Big Banks Just Claimed A Constitutional Right To A Taxpayer Subsidy
05/04/2016 04:35 pm ET | Updated 1 day ago
7.5 K
Kimberly White/Getty Images
Jamie Dimon is CEO of JPMorgan Chase, one of the banks that stands to benefit the most from the new lobbying push.
WASHINGTON — Big banks get a lot of free money from the federal government. And their lobbyists think they have a constitutional right to it.
Each year, the government pays billions of dollars to banks to thank them for being part of the Federal Reserve system. These payments aren’t structured to influence or encourage any particular business activity — banks just get straight cash, no matter what they do. The subsidy is economically useless. It doesn’t push interest rates lower or boost pay for bank tellers or help more farmers qualify for loans. The money just goes straight to the bottom line, boosting bank profits.
Late last year, Congress passed a law limiting these payouts, using the savings to help pay for a highway bill. While lawmakers originally proposed trimming the subsidy by $17 billion over five years, the legislation ultimately only cost banks $2.7 billion, thanks to a late compromise that allowed smaller banks to keep receiving full payment. Since the subsidies are scaled to the size of each bank, the lion’s share of the $2.7 billion will come from a small number of big firms.
The top lobbyist for the American Bankers Association wrote a letter to the Fed last week calling the subsidy cuts “an unconstitutional taking of member banks’ property without compensation.”
“The government’s actions ... amount to a regulatory taking of member banks’ property,” ABA President and CEO Rob Nichols wrote.
You read that correctly. A bank lobbyist argued that banks have a constitutional right to money from the government.
The bank subsidy is a century-old relic from the earliest days of the Federal Reserve. When the United States established a central bank in 1914, it didn’t require all banks to participate in the new regulatory regime. Instead, Congress encouraged banks to take part by offering to pay a healthy dividend on stock that banks purchased in the new central banking system. This practice eventually became obsolete when Congress granted the Fed blanket power to regulate commercial bank reserves whether they had opted into the central banking system or not.
But Congress never got around to ending the subsidy after it changed the regulatory standards. Now the bank lobby is insisting that this dividend payment is property that the government is forbidden from seizing without compensation. The government agreed to pay banks in 1913, and changing course to lower those payments today would be theft, the ABA maintains.
The Fed can’t reverse a law passed by Congress. But the central bank’s leaders have been sympathetic to the bank lobby since both groups were caught flat-footed by the highway bill last year. When asked about the dividend in July, Fed Chair Janet Yellen lamely said that she didn’t want to discourage banks from participating in the Federal Reserve system — even though the Fed has the same oversight powers over banks whether they take part or not. In February, two experts at the Richmond Federal Reserve wrote that cutting the dividend could encourage growth in “shadow banking” — something that would only happen if the Fed and another agency, the FDIC, chose not to use their regulatory authority.
Nichols referenced the Richmond Fed paper in his letter before asking for help from the central bank.
“ABA understands that the proposed interim final rule is in pursuance of a decision made by legislation,” Nichols wrote, adding that his lobbying group “stands ready to assist the Board of Governors of the Federal Reserve with any appropriate measures that mitigate these concerns.”
The only “appropriate measures” available to the Fed are pressuring Congress or aiding the lobby group in a lawsuit to overturn the subsidy cuts. The Fed pressures Congress on behalf of big banks all the time, even though the law doesn’t technically consider this advocacy to be lobbying. The central bank’s general counsel, Scott Alvarez, has been especially adept at securing favors for banks through the regulatory process and publicly advocated for bank deregulation before a conference of bankers in 2014.
http://creditrating.einnews.com/article/324695460/E1d0CYQeGYjMnO7c
Uhhhhhh...wow.
05/04/2016 04:35 pm ET | Updated 1 day ago
7.5 K
-
Zach Carter Senior Political Economy Reporter, The Huffington Post
Kimberly White/Getty Images
Jamie Dimon is CEO of JPMorgan Chase, one of the banks that stands to benefit the most from the new lobbying push.
WASHINGTON — Big banks get a lot of free money from the federal government. And their lobbyists think they have a constitutional right to it.
Each year, the government pays billions of dollars to banks to thank them for being part of the Federal Reserve system. These payments aren’t structured to influence or encourage any particular business activity — banks just get straight cash, no matter what they do. The subsidy is economically useless. It doesn’t push interest rates lower or boost pay for bank tellers or help more farmers qualify for loans. The money just goes straight to the bottom line, boosting bank profits.
Late last year, Congress passed a law limiting these payouts, using the savings to help pay for a highway bill. While lawmakers originally proposed trimming the subsidy by $17 billion over five years, the legislation ultimately only cost banks $2.7 billion, thanks to a late compromise that allowed smaller banks to keep receiving full payment. Since the subsidies are scaled to the size of each bank, the lion’s share of the $2.7 billion will come from a small number of big firms.
