No shame on ‘Street’

Opinion: April 2, 2010 at 12:00a.m.

By SARAH ANDERSON

McClatchy-Tribune

After the financial meltdown of 2008, I remember thinking that I wouldn’t be running into Wall Street lobbyists much anymore in the halls of Congress.

If you’d just driven the economy off a cliff, wouldn’t you be embarrassed to show your face on Capitol Hill? And surely, I thought, these firms wouldn’t spend their taxpayer bailout money on high-priced lobbyists.

Boy, was I naive. Last year alone, Wall Street spent more than $200 million to block efforts to rein in their recklessness.

And the investment is paying off. The financial reform bills moving through Congress are full of holes for greedy bankers to exploit.

New bill

Just look at the Senate Democrats’ new bill. One place you can see the Wall Street lobbyists’ handiwork is in all the exemptions for derivatives, the complicated financial instruments blamed for accelerating the crisis.

Analysts say the bill would exempt up to 40 percent of derivatives from being traded on open exchanges. This means that high flyers could still do their riskiest gambling in secret.

This type of over-the-counter trading is kind of like backroom poker. In most cases, it adds no value to the real economy, so it’s exactly like betting. Except if the game goes really badly, it’s not one unlucky gambler who stands to lose his shirt — it’s the entire economy.

While we’re still struggling to recover from the last catastrophe, it should be unimaginable that derivatives not be subject at least to a modest requirement that they be traded on exchanges.

Anderson is Global Economy Project director, Institute for Policy Studies.