Kudos to Massachusetts Senator Elizabeth Warren for ripping Citigroup apart last week in her challenge to Congress and exposing Wall Street’s continued unethical activities.
Senator Warren vehemently objected to a little-known provision written by Citigroup and inserted in the year end funding bill that would undo a new financial regulation and allow Wall Street to gamble with our money and be bailed out once again if the risks “threaten to blow up our financial institutions.” The measure involves derivatives, which while highly profitable are also risky.
Dodd-Frank had required banks to establish subsidiary companies to do their trading using their own money instead of using federally-insured deposits, and the recent spending bill eliminates these rules and keeps this risky financial trading within the banks themselves.
While Warren spoke of the power many Wall Street Institutions have exerted on government, she took specific aim at Citigroup, “Many Wall Street institutions have exerted extraordinary influence in Washington’s corridors of power, but Citigroup has risen above the others. Its grip over economic policymaking in the executive branch is unprecedented.” As Warren tells us, “In virtually every economic policy discussion held in Washington, the point of view of the Wall Street banks is represented – so well represented in fact, it crowds out any other point of view.”
Citi has exerted extraordinary influence in economic policy making. Citigroup executives, more so than those from other banks, have consistently risen to positions of considerable power in every high level of government office. In fact, three of the last four of our Treasury Secretaries under Democratic Presidents have had Citigroup affiliations and our present Vice Chairman of the Federal Reserve, Stanley Fisher, was also a Citi executive.
One might think Citigroup a university, deliberately grooming its officials for positions in government. Or does it just seem that way to me?
It’s no secret that Citi received more TARP, FDIC and Fed bailout money than any other bank – to the tune of almost half a trillion dollars!
That gave them $140 billion more than the next biggest bank. Senator Warren is right when she says no one in Congress likes bailouts regardless of what party they are in. And, she is right that Americans are disgusted by Wall Street and the bailouts.
[tweetthis]Americans are disgusted by #WallStreet & the #bailouts. ~@SenWarren via @RichardMBowen #citigroup #2big2fail[/tweetthis]
Yet, once again we are playing to Citi – with a provision that will put tax payers on the hook for bailing out the banks. Citigroup may, in fact, be too big to fail and their influence has prevented legislation to break up the banks, giving them even more power. However, this time we may all be paying off an even higher bill.
It’s not surprising that Warren is asking for tougher legislation so that we are not squeezed by the iron fist of the too powerful financial institutions that have become monopolies. We should be asking ourselves how to implement appropriate steps, not eliminating much needed controls.
If Dodd-Frank isn’t cutting it then what will? We should be asking how it’s possible that a bank can wield such power over Congress that it can dictate what bills are passed. Such power endangers our economy and the very foundation of democracy on which this country was built.
Senator Warren is incensed. So am I, as should you. We are counting on our regulatory agencies to prevent another debacle yet these same regulatory agencies know that our largest financial institutions do not have the safeguards in place they should if they take on too much risk. So we rewarded their abject failures before and by taking out the new provisions we are setting us up to do so again.
This country is built on the concepts of entrepreneurship, not monopolies who are allowed to have a strategic hold on our government. It’s built on the principles that encourage its citizens to strive to better their circumstances for themselves and their families. Is it just, moral and ethical to reward incompetence at the top at our own expense?
We as taxpayers need to speak up. Warren is right, enough is enough.
[tweetthis]Taxpayers need to speak up. @SenWarren is right: enough is enough. via @RichardMBowen #citigroup #2big2fail[/tweetthis]
Remarks by Senator Warren on Citigroup and Its Bailout Provision – December 12, 2014
Elizabeth Warren Was Right – The Links Between Citigroup and Governmen Run Deep
Elizabeth Warren Blasts Citigroup From the Senate Floor
Wall Street Journal Op-ed: The Fed Needs Governors Who Aren’t Wall Street Insiders