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Banks Get Delay in New Rule, Keeping Taxpayers on the Hook for Risky Trades

Pat Garofalo
Think Progress / News Report
Published: Saturday 5 January 2013
The Volcker Rule—also meant to rein in risky bank trading with dollars backed by the government—has been delayed, and House Republicans want to push back its implementation even further.
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Regulators have decided to delay rules that would have required Wall Street banks to isolate some of their risky derivatives trading in entities not backed by taxpayers. Banks will now have until at least 2015 to comply with the rules, Bloomberg News reports:

JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. (GS) and Bank of America Corp. won a delay of Dodd-Frank Act requirements that they wall off some derivatives trades from bank units backed by federal deposit insurance.

Commercial banks including the Wall Street firms may get as long as an additional two years — until July 2015 — to comply with the rules, the Office of the Comptroller of the Currency said in a notice yesterday. The provision was included in Dodd- Frank, the 2010 financial-regulation law, as a way to limit taxpayer support for risky derivatives trades…The so-called push-out provision of Dodd-Frank requires that equity, some commodity and non-cleared credit derivatives be moved — or pushed out — into separate affiliates without federal assistance.

“The procrastination of both regulators and the banks on this portion of Dodd-Frank has been pretty amazing,” said Marcus Stanley, policy director for Americans for Financial Reform. “The swaps-pushout provision is a really important part and something that absolutely should be a central part of the regulatory framework.” As economists Jane D’Arista and Gerald Epstein wrote, “the intent is to remove risky activities from the core banking functions that are essential to the economy and to ensure that those risky activities will not trigger the need for a bail out to prevent systemic collapse in the future as they did in the 2008 crisis.”

This is hardly the first rule from the Dodd-Frank financial reform law to get bogged down in delays. The Volcker Rule — also meant to rein in risky bank trading with dollars backed by the government — has been delayed, and House Republicans want to push back its implementation even further.

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ABOUT Pat Garofalo

Pat Garofalo is Economic Policy Editor for at the Center for American Progress Action Fund. Pat’s work has also appeared in The Nation, U.S. News & World Report, The Guardian, the Washington Examiner, and In These Times. He has been a guest on MSNBC and Al-Jazeera television, as well as many radio shows. Pat graduated from Brandeis University, where he was the editor-in-chief of The Brandeis Hoot, Brandeis’ community newspaper, and worked for the International Center for Ethics, Justice, and Public Life.

Dear FULLBLAD: I have to

Dear FULLBLAD: I have to admit that I too am close to giving up trying to get our citizens to make the first move needed to straighten out the Congressional mess in Washington D.C. It seems like a deliberately caused situation that favors the continuation of our corrupt lobbying system that is enjoyed by big corporations, banks and extremely rich individuals. We no longer have Democracy. It has been replaced by Plutocracy (government by the wealthy). Expressed another way what we currently have is government of the people by the lobbyists for the rich and powerful corporations and individuals. I do not believe in Socialism. I do believe in government of the people by the people and for the people. That is democracy which I definitely believe in. I am convinced that nothing will change until the SOURCE of the power that the corporations and others have over too many of our members of Congress is taken away. That source of course is MONEY! The first step to eliminating that evil source is for a massive overpowering grass roots movement that cannot be ignored in D.C. That movement can be initiated by enough people signing the petition at (need to click on or paste into your browser).

One of the things that really makes me feel discouraged is that after making contact with executives of organizations advocating women’s’ rights, the Occupy movement, Greenpeace, alternative fuels and a host of others, none have taken action to invite all of their followers or members to sign the petition which is the only viable means to get the grass roots movement started. So your rhetorical question, “Sooo, whad a ya gonna do aboud't?" says it all. It is kinda like Shakespeare’s words, “Full of sound and furry signifying nothing!” I am just about ready to throw in the towel. (For the young ones that means “give up”.) Speaking of "young ones" the only thing motivating me (almost 80) to pursue the needed change we need in D.C. is my grandchildren. It really hurts me when I think about the mess they are about to inherit.

I couldn't agree more

I couldn't agree more Grandma. But the problem is no matter how many petitions you get signed, the same people that voted all this stuff in will find a way to ignore it or vote against it. What amazes me is everyone knows how corrupt Washington has become yet the same players or there hand picked choices get voted back in. I think the only way now is to somehow get a Party started to run against these crooks and let the truth be known about each candidate that there running against. therein lies the other problem,MONEY.How do you come up with that kind of cash without getting into someones pocket? Now if the take the money out of politics somehow miraculously got passed,you might have a chance. the other option is VOTE. but anymore it seems there isn't anyone that isn't tied to some special interest lobbyist group. Our country is doomed if we cant somehow get this mess fixed.

This is what happens when the

This is what happens when the United States is ruled by corporations.

"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini

Sooo, whad a ya gonna do

Sooo, whad a ya gonna do aboud't?

I believe I have reached an end in commenting in the blogasphere. It has become a circular exercise of repeated themes. Over indulgence of gut wrenching articles starts to have it's effects. Better to confine oneself to one cause and read mystery novels in your "down time" and retain some sembalance of normalcy. I don'y know how these writers retain sanity, let alone the Hedges and Chomskys of this world?

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