The top lobbyist for the American Bankers Association wrote a letter to the Fed last week calling the subsidy cuts “an unconstitutional taking of member banks’ property without compensation.”
“The government’s actions ... amount to a regulatory taking of member banks’ property,” ABA President and CEO Rob Nichols wrote.
You read that correctly. A bank lobbyist argued that banks have a constitutional right to money from the government.
The bank subsidy is a century-old relic from the earliest days of the Federal Reserve. When the United States established a central bank in 1914, it didn’t require all banks to participate in the new regulatory regime. Instead, Congress encouraged banks to take part by offering to pay a healthy dividend on stock that banks purchased in the new central banking system. This practice eventually became obsolete when Congress granted the Fed blanket power to regulate commercial bank reserves whether they had opted into the central banking system or not.
But Congress never got around to ending the subsidy after it changed the regulatory standards. Now the bank lobby is insisting that this dividend payment is property that the government is forbidden from seizing without compensation. The government agreed to pay banks in 1913, and changing course to lower those payments today would be theft, the ABA maintains.
The Fed can’t reverse a law passed by Congress. But the central bank’s leaders have been sympathetic to the bank lobby since both groups were caught flat-footed by the highway bill last year. When asked about the dividend in July, Fed Chair Janet Yellen lamely said that she didn’t want to discourage banks from participating in the Federal Reserve system — even though the Fed has the same oversight powers over banks whether they take part or not. In February, two experts at the Richmond Federal Reserve wrote that cutting the dividend could encourage growth in “shadow banking” — something that would only happen if the Fed and another agency, the FDIC, chose not to use their regulatory authority.
Nichols referenced the Richmond Fed paper in his letter before asking for help from the central bank.
“ABA understands that the proposed interim final rule is in pursuance of a decision made by legislation,” Nichols wrote, adding that his lobbying group “stands ready to assist the Board of Governors of the Federal Reserve with any appropriate measures that mitigate these concerns.”
The only “appropriate measures” available to the Fed are pressuring Congress or aiding the lobby group in a lawsuit to overturn the subsidy cuts. The Fed pressures Congress on behalf of big banks all the time, even though the law doesn’t technically consider this advocacy to be lobbying. The central bank’s general counsel, Scott Alvarez, has been especially adept at securing favors for banks through the regulatory process and publicly advocated for bank deregulation before a conference of bankers in 2014.
http://creditrating.einnews.com/article/324695460/E1d0CYQeGYjMnO7c
Today at 2:18 pm by Rocky
» utube MM&C 4/26/24 Iraqi Dinar - US Treasury Exchange Rates- Focus - Banking Partnerships - Rate C
Today at 2:17 pm by Rocky
» Parliamentary efforts to transform Iraq into a global market for transferring Internet capacities
Today at 2:07 pm by Rocky
» A parliamentary committee that enriches the political forces: Stop plundering Iraq’s wealth and work
Today at 1:56 pm by Rocky
» Politician: Salem Al-Issawi is the most likely to assume the presidency of Parliament
Today at 1:55 pm by Rocky
» The price of the dollar is close to 145 thousand dinars؛ how much is $100 worth of transactions؟
Today at 11:57 am by wciappetta
» Al-Sudani: The world today is witnessing crises whose impact has been reflected in the global econo
Today at 9:50 am by Rocky
» The Federal Court responds to an inquiry by Al-Sudani regarding the powers of the provincial council
Today at 9:40 am by Rocky
» Among them are the Iraqis... a list of the most sought-after immigrants to America
Today at 9:38 am by Rocky
» An expert talks about the "biggest barrier" and the positives of merging Iraqi and Arab banks
Today at 9:29 am by Rocky
» The House of Representatives adjourns its session
Today at 9:24 am by Rocky
» Parliamentary demands to expedite the legislation of the Eid al-Ghadir holiday law (documents)
Today at 9:23 am by Rocky
» Parliament adds the paragraph “Electing the Speaker of the House of Representatives” to its agenda
Today at 9:21 am by Rocky
» Alsumaria publishes the text of the law against prostitution and homosexuality
Today at 9:20 am by Rocky
» A parliamentarian reveals the reason for the failure of the Speaker of Parliament to pass during tod
Today at 9:19 am by Rocky
» Al-Sudani: The government has launched many strategies and initiatives that will improve the reality
Today at 8:42 am by Rocky
» International Business: Iraq has made progress in supporting businesses through investment and priva
Today at 8:33 am by Rocky
» Association of Banks: Iraq is witnessing great development in the transition to electronic governmen
Today at 8:25 am by Rocky
» The House of Representatives votes to add an item to its agenda (election of the Speaker of the Hous
