The Senate Agriculture Committee passed its part of the Financial Reform Bill allowing the Feds to regulate derivatives. Extreme right-wing Republican Chuck Grassley of Iowa crossed party lines to vote for the bill. He’s up for election in a state that now has a majority of liberal Democrats in its delegation. Senator Saxby Chambliss of Georgia, the senior Republican on the committee sniffed that these reforms would put an undo burden on the community banks back home. The FDIC closed eight more failed community banks last week at the cost of a billion or more. This is the result of Republican policies over the past thirty years. Back home in Saxby’s Georgia there have been more banks closed than in any other state.
Gary Gensler, the chairman of the Commodity Futures Trading Commission who answered questions at the committee mark-up, disagreed with Senator Chambliss and said that community banks would not be treated like big banks under the bill. But its trades with those banks would need to be routed through a clearinghouse, he said, to protect the small bank if the big bank went out of business. Protect the small banks back home… what a crazy liberal idea.
The Republicans had been counting on Chairman Blanche Lincoln, the Democrat in name only of Arkansas to bottle up any regulation of derivatives. With an increasingly stiff primary challenge from a progressive Democrat back home she is suddenly shocked, shocked to discover there has been gambling going on. It was the quadrillion dollars worth of derivatives that collapsed the banking system two years ago and the big banks have not lost their appetite for gambling with an estimated 600 trillion still on the books.
These instruments include hedges against commodity market and currency swings but the bulk are simply casino bets and bets on bets. They are nothing but a method for the organized banking crime families to skim so-called profits from the financial system justifying the hundreds of billions of bonuses they take for themselves after creating nothing. The SEC complaint against Goldman Sachs is about bankers rigging those bets and it is only the tip of the Wall Street iceberg.
Bernie Madoff is reported to have been shocked that he would get real prison time for his activities. After 50 years as a major player on Wall Street he knew that fraud was just business. He could use some new cell mates from Wall Street to play Monopoly with. (his current cell mates prefer Twister) www.prairie2.com