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More Derivatives and Smaller Pensions Included in Funding Bill

Image: Citigroup reportedly close to a deal with Justice Department
epa04307604 A view of Citigroup logo at the offices in New York, New York, USA, 09 July 2014. The multinational banking and financial services corporation is reportedly close to a negotiated deal with the US Department of Justice that could cost the bank $7 billion US dollars (5.1 million euros) to settle a civil investigation into the bank's sale of mortgage investments. EPA/JUSTIN LANEJUSTIN LANE / EPA

In addition to the measure that eases the limits on campaign contributions to political parties, two others are gaining attention of the $1.01 trillion spending bill. One is the rolling back of key component of the Dodd-Frank financial regulation bill that passed in the aftermath of the economic crisis to rein in abusive practices of banks and financial institutions. The other is changes on up to one million retirees' pension plans.

On the insistence of the powerful banking lobby, Congressional negotiators included a provision that would ease the regulations limiting derivatives trading. The measure would allow banks to trade derivatives from government-insured banks. Derivatives are complicated products that are believed by some to have been a central cause of the economic fallout.

Democrats are now protesting the inclusion of the provision. Democratic Leader Nancy Pelosi said she is “deeply troubled” by the provisions inclusion in the spending bill.

Massachusetts Democratic Sen. Elizabeth Warren, who has built her career on oversight of Wall Street, urged her colleagues “to withhold support … until this risky giveaway is removed from the legislation.”

“We put this rule in place because people of all political persuasions were disgusted at the idea of future bailouts, and now, no debate, no discussion, Republicans in the House of Representatives are threatening to shut down the government if they don't get a chance to repeal it,” Warren said.

While not seen as nearly as controversial, cuts to some current retirees’ pension plans have been included in the spending bill. It would impact up to a million people who have retirement plans in multiemployer pension plans that are on the verge of collapse.

The deal was reached by the top two members of the Education and the Workforce Committee, Chairman John Kline, R-Minnesota, and Rep. George Miller, D-California. It has the support of labor and business groups and is meant to prevent the government from having to bail out insolvent plans while ensuring that retirees still receive a portion of their benefits.


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