Elizabeth Warren explains GOP's putting Americans' at risk
Senator Elizabeth Warren came out swinging on The Rachel Maddow Show about the Omnibus bill that Congress is attempting to pass. "What the Republicans did is they pushed a bunch of terrible financial bills in the negotiations," Elizabeth Warren said. "A lot of attacks on Dodd-Frank, on the Consumer Protection Bureau, and the Democrats beat them back. But this is the provision that stayed and it is a real stinker."
In 2008 the world economy collapsed not because of anything middle class or poor America did. The collapse was a foreseen economic calamity. The titans of finance, the people America wrongly puts in faith in to define our economy proved that after all, it is the average American they depend on when their financial experiments fail.
"What this one is about is that after the financial crash," Elizabeth Warren said. "We said to these big financial institutions, you've got to take the riskiest part of your trading, separate it out so that if it explodes, when it explodes, it's not going to take down the insured part of the business, the deposits that are insured by FDIC insurance. ... But what happens now in the spending bill is they just repeal that provision. Which means that the taxpayers ultimately will be on the hook. If they get out there, engage in derivative trading and it blows up, the entire financial institution or the entire economy. ... This is a basic and soundness provision. And it only applies to just a handful of the biggest financial institutions in this country."
The activities that the banks want to engage in, derivatives trading with government backed insurance deposits is no different than gambling, legalized gambling. These financial instruments do nothing to create a product or service for the American economy. They inflate wealth from the hope that someone will be willing to purchase these technically worthless financial instruments from someone at higher prices than which they were purchased irrespective of what the financial instruments actually represent.
As a simple example, one could create a financial instrument that says the Stock Market will appreciate by at least 10 percent in 2 years. The instrument is 'derived' (hence derivative) from the performance of the Stock Market. Another financial instrument could be created to insure that if the derivative fell in value, it would be covered by an insurance policy. That insurance policy could be backed by some other insurance policy. The investment of that second insurance policy could conceivably indirectly own some of the original "Stock Market" derivative. In effect, a house of cards that is based on nothing but a potentially circular paper trail of financial instruments. This is a simplistic view. The titans of finance make it seem more complicated with fancy and impressive sounding names to make it seem as if they are doing something of value.
Why would Congress go out of its way to placate these financial institutions that pilfers us all? "Well, they can make more money," Elizabeth Warren said. "If they can do all this business under the umbrella of their insured operations. They want the American taxpayers to subsidize their risk taking. They'll take all the profits when it works and push the losses off on everyone else if it blows up."
It is time for Americans to wake up. We continue to be played as pawns in a game we have ceded to those who least produce or serve this country. Only when we take the time to engage and penalize those that continue to sell us out will a change be made.