Last night, the Senate adjourned for the year, thus bringing to an end to the "lame duck" session of Congress. The major piece of legislation passed in the lame duck was the "Cromnibus" spending bill. Campaign for Liberty Chairman Ron Paul discussed the Cromnibus in his weekly column. James Bovard also has a must-read column on the Cromnibus, linked here with excerpts below:
After spending much of the Fall re-applying for their current jobs, members of Congress returned to Washington and heaved all of their overdue work into a 15-pound pile of paper which no individual member had time to comprehend before approving. House Speaker John Boehner pooh-poohed any concerns about the process: “Understand, all these provisions in the bill have been worked out in a bicameral, bipartisan fashion or else they wouldn’t be in the bill.” And never before in American history have there been any problems from the deals that Republican and Democratic pooh-bahs carved out behind closed doors.
The bill unleashes a blizzard of new dictates regarding marijuana in Washington, D.C., bread in school cafeterias, sleepy truckers, portrait painting in federal offices, reckless speculation by federally-insured banks, campaign contributions from rich folks, lecherous congressional aides, and dozens of other subjects. Both conservatives and liberals are outraged at provisions popped into the bill with no warning or public hearing. But congressmen believe they are entitled to rule regardless. North Carolina Republican Rep. Robert Pittenger captured that mindset perfectly when he declared shortly before the vote: “Let’s go govern.”
Some defenders of Congress act like the Cromnibus process is an aberration—like a once-a-decade family reunion where a thrice-removed cousin goes on a bender and smashes up a few tables. But this is more like the depraved uncle who goes on a liquored-up rampage at every Christmas dinner.
Cromnibus would not have passed without congressmen’s grandiose self-delusions of benevolence. California Democratic Rep. Sam Farr yesterday urged his colleagues to support Cromnibus: “Hold your nose and make this a better world.” Politicians believe they are so superior to common folks that citizens will be better off even when politician have little clue of what they are dictating to the American people.
Earlier this week, many congressmen justifiably railed at Obamacare architect Jonathan Gruber for publicly scoffing at the stupidity of voters. But do congressmen not recognize that they have “out-Grubered” Gruber by carelessly rubber-stamping a 1600-page Pandora’s Box?
It will be weeks or months until we learn all the ways that the Cromnibus imperils Americans’ liberties and wastes their tax dollars. But we already know that the struggle between Democrats and Republicans is a myth. There is only one party in Washington: the Know Nothing Party.
One provision that was snuck into the Cromnibus was a provision allowing banks to receive federal assistance for "swap out" transactions ... yea, the lame duck Congress put the taxpayer on the hook for future big bank bailouts. Paul-Martin Foss at the Carl Menger Center for the Study of Money and Banking provides an excellent analysis of this provision here, with excerpts below:
The push-out provision basically states that any “swap entity” as defined in the section cannot receive federal assistance if they engage in swap activity. This also applies to insured depository institutions (banks) that engage in swaps outside of certain narrow swap activity directly related to their depository activities. Federal assistance is defined as participation in Federal Reserve discount window lending, certain Federal Reserve credit facilities, or loans or guarantees through FDIC. What is important to keep in mind is that this provision of law does not prohibit swap activity, it merely states that if you engage in swap activity and don’t meet the exemptions of this section, or if you don’t spin your swap activity off into a separate entity (push-out), you can’t receive assistance (i.e. bailouts) from the Federal Reserve or FDIC. In other words, no taxpayer subsidies for companies who engage in certain swap activity.
What the language put into the omnibus did is significantly weaken those provisions of law. While there was already an exclusion in the push-out rule for some activities of FDIC-insured banks, this new language expanded that loophole to include uninsured agencies or branches of foreign banks. So foreign banks engaging in swap activities in the US are now able to receive bailouts from the Fed or from FDIC, which they previously were not able to get. It also expands the types of swap activities that FDIC-insured banks are able to engage in, including swaps based on asset-backed securities. Remember the AAA-rated mortgage-backed securities that ended up being completely worthless? Well, banks can now engage in swap activity with these types of asset-backed securities and have it backed up by government guarantees. As has been widely reported in the past, the language of H.R. 992 that has now been passed in the omnibus was largely written by Wall Street bank lobbyists.
Tim Carney at the Washington Examiner provides some more background on this deal.
In a don't-blink-or-you'll miss it moment, Congress rushed through legislation imposing new sanctions on Russia. The legislation passed the House late last Friday after the Cromnibus vote, when there were only three Representatives on the floor. The Senate then passed the bill late Saturday night after the Cromnibus vote. The bill was introduced the day it passed the House, and the text was not available online until after it passed the House.
Former congressman Dennis Kucinich has a good write-up on this bill at the Ron Paul Institute.
Tags: Russia, Dodd-Frank, Crominubus