(2014-12-16) Another Omnibus

Time for another Omnibus deal.

On December 13, the Senate passed by a vote of 56 to 40 the FY 2015 omnibus appropriations bill, H.R. 83. The House approved the same bill on December 11, 219 to 206. The President (Barack Obama) is expected to sign the bill soon. The omnibus is a package of 11 FY 2015 spending bills, providing funding through the end of FY 2015 (September 30, 2015) for federal agencies.

A shocking provision in the bill undoes a piece of Dodd Frank Finance Reform that prevented an FDIC Bail-Out of Wall St firms who lose money on risky bets.

• Dec11: The very idea was abhorrent to many Democrats on Capitol Hill. And some were stunned that the White House would support the bill with that provision intact, given that it would erase a key provision of the 2010 Dodd Frank financial reform legislation, one of Obama’s signature achievements. But perhaps even more outrageous to Democrats was that the language in the bill appeared to come directly from the pens of lobbyists at the nation’s biggest banks, aides said. The provision was so important to the profits at those companies that J P Morgan's chief executive Jamie Dimon himself telephoned individual lawmakers to urge them to vote for it, according to a person familiar with the effort. The White House, in pleading with Democrats to support the bill, explained that it got something in return: It said that it averted other amendments that would have undercut Dodd-Frank, protected the Consumer Financial Protection Bureau from Republican attacks, and won double digit increases in funds for the Securities and Exchange Commission and the Commodity Futures Trading Commission. "The president is pleased," said White House spokesman Josh Earnest.
• Dec12: Elizabeth Warren made an angry speech in hopes of stopping Senate approval. Here we are -- five years after Dodd-Frank – with Congress on the verge of ramming through a provision that would do nothing for middle class, do nothing for community banks – do nothing but raise the risk that taxpayers will have to bail out the biggest banks once again.
• Dec13: The net effect of the changes in the Omnibus spending bill would be to expand permissible swaps activities within a bank and to only exclude swaps based on asset-backed securities that are unregulated and not of a credit quality. All very technical, but the net result is to allow Citigroup, JP Morgan Chase and others to use the Fed’s discount window to borrow money in case of a crisis that roiled the derivative market for credit swaps again as took place in September 2008. (Credit Crisis 2008)
• Dec14: Is Elizabeth Warren's strategy ever working?
• Dec15: The language was introduced by Kevin Yoder last summer. (Why are we only hearing about it now?) Yoder has been mum about the spending package since it passed the House. His office hasn't responded to multiple requests for comment on why he slipped the Citigroup language into it. The press statements on his website say nothing about the provision or the spending bill. There are no posts about it on his Facebook page. He's said nothing in his Twitter feed.
• Dec16: Elizabeth Warren is correct about the depth/breadth of CitiGroup's ties with the government. In many ways, however, this isn't One Degree of Citigroup. It's One Degree of Robert Rubin. After his stint as President Bill Clinton's Treasury secretary, Rubin decamped for the newly-created Citigroup, which formed after Congress passed a law ending the Depression-era prohibition on banks and securities firms from operating under the same roof (Glass Steagall). And then Rubin's long list of proteges followed.