Bipartisan Coalition in House Loosens Financial Regulations
- Posted on March 26, 2012 at 10:00pm by
Mytheos Holt
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WASHINGTON (AP/The Blaze) — To the chagrin of consumer groups, the House gave overwhelming bipartisan approval Monday to two bills easing requirements that President Barack Obama’s overhaul of financial regulations impose on some exotic financial instruments blamed for helping trigger the 2008 financial crisis.
Lawmakers of both parties said they were relaxing rules that would otherwise inhibit the ability of companies to manage the risks of prices and investments, ultimately reducing their profitability and job creation. Consumer groups said legislators were bowing to the interests of their corporate and finance-world contributors and taking steps that might prove harmful to the public.
The instruments are called derivatives, assets tied to the value of commodities like petroleum or fluctuating economic variables like interest rates.
One measure, approved 357-36, would exempt some derivative trades between related companies from rules including requirements that they set aside money to cover possible losses. Firms sometimes move a derivative from one subsidiary to another that might be in a better position to handle the risk involved, perhaps because one has more capital or could enjoy a tax advantage.
The other bill passed 370-24 and would provide similar exemptions to companies called end-users that directly use the commodity tied to the derivative. For example, airlines sometimes purchase derivatives tied to the cost of jet fuel as a hedge against price increases.
“End users, you know, were not the cause of the financial crisis,” said Rep. Scott Garrett, R-N.J.
Democrats praised the bills as well.
“We should allow American businesses, acting in good faith, to effectively manage risk,” said Rep. Marcia Fudge, D-Ohio.
The bill was not the first time Congress has tried rolling back provisions of the 2010 revamping of federal regulation of the financial industry — a response to the financial meltdown in 2008. But in the past, such efforts — including providing less money than the administration wanted for regulatory agencies — were spearheaded by Republicans, not lawmakers from both parties.
Consumer advocates said the two bills could lead to abuses. For example, the bill addressing transactions between related companies refers to swaps between “affiliates.” Marcus Stanley, policy director for Americans for Financial Reform, said he worried that corporate lawyers would try broadening the use of that term to include more and more companies.
“It’s ridiculous to put this broad exemption into statute,” Stanley said.
Bartlett Naylor, financial policy advocate for Public Citizen, blamed the upcoming congressional elections.
“Unfortunately in an election year, the default position in my opinion is to curry favor with your major source of funding,” Naylor said.
By voice vote, the House also approved a third bill that would give financial institutions regulated by the Consumer Financial Protection Bureau the same privacy protections they get from other regulators. The bill would require that sensitive legal information firms provided to the bureau be kept secret.
Travis Plunkett, legislative director of the Consumer Federation of America, said that measure was not controversial.
Senate Banking Committee Chairman Tim Johnson, D-S.D., has expressed support for minor regulatory changes that have broad bipartisan support, said spokesman Sean Oblack.
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Micmac
Posted on March 27, 2012 at 4:13amCorporatism at it’s finest. The govt and corps have been in bed together for some time now. Not good.
“I hope we shall crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.”
–Thomas Jefferson
NoBama 2012
Report Post »TRILO
Posted on March 26, 2012 at 10:51pmAll this does is protect the big boys. If my memory is correct, is there not something like a quadrillion in derivatives out in the market? With the collapse of Greek debt was it not the derivatives market that everyone was worried about. No one even understands this accounting and insurance fraud let alone understand how to regulate it. They need to eliminate it, is what they should do.
Once again, Congress screws the average man on the street. Hey, I hear the Jobs Act is even worse. Can’t wait for that legislation to promote even more fraud. Come on, who could vote against a “Jobs Act”?!!!! Way to go Congress. Looking out for your campaign $$ rather than the American people.
With the vote totals I am sure all of your tea party stooges went right along with the vote in favor of the party and not the people.
Report Post »oldguy49
Posted on March 26, 2012 at 11:47pmterm limits
Report Post »Jaycen
Posted on March 27, 2012 at 2:17amIt’s a loophole that Congressmen will exploit.
To the person who says “Term Limits”, I say “Free Speech”, douche. You refuse my right to vote for whom I like, as often as I like, as soon as I get to refuse you the right to open your hole.
For Constitutional Conservatives, your default mode of operation must be Freedom. You must learn to view all things through that lens, or we will allow our Progressive tell-you-how-to-live-your-life enemies to win.
Report Post »lukerw
Posted on March 26, 2012 at 10:20pmDERIVATIVES have not been Understood by any FR Chairman… nor Economist. So, now, some YaHo Congressmen are smarter than any Expert?
Another Obama… Trojan Horse! STOP IT!
Report Post »brntout
Posted on March 26, 2012 at 10:15pmGot lost at Marcia Fudge-packer’s comment.Let business take the risk….Huh,whuh…..a reality ck you waste of skin -in-the-game, they are not structured like airlines.Airlines are in the business of moving people,and the rest of them are in the business of employing these people on the move to make them stay put.What a waste of intellect we have here in O…H…I…O….Nothing to any democrat/progresssive idiot that is in office.
Report Post »G-WHIZ
Posted on March 27, 2012 at 11:04amBy–Jove!! I think you’ve got-it!!!!!!
Report Post »Itsjusttim
Posted on March 26, 2012 at 10:14pmYou know money isn’t worth crap right now, but they know eventually dumb money “That’s you” will figure it out, and they hope to be done scamming you by then.
Report Post »scuba13
Posted on March 26, 2012 at 11:01pm“You know money is not worth crap right now” Well Tim I have a yard full of dog crap I will trade you for as much cash as you want. Also take your medication.
Report Post »Itsjusttim
Posted on March 26, 2012 at 10:10pmOh, more of the same. Giving companies the chance to move their stuff around before financial collapse.
Report Post »Snowleopard {gallery of cat folks}
Posted on March 26, 2012 at 10:06pmNow for the million dollar prize:
Have we actually achieved something: achieved nothing; or been stabbed in the back yet again.
Report Post »Itsjusttim
Posted on March 26, 2012 at 10:11pmWell I’m sure it benefited inside traders.
Report Post »brntout
Posted on March 26, 2012 at 10:37pm@ snow remember tug-of-war? Keep the faith ,there are alot of folks ready to ,which ever way this goes,kick his lowness butt and crew to their hidey-holes a.k.a spider holes.They can run and hide ,but oxygen will run out eventually.
Report Post »Darmok and Jalad at Tanagra
Posted on March 26, 2012 at 11:48pm@snow:
Report Post »I think this counts as the countries annual prostate exam.
Darmok and Jalad at Tanagra
Posted on March 26, 2012 at 10:06pmHarry Reid will never let this on the Senate for a vote.
Report Post »