Senator Elizabeth Warren recently got a lot of attention by claiming that the new budget bill would allow banks to get govt bailouts for risky investments in derivatives such as credit default swaps which were the cause of the 2008 financial collapse. As usual the Senator is full of crap. What changed is called the push-out rule. The push-out rule complicates the regulatory framework. Another provision of Dodd-Frank, called the Volcker Rule, largely takes care of the problem. It prohibits banks from using federally insured deposits to make investments for the banks own proprietary accounts. And that would include derivatives like credit default swaps. Pushing these transactions out of the banks means they would be less regulated. Once again, Senator Warren and the media have fed the public a big lie. The change means more regulation on these types of investments and the Volker rule disallows the use of FDIC insured deposits which helps prevent govt bailouts. Exactly the opposite of what Senator Warren claims.
Posted on: Sat, 20 Dec 2014 19:47:46 +0000
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