Sen. Bernie Sanders (audio) with Richard Eskow
No sooner had the infamous “Citigroup amendment” been added to a vital spending measure than the warnings began. One of the first was from Rob Blackwell, writing in American Banker, who called it “a victory that may soon come to haunt the largest institutions.” Those may prove to be prophetic words, although perhaps not “soon” enough, especially if leading progressives like Sen. Bernie Sanders prevail.
Sanders’ website announced on Saturday that the Vermont independent “will introduce legislation to break up Wall Street megabanks that are using a bill before the Senate this weekend to put taxpayers on the hook for the banks’ risky investments.”
As is common knowledge in Washington by now, the amendment – which provides taxpayer-funded insurance for risky bets placed by the nation’s largest banks – was literally written, almost word for word, by lobbyists for Citigroup (or Citi, as it’s sometimes known).
Citi was created in its current form when Citibank merged with Traveler’s Insurance Group, a merger that was only made possible by Republicans in Congress and senior Treasury executives in the Clinton administration (many of whom later went to work at Citi themselves, or returned to prior positions there, and became quite wealthy. That practice has continued under the current administration.)
The “Citi amendment,” which became law over the weekend, unravels one of the economic safeguards in the Dodd-Frank financial reform bill – a measure which we should be strengthening, not weakening as was done this weekend.
Sanders’ bill, which he says he will introduce at the start of the next session, is given very little change of passage. “I look forward to working with both progressive and conservative Senators who have the courage to stand up to Wall Street and protect the working families of this country,” said Sanders, but very few conservatives are expected to back the effort.
Cynics may argue that this bill is therefore an exercise in futility, given the composition of the upcoming Congress. They’re missing the point. Sanders deserves praise for introducing a measure that is designed to put members of the United States Senate on record before the voters: Are they willing to break up the big banks or not?
The value of a bill like this one isn’t measured solely by its likeliness to prevail in the current Congress. Sometimes their purpose to change the composition of future Congresses, so that measures like this one are more likely to succeed.
Too-big-to-fail banks pose a systemic threat to the economy. As we now know, they also present a threat to democratic process. As Sanders said in his statement:
“Over the last several days, it has become abundantly clear that Congress does not regulate Wall Street but Wall Street regulates Congress. If Wall Street lobbyists can literally write a provision into law that will allow too-big-to-fail banks to make the same risky bets that nearly destroyed our economy just a few years ago, it should be obvious to all that their incredible economic and political power is a huge danger to our economy and our way of life.”
This move may increase speculation that Sen. Sanders intends to run for president in 2016. We asked him that very question a few days ago on The Zero Hour. His answer, which can be heard in the clip above, may interest you.