A “CRomnibus” bill: a combination of two phrases—continuing resolution and omnibus. Continuing resolutions are short-term spending measures that have been used in recent years when Congress couldn’t agree on a long-term bill. Omnibus bill are comprehensive measures that cover spending throughout the government.
Sen. Elizabeth Warren opposes the “CRomnibus” provision that would restore FDIC insurance for high-risk trading in derivatives. Warren Democrats have already jumped out in opposition to the change. By removing the Dodd-Frank separation of derivatives trading from federally insured traditional banking, the CRomnibus spending bill effectively restores federal insurance for the kind of high-risk derivatives trading that over-leveraged Wall Street and toppled the economy in 2008.
Indemnifying bankers against losses from high-risk derivatives trading means bankers reap rewards without risk while taxpayers assume risk without rewards. It essentially 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. In other words, private profits, socialized losses.
This is an anti-market, anti-middle-class provision because of the following:
• By putting taxpayers on the hook for Wall Street losses, it raises the specter of a rich-get-richer bailout and a transfer of wealth upward from the middle class at a time when the left is already exploiting stagnant middle-class wages and growing income inequality to incite class warfare.
• It undermines public confidence in the essential fairness and neutrality of a free market economic order at a time when job losses to global competition and digitization have already rattled nerves.
• It subsidizes risky trading in derivatives. Subsidize something, and you get more of it. Indemnify losses from risky trading, and you get more risky trading, and, in turn, more losses, more taxpayer-funded bailouts, more risky trading, all in a vicious circle.
• By insulating wealthy financiers from the costs of failure, it undermines the ethic of personal responsibility. If we ask unwed teenage mothers and young workers straining under student loan debt to take personal responsibility, the least we can do is ask the same of Wall Street bankers.
• By artificially propping up failed enterprises, we interrupt free market feedback circuits and disable capitalism’s immune system, preventing the system from learning from error and gaining overall strength from localized weakness.
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