Judd Gregg and Ben Nelson: More Socialism Please

As we find our economy subsisting on massive government spending and no-strings-attached bailouts, borrowed, of course, from future generations, what solutions do the same leaders who got us into this mess offer?

You already know the answer — more government handouts.

The latest gambit?

Politicians like Judd Gregg and Ben Nelson are fighting to keep the crooked $600 trillion derivatives market unreformed. The dirty not-so-little secret about derivatives? In their current form, they are basically government insurance where the bailed-out mega-banks get to keep the premiums but the taxpayer pays the claims.

Senator Gregg points out that good, honest American companies like Harley-Davidson and Caterpillar use these derivatives to hedge against things like currency changes and costs of materials. Hedging against price fluctuations is something that any smart business would want to do and should be encouraged.

What Senator Gregg doesn’t point out is that companies can already do this WITHOUT secret derivatives. They just have to buy them on a market exchange or, if it’s something unusual or exotic, go to an actual regulated insurer like Lloyd’s of London. If Mariah Carey can get her legs insured, I am pretty sure that Caterpillar can find a regulated insurer to cover a seasonal drop in steel prices.

The reason no one wants to cut this scam off is because it works out great for everyone except the taxpayer/sucker who actually pays the claims. The buyers get cheap insurance backed by the US government, the banksters (the big four: JPMorgan Chase, Bank of America , Citigroup and Goldman Sachs) get to keep the premiums and WE THE TAXPAYER pay the claims — and trust me, AIG is just the tip of the iceberg (note: Fannie + Freddie) in this ongoing derivative bailout!

Just because a few good, American companies like Berkshire Hathaway (major stockholder: Ben Nelson) like getting a sweet deal from the taxpayer doesn’t mean that we should keep giving them one. This is especially true when CEOs like Warren Buffet already knew they were a deal too good to be true when they bought them. It is time for us to cut off their welfare checks.

Too many politicians in this country have decided that socialism buys votes, especially when their generation doesn’t have to pay for it. But thankfully, there are politicians willing to keep our great country from falling further into this abyss and are willing to put an end to this ridiculous taxpayer giveaway.

Call or write your Senator and tell them to support real derivative reform or that they will pay the consequences come election time.

The Speech: The Good, The Bad and The Missing

The Good: The president had strong language for backing real derivative reforms.

The Bad: Vague language about the “Volcker rule” will not stop Too Big To Fail; but a plan like this (or even one like this) for breaking up the current mega-banks and limiting their liabilities will.

The Missing: NONE of this matters while our cops still work for the crooks.

To wit:

Our main form of protection against these kinds of financial criminals, the SEC, remains woefully underfunded. The revolving door between government regulators and the high-paying banks they supposedly regulate remains as fluid as ever. And does it get any scarier than White House Counsel jumping from President Obama’s side one day to Lloyd Blankfein’s the next? Actually, I guess it does when institutions that should fear the government instead now just declare all-out war.

Meanwhile, the complicit ratings agencies remain a government-sponsored cartel paid by the banks for their favorable grades.

But what is the final backstop that is supposed to protect us next time around under this new plan? Well, Secretary Timothy Geithner explained today on Morning Joe that they would be able to stop the next bailout if only they had the authority to do so. Then finally, they could do things like wipe out equity holders, replace management… you know, kind of like the same steps that they were somehow magically able to do with GM.

But we all know the truth — no one will do that to the banks until they are no longer Too Big To Fail. As William Black so eloquently told Congress this week, Mr. Geithner and Chairman Bernanke already had that chance to do this to the big banks last time around and they chickened out.

The only way to keep this from happening again is to break up these big banks now and it is up to us to find people with the guts to do so. Hopefully, one of them will be our current President.

Email Dylan

Speaking Engagements, Interviews, Issue Advocacy, drop Dylan a line...

Stay connected with Dylan