Treasury Secretary Jack Lew has said he would tell President Obama to veto any financial deregulation slipped into Congress’ end-of-the-year spending bills.
“My recommendation to the president would be that if there are legislative measures that will roll back the clock, that would take us back towards where we were before the financial crisis, I would recommend a veto,” he said in an interview with The Huffington Post.
Congress must pass a spending bill to fund the government into the New Year and Big Bank lobbyists have been pushing hard to get riders into the bill to scale back regulation.
Since the new funding bill is a do-or-die scenario, bankers are hoping that pro-regulation Congressmen would swallow the pill to save the government.
The Volcker Rule prevents banks from doing speculations and betting on derivatives. Essentially, banks use their client’s money as collateral on some risky investments which could have a big pay off for the bank, but no benefit to the client who’s money the bank is gambling with.
“Our general rule is, it is inappropriate to be putting controversial policy issues into must-pass bills. So we have taken a broad position not to use the process in that way,” Jack Lew said. “The thing I wanted to make clear is, just as it was not acceptable to us when there were proposals to repeal Dodd-Frank straight up, it is not acceptable for us to dismantle it piece by piece.”
Earlier this month the Republicans indicated that they would try and push the envelope regardless.
“Democrats insisting that there not be policy riders is … a big mistake,” said Sen. Roy Blunt (R-Mo.). “There’s never been an omnibus bill that didn’t have policy riders. This bill will have policy riders in it, and I think it’s only a process of seeing how many and how far they go.”
Senator Elizabeth Warren who made a name fighting Big Banks taking advantage of those on Main St. has said that the Republicans are going in the wrong direction.
“The law isn’t perfect, and some of us think we need more accountability to make sure big financial institutions don’t threaten the economy again, but House Republicans are pushing in the opposite direction,” Warren wrote in a Facebook post.
Congress has a deadline of Dec. 11 to pass a spending bill.
[The Huffington Post] [U.S. News] [Politico] [Inside Sources]