it — because it happened in secret.

The favor was huge — allowing Wall Street’s most reckless speculators to have their losses on risky derivative deals insured by us taxpayers. Yes, such losses were a central cause of the 2008 financial crash and subsequent unholy bank bailout, which led to passage of the Dodd-Frank reform law, including a provision sparing taxpayers from covering future losses. But with one, compact, 85-line provision inserted deep inside the 1,600-page, trillion-dollar spending bill, Congress did a dazzling flip-flop on that regulation, putting us taxpayers back on the hook for the banksters’ high-risk speculation.

In this same spending bill, Congress also used its legislative athleticism to free rich donors (such as Wall Street bankers) from a limit of under $100,000 on the donation that any one of them can give to political parties. In a spectacular gravity-defying stunt, lawmakers flung the limit on these donations to a record-setting 15 times higher than before. So now bankers who are grateful to either party for being able to make a killing on taxpayer-backed deals can give $1.5 million each to the parties.

Perhaps you recall from your high school civics class that neat, one-page flow chart showing the perfectly logical, beautifully democratic process that Congress must go through to pass our laws.

What a bunch of kidders those chart makers were! To see how the sausage is really made, let’s take a look at that trillion-dollar budget bill that Congress squeezed out just before Christmas. It was crammed with special corporate favors, such as: reinstating a Bush rule allowing mining giants to explode the tops off ancient Appalachian mountains and then bulldoze the rubble down into the valley below, destroying pristine mountain streams; another letting long-haul trucking outfits require their drivers to be on the road more than 11 hours a day and up to 82 hours per week, filling our highways with highballing, sleep-deprived truckers; and cutting $60 billion from the Environmental Protection Agency, freeing up polluters to go unpunished for polluting.

None of these favors had anything to do with that “how a bill becomes law” flow chart in our civics textbook. No bill was filed, no public hearings, no debate, no vote. Just — BAM! — there they were, a thicket of benefits secretly slipped into the 1,600-page budget bill by … well, by whom? Largely by corporate lobbyists, though they get one of their for-hire congresscritters to do the actual dirty deed.

The taxpayer subsidy for Wall Street, for example, was written by Citigroup. The bank’s lobbyists then handed the provision to Kansas Republican Kevin Yoder, who slipped it into the bill. Thus, the Wall Street conglomerate that took a $50 billion bailout from us taxpayers just seven years ago to save itself from its own bad deals essentially was allowed to become an unelected, self-serving, do-it-yourself, backroom “lawmaker” to make sure that your and my tax dollars will be there to cover its next mess-up.

And that, boys and girls, is the real flow chart for making our laws. It’s always an amazing sight when Wall Street and Congress get together — especially when they get together out of sight.

To find out more about Jim Hightower, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Web page at www.creators.com.

Photo: Matt Buck via Flickr

Jim Hightower

Jim Hightower is a nationally syndicated columnist and one of America's most prominent progressive voices. His column carried by more than 75 publications across the country. Prior to becoming a writer, Hightower served as Texas Agricultural Commission from 1982 to 1991.

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  1. Dominick Vila December 24, 2014

    A return to the good ole days of ENRON, Lehman Brothers, AIG and the rest may be around the corner now that most of the regulations and safeguards that were put in place to minimize the probability of a sequel to the Great Recessions are being expeditiously removed, or re-written by the wolves while the chicken hide in their coops.

  2. dtgraham December 24, 2014

    I still cannot understand and get my head around how the elimination of such extremely important legislation, that was fought so long and hard for, could simply be slipped into a huge omnibus bill at the last moment and passed. Presto. Just like that. All that for nothing.

    Why the White House put up no resistance and actively lobbied Congressional Democrats to support Boehner is another one of life’s little mysteries. The GOP were going to hit Obama with all kinds of poison pills next year no matter what the result of this would have been. They’ll be even more emboldened now, especially next September. It was revealed later that the minority of Democrats who did support Boehner also received the most political donations from Wall Street. Nice.

