To the Editor:
This week, the House of Representatives plans to vote on a measure — HR 992 — that would repeal a section of the 2010 Dodd-Frank Wall Street Reform Act that prohibits gambling by banks with FDIC-guaranteed deposits.
If he votes the same way as he did in committee, U.S. Rep. John Delaney, D-Md., who represents Western Maryland, will support this measure. In effect, he will support a measure that subsidizes Wall Street gambling.
House Financial Services Committee Republicans have long been in favor of this carve-out for Wall Street. So it was no surprise when they voted unanimously on May 7 in favor of HR 992 and eight other bills to eviscerate important safeguards in the 2010 Wall Street Reform Act pertaining to derivatives supervision. But Western Maryland taxpayers would perhaps be surprised to learn that Rep. Delaney and several other Democratic freshman also jumped on board.
Derivatives have to do with the gambling aspect of financial firms’ operations, as it is the part in which they make high-stakes bets under the guise of “hedging.” For instance, the unregulated “credit default swaps” that nearly caused a full meltdown of the financial sector in 2008 were derivatives, as was the “London Whale,” JP Morgan’s major loss this year. Swaps are a form of derivative. HR 992 is formally titled the “Swaps Regulatory Improvement Act.” Washington is prone to misleading names. We view this bill as deregulating swaps. Former FDIC Chair Sheila Bair vocally opposes HR 992, as do many other reform experts.
HR 992 involves obscure terms, which, alas, are where the “muggers hide,” as U.S. Sen. Elizabeth Warren (D-Mass.) once said. Some members of Congress may not fully understand the content of these bills. This bill was written by lobbyists for Citigroup. (See New York Times, May 23, 2013, “Banks’ Lobbyists Help in Drafting Financial Bills, by Ben Protess; http://dealbook.nytimes.com/2013/05/23/banks-lobbyists-help-in-drafting-financial-bills/?ref=politics&_r=0)
Wall Street lobbyists may comfort them with talking points that speak to job creation, and other false claims. In fact, the Wall Street crash cost a huge number of jobs. Cumberland and Western Maryland suffer because of the distant gambling activities on Wall Street and in London.
When HR 992 came before the committee on May 7, senior Democrats generally voted against this and other anti-reform bills. They were in Congress in 2008 and saw the consequences of the crash first-hand as voter-accountable representatives.
Junior members should learn the lessons of JP Morgan, once considered the best managed and safest bank on the planet. JP Morgan’s London Whale loss may not have forced another taxpayer bailout, but shareholders lost 25 percent of their stock value when the supposedly best managed bank on the planet admitted to losing $6 billion on a bet.
Ideally, by the time this bill reaches the House floor, Rep. Delaney will have renewed understanding of the threat of deregulating the derivatives market and vote to oppose this dangerous Wall Street carve-out. His Maryland constituents and the voting public at large, depend on it.
Bartlett Collins Naylor