Democrats are putting up a fuss over a provision of the House spending bill that would loosen a rule for big banks, saying the measure is a handout for Wall Street at the expense of taxpayers.
The rule requires banks to conduct their riskiest trading with money that is not insured by the government, so that taxpayers aren’t on the hook if the trades blow up — as they did in the 2008 financial crisis. (RELATED: Elizabeth Warren Tells Liberals Not To Vote For Spending Bill)
Since the rule was passed as part of the 2010 Dodd-Frank Act, banks have been lobbying Congress to get rid of it, saying it’s ineffective and burdensome.
And if the $1.1 trillion spending bill is passed as is, they will have succeeded. (RELATED: Union Sees Bailout In The Budget)
“This jumps off the page as something that is inexcusable,” Michigan Democratic Rep. Sander Levin, ranking member on the Ways and Means Committee, told The Wall Street Journal. “This one sticks out worse than a sore thumb — it’s an infected thumb.”
Massachusetts Democratic Sen. Elizabeth Warren is leading a fight against the provision, saying it’s not in the average American’s interest, and said Republicans are using it to hold the government hostage.
“We put this rule in place because people of all political persuasions were disgusted at the idea of future bailouts,” Warren said on the House floor Wednesday. “And now, no debate, no discussion, Republicans in the House of Representatives are threatening to shut down the government if they don’t get a chance to repeal it.”
House Speaker John Boehner defended the provision in a briefing Thursday, when a reporter asked whether it’s a handout to Wall Street that will hurt consumers. “I don’t believe that to be the case at all,” he said, and added: “Nobody did this unilaterally.”
The provision went through the normal House committee process and was negotiated with Democratic Sen. Barbara Mikulski, who chairs the Senate Appropriations Committee, reported The Washington Post.
Warren acknowledged House and Senate negotiators of both parties worked hard to write the spending bill, and praised Senate leaders for “preventing the House from carrying out some of their more aggressive fantasies about dismantling even more pieces of financial reform.”
“But this provision goes too far,” she said on the House floor.
Warren urged senators not to support the bill until the provision is removed, but stopped short of saying she’ll vote against it. House Minority Leader Nancy Pelosi and Minority Whip Steny Hoyer have also voiced opposition to the provision, but have not told members to vote against the bill, reported The Washington Post.
“While some members may have objected to this issue or that issue, I expect this bill will receive bipartisan support and pass,” Boehner said at the briefing.
President Obama officially backed the spending bill Thursday, but his administration said it opposes “special interest riders” in the bill, including the Dodd Frank provision, saying it would “weaken a critical component of financial system reform aimed at reducing taxpayer risk.”
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