    The financial stability aspects of Dodd-Frank have been badly damaged by this and the bailout ending provisions are gone with the wind. The amendment to the Bank Holding Company Act of 1956, which became known as the Volcker rule, has been effectively neutered as far as I can see unless I’m reading it wrong. This was essentially the 21st century version of Glass-Steagall. There’s a good illustration of how effective the Volcker rule was. In response to the Volcker rule, and in anticipation of it’s ultimate impact, a number of commercial banks and investment banks operating as bank holding companies began to downsize or dispose of their proprietary trading desks. That is a good thing…or was. They’ll now be firing up those desks again now that they’re flush with government insured money once more.

    The Title VII Wall Street Transparency act is still around but I just don’t see how you can rely on over the counter derivative swaps being cleared through exchanges, as being enough. It isn’t enough. Dodd-Frank is still with us but some of the key parts of it have been gutted. The heart of it really.

    This is all in addition to the shredding of the last remnants of campaign finance reform, sleepy truck drivers, poisoned rivers, etc… One person can now donate 1.5 million dollars personally. Unless you’ve got more than that to give, who needs super-pacs? Even if you have a pac, that’s a nice little bonus to throw in if you’ve got that much. Where do you think that $10.00 or $20.00 donation puts us, in the scheme of things, in terms of our importance to the politician? The rich guy’s free speech comes at the politician with the volume of concert stadium speakers. The 20 dollar guy’s free speech isn’t even audible as a whisper.

    1. idamag December 24, 2014

      Some very powerful people have managed to dupe the public into electing their people.

  3. johninPCFL December 24, 2014

    Why now? Why was it so important to water Dodd-Frank down now? Well, because the banks have ALREADY been at it again.
    The last time, they bet that mortgages would continue to be paid on time (that is, the default rate would remain stable) even though the balloons built into the structure of these refinance vehicles (yes, about 70% of the sub-prime mortgages weren’t new-home-ownership mortgages, they were “home equity” loans taken out to buy other stuff) pretty well guaranteed that they wouldn’t. As a hedge on that bet, they also bet that the loans would fail, but the insurer of that deal, AIG, went bust and the taxpayers had to pay the bill. The first $45B was “loaned” to them by GWB with no strings attached: no repayment timetable, no interest, in fact no requirement to ever pay it back. And they haven’t and never will. The next $200B from Obama had penalties for late payment, interest, etc. and has all been paid back.

    This time the banks bet that oil prices were always going up. They loaned about $1T to speculators, pipeline managers, drillers, refiners, etc. on the premise that prices would never fall. Of course, they also hedged their bets with other AIGs. Now that prices have fallen, the banks are looking at their hedge carriers to see if they’re financially sound enough to pay the losses. If the banks are writing legislation that puts the taxpayer back on the hook for those losses, I think we have the results of their analysis.

  4. 1standlastword December 24, 2014

    “In this same spending bill, Congress also used its legislative athleticism to free rich donors (such as Wall Street bankers) from a limit of under $100,000 on the donation that any one of them can give to political parties. In a spectacular gravity-defying stunt, lawmakers flung the limit on these donations to a [record-setting] 15 times higher than before. So now bankers who are grateful to either party for being able to make a killing on taxpayer-backed deals can give $1.5 million each to the parties.”


    This paragraph puts the fat in the butter!

    Politicians and their rich benefactors are conducting the embezzlement of public funds in the light of day and their is NOBODY of any elected office willing and able to stop it.

    And worse our elected lawmakers are aiding and abetting the corporate take over of the government that constitutionally is “Of The People By The People For The People

    What will we–the engines of a great public wealth–have left if our votes become impotent to influence the people we elect because we have faith in them when they pledge to work for us.

    The WH signed off on Omnibus under duress, I’d like to think. But, what about the principle of civic duty! I think Obama caved when he let citizens be taken hostage by this modern class of Robber Baron called the U.S. Congress and their corporate lobbyists.

    He must still believe that the few select gains he won in exchange for a HUGE infusion of confidence for the adversaries of the working and middle classes will pay off.
    I can’t see it and I’m unhappy about that.

    It seems that is as the world afar near and around crumbles, we become more aware of the false morals and character failings of our modern lawmakers


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