Congress to Reinstate Taxpayer Subsidies for Reckless Derivatives Trading
"After reckless derivatives trading helped bring the global economy to its knees in 2008, prompting a Congressional bailout worth some $700 billion and Federal Reserve emergency loans worth trillions, Section 716 was implemented "as a commonsense provision to protect taxpayers from future derivatives deals gone awry," says economist Simon Johnson. The measure took "the state out of subsidizing some of these particularly high risk derivatives."
But America's "too big to fail" banks desperately want to continue business as usual. Citi, which itself was rescued by taxpayers to the tune of $100 billion in Federal Reserve loans, wrote the provision, says the New York Times.
You remember Citi: the behemoth bank was instrumental in killing the Glass-Steagall law that for 60 years separated everyday banking from high-stakes, high-speed trading. Citibank merged with Travelers Insurance to form Citigroup in 1998, and later became one of the first too-big-to-fail banks to collapse in the financial crisis.
The Times detailed that "Citigroup's recommendations were reflected in more than 70 lines of the House committee's 85-line bill. Two crucial paragraphs, prepared by Citigroup in conjunction with other Wall Street banks, were copied nearly word for word."
