U.S. Rep. Kevin Yoder is doubling down on his dubious explanation that the controversial amendment he sponsored last week in the huge “cromnibus” spending bill passed by Congress was all about helping community banks and farmers.
The amendment, written by lobbyists for Citigroup (that’s the first red flag), repeals a provision in the 2010 Dodd-Frank law that says banks cannot rely on protection from the Federal Deposit Insurance Corporation when they trade their riskiest assets. In other words, go ahead and gamble, but don’t expect the taxpayers to bail you out.
Yoder, a Republican from Overland Park, Kan., said in his email newsletter that his amendment doesn’t apply to truly risky transactions, but instead removes a burden for smaller banks.
It’s complex, so here is the congressman’s explanation in his own words:
“The provision amends Section 716 of Dodd-Frank, which would have increased transaction costs by requiring banks to push out almost all derivative business into separate entities. The derivatives associated with this provision are not the same as the riskier Collateral Debt Obligations (CDOs) that many blame for causing the mortgage crisis. CDOs remain subject to the push out even after the adoption of this provision.
Without this change, small regional banks would be in danger of being unable to serve the lending needs of their customers. Ultimately, farmers, manufacturers, and other Main Street businesses would be harmed the most. I opposed the taxpayer bailouts in 2008 and stand strong by the provisions in existing law that prohibit bailouts from ever happening again. This fixes an onerous provision of Dodd-Frank that actually made markets less safe and increased the cost of lending. It does not make any change to provisions preventing bailouts.”
Is he right? Not according to Democratic U.S. Sen. Elizabeth Warren, who urged the Senate to reject the spending bill because of Yoder’s amendment.
In a speech on the Senate floor, Warren addressed the explanation Yoder is trying to push:
“The fact sheet Republican appropriators sent around to their members explaining the provision does not describe it accurately,” she said. “According to this fact sheet, the provision in question would protect farmers and other commodity producers from having to put down collateral to get a loan, expand their business, and hedge their production. Whatever you think about the bill, that description is flatly wrong. In fact, that description applies to yet another Wall Street reform rollback that the Republicans are pushing right now, which is attached to a completely different bill. I do not know if Republican leaders in the House are deliberately trying to confuse their members in voting for a government bailout program, or whether they cannot keep straight on their efforts to gut financial reform.”
So, who’s version do we go with here? Yoder’s? Or Warren’s?
No contest. Warren is the expert. Protecting taxpayers from the greed of the financial sector is her wheelhouse.
Yoder, as the nonpartisan research organization Maplight points out, has acquired some expertise in accepting donations from big banks. Since the beginning of 2013, he’s received $29,000 from the political action committees of Citigroup, Goldman Sachs, Bank of America and JPMorgan Chase, which represent more than 90 percent of the swaps market. That doesn’t place Yoder in the top ten recipients of the big banks, but he’s close.
I don’t think Yoder will fool many people. If his amendment was all about farmers and community banks it wouldn’t have been drafted by Citigroup.
Here’s Warren again:
“Here is the bottom line — a vote for this bill is a vote for future taxpayer bailouts of Wall Street. When the next bailout comes, a lot of people will look back to this vote to see who was responsible for putting the government back on the hook to bail out Wall Street.”
If that happens — when that happens? — one of the names in bold print will be U.S. Rep. Kevin Yoder.
To reach Barbara Shelly, call 816-234-4594 or send email to firstname.lastname@example.org. On Twitter @bshelly.