CBO Warns Bipartisan Bank Bill Heightens Risk of Financial Crisis

The Intercept: “The Congressional Budget Office confirmed on Monday [March 5, 2018] that bank lobbyists had successfully altered language of the so-called Citigroup carve-out, potentially allowing mega-banks Citi and JPMorgan Chase to add leverage and put more debt-fueled risk on their balance sheets. CBO gave Citi and JPMorgan a 50 percent chance of convincing regulators to let them take the carve-out, and their lobbyists are still working to increase that probability to 100 percent. Factoring in the reality that the major banks will be lobbying regulators in the Trump administration could plausibly increase the likelihood of their success. CBO’s cost estimate of S.2155, the bipartisan bank deregulation bill that faced its first test vote today, was obtained by the Washington Post on Monday and released publicly Tuesday morning. S.2155 would cost taxpayers $671 million over a 10-year period, CBO estimated, because of the increased possibility of bank failures and financial crisis from using more leverage and other deregulatory changes. “The probability is small under current law and would be slightly greater under the legislation,” they concluded…”

The Intercept – Senate Claims to Fix Its Wall Street Bill, but a Look at the Text Says It’s Still a Giveaway – “Instead of Taking on Gun Control, Democrats Are Teaming With Republicans for a Stealth Attack on Wall Street Reform…A bill that began as a well-intentioned effort to satisfy some perhaps legitimate community bank grievances has instead mushroomed, sparking fears that Washington is paving the way for the next financial meltdown. Congress is unlikely to pass much significant legislation in 2018, so lobbyists have rushed to stuff the trunk of the vehicle full. “There are many different interests in financial services that are looking at this and saying, ‘… there’s finally going to be reform to Dodd-Frank that may move, let me throw in this issue and this issue,’” said Sen. Chris Coons, D-Del., in an interview. “There are a dozen different players who decided this is the last bus out of town.” And Coons is a co-sponsor of the bill…”