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1 step forward, 2 steps back

While it was refreshing to see Congress pass the recent bipartisan spending bill to keep the government operating for another year, the 1,600-page budget bill contained some surprise provisions that were a gift to big banks and could come back to...

While it was refreshing to see Congress pass the recent bipartisan spending bill to keep the government operating for another year, the 1,600-page budget bill contained some surprise provisions that were a gift to big banks and could come back to haunt the economy.

One of the most controversial measures included in the bill is a provision that rolls back part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The new provision, originally written by Citigroup lobbyists, allows entities insured by the Federal Deposit Insurance Corporation to trade complicated financial instruments known as custom swaps, a type of derivative.

In a move to get big banks back into the traditional banking business and away from risky trading that helped crash the economy in 2007-2008, Dodd-Frank forced banks to “push-out” their custom swaps to subsidiaries not insured by the FDIC.

Just four banks, Bank of America, Citigroup, Goldman Sachs and JPMorgan Chase, control more than 90 percent of the banking industry’s swaps market.

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How much did campaign contributions influence the vote in Congress?

A MapLight analysis shows that Political Action Committees set up by Bank of America, Citigroup, Goldman Sachs and JPMorgan Chase (banks representing more than 90 percent of the swaps market) gave on average 2.6 times more money to U.S. House members who voted “yes” ($9,576) than to those who voted “no” ($3,726).

Those same bank PACs gave more than three times more money to Democratic House members who voted “yes” ($10,674) than to those who voted “no” ($3,398).

Those bank PACs gave more than twice as much money to Republican members of Congress who voted “yes” ($9,108) than to those who voted “no” ($4,388).

In the Senate, the PACs gave, on average, 1.7 times more money to senators who voted “yes” ($6,301) than to those who voted “no” ($3,738).

They gave, on average, 1.8 times more money to Democratic senators who voted “yes” ($5,302) than to those who voted “no” ($2,952).

They gave, on average, 1.6 times more money to Republican Senators who voted “yes” ($7,854) than to those who voted “no” ($4,861).

Since Jan. 1, 2013, the top four banks have spent more than $30 million lobbying Congress and federal agencies.

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Are they just civic minded? Or do they expect to get something in return for their generous contributions?

Also taking a hit in the budget bill are federal agencies tasked with collecting taxes and regulating Wall Street.

Tax collectors will have to get by with a lot less money thanks to a second straight year of cuts to enforcement.

The Internal Revenue Service’s enforcement division budget was cut to under $4.9 billion for 2015, as conservative lawmakers reacted to  what they consider an IRS witch hunt against conservative non-profit groups that work to influence elections.

The IRS will have to enforce U.S. tax law in the coming year with roughly half a billion fewer dollars than it had two years ago.

And the budget also starves the Commodity Futures Trading Commission, preventing the agency from staffing up in the coming year to keep up with its growing role in regulating the financial industry.

Don’t look now, but the country just moved a little closer to the next Great Recession.

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