Insular Areas and Freely Associated States Energy Development—Continuedby Former Senator Carl Levin
Posted on 2014-12-13
LEVIN. Mr. President, today we face a difficult choice. The
appropriations bill before us today contains a lot of good for Michigan
and for our country, and it will provide most of our Federal agencies,
and the people who rely on them, with the certainty needed to plan and
invest. But it also contains some very troubling provisions.
We shouldn't use appropriations bills like this one to weaken our financial protection laws and to open the floodgates to campaign donations from millionaires. We shouldn't fund our financial regulators far below what they need to do their jobs. We shouldn't meddle with the will of the majority of residents in our Nation's Capital. And we shouldn't let tax cheats walk free by funding the IRS at the lowest level in years. I could go on and on about the flaws in this bill, and there is one in particular that I will highlight further.
But despite these significant flaws, the alternatives to this bill are also deeply problematic. Passage of a continuing resolution, which would put the Federal Government on autopilot, or worse, a government shutdown, are the two alternatives to passage of this bill. So that leaves us with the terrible decision we face today. So this bill appears poised to pass because it must and because it is better than the terrible alternatives I just discussed. If my vote were needed to pass this bill, I would, grudgingly, vote in favor. But it appears that this bill will pass regardless, and so I will not vote in favor of it today because I wish to express my deep concern about a number of provisions.
That provision, which guts the swaps pushout rule, will repeal an antibailout section of the Dodd-Frank act and risk putting taxpayers back on the hook for Wall Street banks' risky bets. As chairman of the Permanent Subcommittee on Investigations, just last month I held a hearing on bank involvement in the commodities markets. As chairman of the Permanent Subcommittee on Investigations, just last month I held a hearing on bank involvement in the commodities markets. We found that Wall Street had huge, wide-ranging ownership and control of and inside information about oil, copper, aluminum, uranium, and electricity markets at the same time they were engaging in financial transactions related to those same commodities posing big risks to the banks and, as a result, to the taxpayers who could be called on to bail them out in the event that those bets go awry.
Less than 14 years ago, the seeds of our financial crisis were planted in a derivatives provision planted in the 2001 appropriations bill. This provision, which like the provision in the bill before us, was added at the last minute and not subject to debate on its own, exempted derivatives from regulatory scrutiny, and left regulators, banks, and the American public on the hook when risky bets went bad.
As a result, Congress voted to enact a prohibition against Federal Government bailouts of swaps entities, or the swaps pushout rule, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This provision bans big banks from conducting risky derivatives trading in their insured banking units--the units that taxpayers would have to bail out if their bets went wrong.
Now we risk repeating the same mistake of 2001.
The language of the provision was written--literally written--by lobbyists for the big banks. According to a New York Times report, 70 of the 85 lines of the provision came directly from Wall Street's recommendations. Even more surprisingly, according to the Times, ``two crucial paragraphs, prepared by Citigroup in conjunction with other Wall Street banks, were copied nearly word for word.'' The Senate has long operated under rules that prevent legislative changes from being made on an appropriations [[Page S6811]] bill. This provision runs completely against that longstanding precedent. The swaps pushout provision is bad policy, and it is bad procedure. And if I could vote against that provision by itself, I certainly would.
But, unfortunately, because of where we are today and because of the decision to insert the unrelated, lobbyist-drafted provision into this bill at the last minute, we won't be able to considering that provision on its merits. Instead, we are considering this as part of an all-or- nothing package, with the threat of a continuing resolution or a government shutdown looming.
So, I will vote against this bill despite much good that it would do for my State and for our country in hopes that the next Senate will heed the warnings of myself and many of my colleagues that the provision in this bill weakening our country's banking regulations may sow the seeds of another taxpayer funded bank bailout and another financial crisis.