The AFL-CIO denounced a provision of the omnibus spending bill Wednesday it charged would lead to another big bank bailout.
Already upset with potential cuts to the Multiemployer Pension Program, the AFL-CIO is now focusing on bailouts.
“At the request of too-big-to-fail banks, the Republican leadership is trying to sneak a provision into a last-minute deal to fund the government that will make it easier for too-big-to-fail banks to put taxpayers on the hook for their risky speculation in toxic derivatives,” AFL-CIO President Richard Trumka declared in a statement.
“We call on members of Congress of both parties who are opposed to too-big-to-fail to stand up to Wall Street and to this harmful roll-back of a critical anti-bailout provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act.”
Congress repealed a portion of Dodd-Frank, which according to the Guardian leads some to worry risky trading will be covered by federal deposit insurance.
The law, passed in 2010, was a response to the financial crisis and detailed what sort of investments banks could make with client deposits.
“Dodd-Frank forced too-big-to-fail banks to move potentially toxic speculation in derivatives out of their government-insured banks,” Trumka added. “Wall Street’s friends in Congress are trying to once again put the public on the hook for the most dangerous aspects of the financial system.”
“Working people were profoundly harmed by the 2008 financial crisis and its continuing aftermath of mass unemployment, falling wages, the mass eviction of working people from their homes, and reduced public investment,” he concluded. Trumka said derivatives “were at the center of the crisis.”
“Derivatives were at the center of the crisis – turning a painful decline in home prices into an international financial crisis that still plagues our economy,” Trumka concluded.
USA Today reported that this has upset many Democrats, despite leaders in the party signing off on the budget earlier. Massachusetts Democratic Sen. Elizabeth Warren, who played a major role in the shaping Dodd-Frank even before she was in Congress, announced her opposition to the package on the Senate floor.
Not everyone however agrees with the Dodd-Frank rule the budget would remove.
Brian Gardner, Washington analyst for Keefe Bruyette & Woods, told The Guardian, “Since the beginning of the financial crisis, the political world has buffeted the financial services sector with waves of new regulation in an attempt to punish the wicked and to make sure a similar crisis ‘never happens again.'”
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