Democrats are calling a banking measure slipped into the $1 trillion federal spending bill so risky that it could lead to another financial disaster similar to the Great Recession. However, they are torn between fighting to remove the provision and passing the bill in time to prevent another government shutdown.
"The House of Representatives is about to show us the worst of government for the rich and powerful," Sen. Elizabeth Warren, D-Mass., said on the Senate floor on Wednesday. She asked her colleagues not to support a "deal negotiated behind closed doors that slips in a provision that would let derivatives traders on Wall Street gamble with taxpayer money and get bailed out by the government when their risky bets threaten to blow up our financial system," reported The Huffington Post.
Warren, who worked hard to reel in risky Wall Street behavior following the 2008 financial crisis, now stands to watch her hard work, and potentially taxpayer money, go up in flames should the spending bill pass unchanged.
The provision under dispute was slipped into the last pages of the 1,600-page spending bill, and would allow Wall Street banks to once again trade risky financial derivatives from subsidiaries insured by the Federal Deposit Insurance Corp., which could leave taxpayers stuck paying for any losses incurred, said HuffPo.
This sort of risky trading was commonplace in the years leading up to the 2008 crash, but the 2010 Dodd-Frank financial reform law changed that by requiring banks to use other subsidiaries not insured by taxpayers.
Warren called on House Democrats to oppose the deal unless the Wall Street provision was removed.
"I understand compromise. I believe in compromise," Warren said during a press conference late Wednesday. "This isn't about compromise. This is about reckless behavior. It is about a giveaway to the largest financial institutions in the country.
"Right now the fight is in the House -- that's the fight we are going to pursue," Warren said as she declined to comment on whether she would use her power under Senate rules to stall the bill if it is passed by the House. "It's up to the House to strip this out. That's what keeps the government operating, that's what keeps a compromise omnibus bill moving forward without endangering the American taxpayer."
Rep. Maxine Waters, D-Calif., told reporters it was "unconscionable" to slip in the pro-Wall Street provision, HuffPo reported.
"This deal just does not make good sense," Waters said. "So we're here to say, we're not going to support the omnibus bill ... and we're going to spend every waking hour trying to pull this out of the omnibus bill."
The top Democrat on the House Rules Committee, Rep. Louise Slaughter, D-N.Y., criticized the provision for "rolling back regulations on risky behavior by big banks - the same sort of behavior that triggered the Great Recession."
However, some Democrats, like Barbara Mikulski, D-Md., the Senate Appropriations chair who acted as a chief negotiator in getting bipartisan approval for the bill, said that while she isn't pleased about the policy changes, she plans to adhere to the agreement.
Senate Majority Leader Harry Reid, D-Nev., is also reportedly remaining more neutral on the issue.
And while House Minority Leader Nancy Pelosi, D-Calif., and Whip Steny H. Hoyer, D-Md., both spoke out against the measure as well, but stopped short of calling for members to vote against it, The Washington Post reported.
Cutting back on risky Wall Street behavior is one of the Obama administration's proudest achievements. White House press secretary Josh Earnest commented on the issue, saying, "I don't think the vast majority of Democrats or even Republicans are going to look too kindly on a Congress that's ready to go back and start doing the bidding of Wall Street interests again."
But, he added, "We certainly don't want to see a government shutdown."
The bill must be approved by Congress by 11:59 Thursday night, or the government could be shut down once again.
