On December 13, the Democratic-controlled Senate voted 56-40 to approve H.R. 83, the so-called “CRomnibus” bill, a $1.1 trillion, nine-month omnibus spending bill that will keep the federal government fully funded through September 2015.
Among the Democratic Senators who voted for the CRomnibus bill was progressive Sen. Tammy Baldwin of Wisconsin, and as the CapTimes notes, there’s a lot for progressives to hate about the CRomnibus bill.
- The measure includes a rewrite of rules for derivatives trading that Massachusetts Sen. Elizabeth Warren said “would let derivatives traders on Wall Street gamble with taxpayer money and get bailed out by the government when their risky bets threaten to blow up our financial system.”
- It includes provisions that will allow billionaires and millionaires to spend dramatically more money buying elections. Democracy 21’s Fred Wertheimer refers to these sections of the CRomnibus as “the most destructive and corrupting campaign-finance provisions ever enacted by Congress.”
- It reworks pension rules in a way that Teamsters President James Hoffa says could “slash the pensions of thousands of retirees who worked years for a pension that they thought would provide them financial security in their retirement years.”
While I understand compromises need to be made in order for the sausage-making process that is legislating to occur, I can’t help but wonder why a progressive like Sen. Tammy Baldwin chose to vote in favor of such a horrible piece of legislation. After all, the last time I checked allowing millionaires and billionaires to spend more money to buy elections and slashing pensions for retirees don’t sound like issues a progressive should support.
It’s a travesty. But I will say the rich went after their senior citizen tea party defenders in a big way for once. None of that Rep. Ryan sleight of hand pushing medicare vouchers out to future generations. Now gramps will have to switch off Fox and lug his bigoted hide from one low wage employer to another cap in hand. His savings and IRA’s will be raided and his federal taxes will go to bail out Chase. Again. Too bad many kind and honest folk will suffer as well.
Zach, thank you.
The link below goes into detail on Sen. Warren’s objections:
“Did Wall Street need to win the derivatives budget fight to hedge against oil plunge?”
“…This interpretation may be too benign. As structured credit expert Tom Adams said via e-mail:
Why are the proponents pushing so hard, with respect to the Dodd-Frank provision on derivatives pushed out of insured banks, to get this done now? Why not just wait until Republicans have control of the House and Senate? Why is Jamie Dimon calling on members now, rather than just waiting? The timing is weird.
Perhaps there are political reasons that give various parties cover they want and that’s all there is to it.
On the other hand, I’ve been closely watching the blow up in the oil and energy markets and I wonder if there may be a link to the Cromnibus fight.
Much of the recent energy boom has been financed with junk debt and a good portion of that junk debt ended up in collateralized loan obligations. CLOs are also big users of credit default swaps, which was an important target of the Dodd Frank push-out. In addition, over the past 6 months banks were unable to unload a portion of the junk debt originated and so it remained on bank balance sheets. That debt is now substantially underwater. To hedge, banks are using CDS. Hedge funds are actively shorting these junk debt financed energy companies using CDS (it’s unclear where the long side of those CDS have ended up – probably bank balance sheets and CLOs).
Finally, junk financed energy companies have been trying to offset the falling price of oil by hedging via energy derivatives. As it turns out, energy derivatives are also part of the DF push-out battle.
Conditions in the junk and energy markets are pretty dire right now as a result of the collapse in oil, as you know. I suspect there are some very anxious bank executives looking at their balance sheets right now.
Since the derivatives push-out rule of Dodd Frank was scheduled to go into affect in 2015, the potential change in managing their exposure may be causing a lot of volatility for banks now – they need to hedge in large numbers at the best rates possible. Is it possible that bank concerns (especially Citi and JP Morgan) about the potential energy-related losses are why Dodd Frank has to be changed now?…”
http://www.nakedcapitalism.com/2014/12/did-wall-street-need-to-win-the-derivatives-budget-fight-to-hedge-against-oil-plunge.html