Sen. David Vitter teams with Democrat Elizabeth Warren to fight spending bill … – NOLA.com

John Hoeven, Ben Cardin, Chuck Grassley, John Barrasso, Jay Rockefeller

Senators John Hoeven, R-N.D., from left, Ben Cardin, D-Md., Chuck Grassley, R-Iowa, John Barrasso, R-Wyo., and Jay Rockefeller, D-W.Va., far back right, walk from the Senate subway on Capitol Hill in Washington, Friday, Dec. 12, 2014. President Barack Obama on Friday urged the Senate to ratify a $1.1 trillion spending bill that has roiled his Democratic Party, judging it an imperfect measure that stems from “the divided government that the American people voted for.” (AP Photo/Manuel Balce Ceneta)

WASHINGTON — Sen. David Vitter, R-La., has teamed with Sen. Elizabeth Warren, D-Mass., on an amendment that would remove a provision from the government funding bill that they say allows taxpayer bailouts to financial institutions that engage in risky derivative trading.

The amendment isn’t likely to succeed because enactment would delay final action on the $1.1 trillion spending bill that the House passed Thursday night. House members have left town, and stripping the provision would require another House vote.

The House gave the Senate more flexiblity Friday, voting by voice vote, in a near empty chamber, for legislation funding the government until Wednesday.

The Senate could ignore that measure, though, and vote on the $1.1 trillion spending bill late Friday or Saturday, including the provision that Warren and Vitter want to remove.

Still, the pairing of Vitter,  a conservative and Warren, a liberal, on restoring a key element of the 2010 Dodd Frank law, drew some interest. Republicans, including Vitter, tried to block Warren from taking over as head of the board created by Dodd Frank to protect consumers.

Vitter has previously teamed with liberal Democratic Sen. Sherrod Brown of Ohio against policies they believe encourage too big to fail banks – banks that are so large that their failure would have such a dire impact on the economy as to almost require government bailouts – as occurred during the 20008 economic crisis.

Warren and Vitter both agreed it was wrong for Congress to add a last-minute provision to a spending bill allowing derivative trading to be included in transactions covered by government insurance programs.

“Ever since the new financial regulations went into place, Wall Street has been working behind the scenes to open another loophole so they could gamble with taxpayer money and get bailed out when their risky bets threaten to blow up our financial system,” Warren said. “Congress should not put taxpayers on the hook for another bailout, and this giveaway that was drafted by Citigroup lobbyists has no place in a critical government funding bill.”

Added Vitter: “Before Congress starts handing out Christmas presents to the megabanks and Wall Street — we should vote on this bipartisan amendment. We need to remove these risky derivatives that aren’t even necessary for normal banking purposes and would only make future taxpayer funded bailouts more likely.”

The American Banking Association argued that stripping Section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that prohibits federal insurance to financial institutions that engage in certain derivatives activities is the right move.

“The majority of banks, including community banks, that use swaps do so in order to hedge or mitigate risk from their ordinary business activities, including lending.   Hedging and mitigating risk are not only good business practices, but are important tools that banks use to help borrowing customers hedge their own business risks,” said ABA Executive Vice President James Ballentine. “The push-out requirement to move some swaps into separate affiliates makes one-stop shopping impossible for businesses ranging from family farms to energy companies that want to hedge against commodity price changes.”

President Barack Obama urged senators to approve the spending bill, even though it has provisions he doesn’t like.

If he could write the bill, Obama said, “I suspect it’d be slightly different.

“That is not the circumstance we find ourselves in, and I think what the American people very much are looking for is some practical governance and the willingness to compromise.”

But Sen. Bernie Sanders, I-Vt., said it is irresponsible to allow banks to resume the same activities that led to the 2008 economic crisis.

“Anyone who thinks that Congress regulates Wall Street has got it backwards,” Sanders said.

Several news organizations reported that the Dodd Frank provision was drafted by lawyers for Citibank, and inserted into the spending bill by House Financial Services Chairman Jeb Hensarling, R-Tex. Hensarling is the same lawmaker who opposed major changes in the 2012 Biggert-Waters law to protect homeowners from large flood insurance premium increases. House leaders worked around him to help pass a bill rolling back some of the largest increases.

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