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Citigroup is Holding Congress Hostage

Behind closed doors, bank lobbyists convinced Congressional leaders to include language written almost entirely by Citigroup in the year-end spending bill (called the “CRonmnibus”).

Citigroup’s language rolls back a key piece of Wall Street reform known as “swaps pushout.”  Swaps pushout is just common-sense: it insists the riskiest derivatives must be held in a separately-capitalized entity, not in a bank’s FDIC-insured accounts.

Why Does Wall Street Want This?

Wall Street has pushed for a rollback of this measure because keeping derivatives in FDIC accounts saves them money: creditors charge lower interest, as FDIC accounts are seen as having the backing of the federal government. And as Peter Eavis documented previously for the NYTimes, this bill helps Citigroup (who received more bailouts than any other bank) keep their costs low, because they own a lot of the risky derivatives that swaps pushout affects.

 

Who’s spoken out already?

Democrats are in an uproar over this deal. House minority leader Nancy Pelosi has said she is “deeply troubled” that this Wall Street provision is included in the funding bill. Representative Maxine Waters said she was: “disgusted” at this back room deal. She spoke out today on the House floor:

And Senator Warren spoke out on the floor, saying “Citigroup is large, and it is powerful, but it is a single private company, it shouldn’t get to hold the entire government hostage.”:


Senator Warren is joined by a chorus of others, including  the U.S. Progressive CaucusTom Hoenig of the FDIC, and many organizations, including Americans for Financial Reform, Public Citizen, the AFL-CIO, us at Other98.org, Demos, the Campaign for America’s Future, and even former Rep Barney Frank.

How Can We Help?

You can help us make sure that Wall Street doesn’t get to hold all of Congress hostage. Tell Democratic leadership to REJECT this horrible deal. Click here to tweet the following at Rep Nancy Pelosi, Senator Barbara Mikulski and Senator Harry Reid:

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