While you weren’t watching — maybe you were trying to figure out what in heck the Supreme Court’s been talking about on health care — the Wall Street lobby has been up to its old games in the House of Representatives this week over an issue that’s even harder to comprehend than an oral argument on the Commerce Clause. With bipartisan support, the big banks are sneaking through a couple of “technical amendments” to Dodd-Frank that seem hopelessly arcane but in fact could lay the groundwork for another financial catastrophe.
In case you’re still reading, one bill is H.R. 3283, or the “Swap Jurisdiction Certainty Act.” Like the name? CERTAINTY ACT. Sounds impressive, huh. Actually it’s totally Orwellian, along the lines of “War Is Peace,” “Freedom Is Slavery,” etc. What this baby does is to create enough UNcertainty in Dodd-Frank to allow U.S. banks to evade capital and margin requirements by exempting their foreign affiliates. So, if it becomes law, a foreign affiliate of Goldman could cut a swap or derivatives deal with a foreign affiliate of GM with no one watching and no capital posted, just as if 2008 never happened. And because banks are totally global, switching the lion’s share of their swap dealing abroad would be as easy as pushing a button.