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A Christmas gift for investment banks

I would rather write about a happy Christmas event benefitting working people or Main Avenue. Unfortunately, the recently passed U.S. government budget compromise contains numerous riders – happy events for special interests and lobbyists.

Wikipedia says: “A rider is an additional provision added to a bill or other measure under the consideration by a legislature, having little connection with the subject matter of the bill. Riders are usually created as a tactic to pass a controversial provision that would not pass as its own bill.”

Before 1999, the year of the repeal of the Glass-Steagall Act deregulating banking regulations, Wall Street was on the hook when taking risks when creating derivatives. The recession six years ago was a direct result of the repeal of the Glass-Steagall Act, freeing investment banks to take greater risks by gambling with derivatives. Unfortunately, because derivatives were insured by the U.S. government, U.S. taxpayers bailed out the banks. To prevent this from happening again, the Dodd-Frank banking regulations were enacted in 2010 over vigorous objections from the banking industry.

Believe it or not, the Republican leadership added a rider into the 2015 budget bill written by Citigroup, the second largest bank in the country. With this rider, U.S. taxpayers will once again be on the hook when banks gamble with derivatives. Backed by the U.S. government, banks can now once again take greater risks, therefore charge more for risky investments while increasing profits by the billions. In addition, numerous other riders were added. The McCain-Feingold election reform was compromised by increasing the maximum yearly political campaign contribution 10 fold from $32,000 to $320,000 per year.

To me, inserting an industry written rider into a budget bill, bypassing scrutiny and public debate is highly immoral.

Actions like these are one more reason to shop locally by using small and, preferably, local banks for your banking needs.

Werner Heiber

Durango



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