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The real reason for Washington's derivatives gift to banks 

December 30, 2014
Nicole Gelinas, LA Times

As we embark on the seventh year since the historic collapse of the Lehman Bros. investment bank, it's clear we haven't fixed what broke the economy in 2008. Big banks still control Congress. Workers remain acutely vulnerable to another financial crisis. But we can't blame only Wall Street for gaming the system. Wall Street does what America wants it to — lend American families money they can't afford to pay back. Fixing Wall Street is easy. But then we would have to fix the problems that Wall Street's machinations mask. And that's hard.

This month, the lame-duck Congress gave Big Finance an early holiday gift. For four years, large financial firms have tried to eliminate part of the Dodd-Frank financial reform law. In signing the law in 2010, President Obama outlawed banks' practice of taking money from regular folks' bank accounts and using it to speculate on risky financial derivatives — financial instruments that allow their holders to vastly magnify their bets in bonds, oil and other markets, making those bets more dangerous.

Read more: LA Times

 

 
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