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Blanche Lincoln, once a senator for Arkansas (1998-2010) noted for her fealty to Wall Street, has had one hope for immortality: Section 716 of the Dodd Frank Financial Reform Act, known to history as the Lincoln Amendment.
Though larded with loopholes, the amendment, introduced by Lincoln when facing a tough primary challenge from a progressive, made it harder for banks to trade derivatives.
Now, even that is about to be blown away like chaff, thanks to proposed legislation a mere four lines long, beautifully pure in its austere simplicity.
Lincoln’s amendment banned swaps – derivatives – trading by anyone on the receiving end of “Federal assistance.”
Federal assistance, otherwise known as taxpayer subsidies in the form of deposit insurance as
well as bailouts from the Federal Reserve is of course what the banks live by. Strenuous efforts to gut the amendment, by Lincoln herself among others once she had won her primary, were not totally successful, thereby impinging on financial industry trading profits.
H.R. 1838, introduced by Republican Nan Hayworth of New York (herself no slouch in collecting Wall Street cash) sets things to rights in a straightforward manner. It simply states “Section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (15 U.S.C. 8305) is amended by striking subsections (a) through (h) and (j) through (m) and redesignating subsection (i) as subsection (a).” That’s it.
Assuming its eventual enactment (and why not?), derivatives trading, which was what brought the financial house down in 2008, can again flourish completely unfettered.
Just to be cruel, she or whoever wrote this has called it “The Swaps Bailout Prevention Act.”