U.S. Rep. Kevin Yoder of Kansas Defends Measure Relaxing Banking Rules
I don’t care if Kevin’s unhappy, opening the banking pandora’s box of Federally insured swaps and derivatives is something wrong that he did and he should not have done it. No matter how much he obfuscates with thinly crafted rationalizations for his bad deed it still remains odious. Kevin characterizes the criticism as coming from the “far left” but I’m not far left, I voted reliably Republican all the way up to 2012, when I decided enough was enough — neither are his constituents who are calling. Indeed, you’d be hard pressed to find people who “Far left” in Dennis’ district.
Kevin Yoder’s phone is ringing off the hook, and he isn’t happy.
Some constituents are equally hot.
The Kansas Republican faced furious criticism this week for his significant role in a measure allowing federally insured banks to use financial “swaps,” a tool designed to protect banks from bad loans.
Critics say that the relaxed rule — part of a bill signed into law Tuesday night by President Barack Obama — provides a potential backdoor bailout for the nation’s biggest banks, and that Yoder offered the measure as a favor for wealthy bank-related campaign donors.
More on the insertion that nobody wants to own at The HIll:
Dodd-Frank’s derivatives push-out provision has a very simple structure and an essentially incontestable purpose. It requires that when large financial conglomerates wish to engage in inherently risky derivatives trading in pursuit of potential profits, they do so through subsidiaries that are kept legally separate from federally insured depository institutions likewise owned by those conglomerates. In effect, it is a “firewall” requirement — a time-honored means, where financial regulation is concerned, of maintaining the safety and soundness of financial institutions whose services are used by ordinary rather than high-flyer Americans.
The reason behind Dodd-Frank’s rendition of this common requirement is straightforward: If Wall Street conglomerates are able to use our bank deposits — which are meant to be kept safe — in addition to their own money to gamble on speculative derivative instruments, then (a) there will be much more gambling of precisely the kind that brought us the 2008 crash; and (b) we taxpayers, rather than Wall Street, will cover the losses that the next crash occasions. We will, in other words, be bailing out Wall Street all over again — socializing losses even as Wall Street continues to privatize gains for itself.
This is, of course, perfectly disgusting. But what is yet worse is that no one will “own” it — presumably because it is so disgusting. We still do not know who inserted the provision, nor do we know why. All that we know is that whoever did it did it both (a) surreptitiously, apparently in hopes no one would notice, and (b) at the last minute, in connection with a continuing resolution cum omnibus spending bill, apparently in hopes of holding continued government operation itself hostage to the provision’s getting through.