Today at 8:22 am by Rocky
» Parliamentary integrity: Combating corruption requires parliamentary legislation
Today at 8:15 am by Rocky
» Al-Karaawi: America is trying to restrict Iraq
Today at 8:13 am by Rocky
» The State of Law coalition moves to form the local government in Diyala
Today at 8:12 am by Rocky
» The Sudanese and his battle against corruption.. Where is the fault with the government or with the
Today at 8:11 am by Rocky
» Prime Minister's Advisor: We will see the dollar fall on the black market soon
Today at 8:09 am by Rocky
» The Sunni blocs are resolute. The presidency of the Council is ours, away from Al-Halbousi
Today at 8:08 am by Rocky
» Al-Sudani discusses with a workers’ organization his government’s steps in this field
Today at 7:58 am by Rocky
» Parliament holds its session in the presence of 170 deputies
Today at 7:57 am by Rocky
» In the presence of Nechirvan Barzani and Al-Sudani... the State Administration Coalition holds an “i
Today at 7:55 am by Rocky
» The UAE company ADNOC resorts to Iraqi oil. Find out the reasons
Today at 7:53 am by Rocky
» The Iraqi Parliament votes to add an item to elect a president to its agenda
Today at 7:52 am by Rocky
» The Federal Court responds to an inquiry by Al-Sudani regarding the powers of the provincial council
Today at 7:51 am by Rocky
» Al-Sudani: It is necessary to attract women to work as a productive energy that cannot be disrupted
Today at 7:47 am by Rocky
» Zebari regarding targeting the Kormor field: a systematic attack on the economy of Kurdistan
Today at 7:46 am by Rocky
» Saudi Arabia tops, and this is Iraq's rank... a list of major suppliers of crude oil to South Korea
Today at 7:45 am by Rocky
» With a value of 125 million dollars.. Iraq is at the forefront of countries importing Iranian textil
Today at 7:44 am by Rocky
» More than a billion dollars in sales from the Iraqi Central Bank within a week
Today at 7:43 am by Rocky
» Al-Sudani stresses the need for the expertise of the International Labor Organization to legislate a
Today at 7:29 am by Rocky
» Including the return of 21 wanted persons.. The Iraq Money Recovery Fund counts its achievements in
Today at 7:27 am by Rocky
» The path to development is the criterion between true patriotism and political clowning.
Today at 7:25 am by Rocky
» The file of the Presidency of Parliament is on the state administration table... this evening
Today at 7:22 am by Rocky
» Director General of the International Labor Organization: Many challenges in the world of work and t
Today at 7:20 am by Rocky
» Al-Sudani: The world is witnessing crises that reflect negatively on the Arab and international peop
Today at 7:11 am by Rocky
» Prime Minister: Our government has provided great support for the success of the activities, program
Today at 7:08 am by Rocky
» Al-Asadi: Iraq places the social protection file among its priorities
Today at 7:07 am by Rocky
» Al-Sudani: Iraq is one of the first countries in the region to join the International Labor Organiza
Today at 7:05 am by Rocky
» In the presence of Al-Sudani and Barzani, the State Administration Coalition holds an “important” me
Today at 7:03 am by Rocky
» Appreciating the presence of Al-Sudani... Director General of the Arab Labor Organization: Here from
Today at 5:29 am by Rocky
» Prime Minister: Our government has provided great support for the success of the activities, program
Today at 5:28 am by Rocky
» Al-Sudani: The world is witnessing crises that reflect negatively on the Arab and international peop
Today at 5:24 am by Rocky
» The Parliamentary Development Institute organizes a workshop on the political role of the representa
Today at 5:22 am by Rocky
» With Arab and international participation. Tomorrow will be the start of the Fourth Baghdad Internat
Today at 5:21 am by Rocky
» OPEC Secretary General: The end of oil is not on the horizon
Today at 5:19 am by Rocky
» Closing a number of unlicensed offices and companies south of Baghdad
Today at 5:16 am by Rocky
» Repercussions of the bombing...intensive government movements to resume work in the “Kormor” field
Today at 5:15 am by Rocky
» In the presence of Al-Sudani...the opening of the Arab Labor Conference in its 50th session in Baghd
Today at 5:14 am by Rocky
» Al-Sudani: We are working on drawing future visions regarding the “green and digital” economic secto
Today at 5:13 am by Rocky
» Barzani after the Kormor attack: We are ready to coordinate with Baghdad to put an end to these atta
Today at 5:10 am by Rocky
» Al-Sudani directs the formation of an investigative committee into the circumstances of the Kormo fi
Today at 5:08 am by Rocky
» Bismayah is confused about the new electronic portal.. What about the landlord and the subcontracts?
Today at 5:07 am by Rocky
» Kurdistan Government: Loss of 2,500 megawatts of electricity due to targeting the Kormor field
Today at 5:06 am by Rocky
» Crisis in Kurdistan: 12-hour daily power outage and complaints of “confusion”
Today at 5:05 am by Rocky
» The Supreme Anti-Corruption Commission demands Nineveh for the contracts concluded by “Najm Al-Jubou
Today at 5:04 am by Rocky
» Al-Khanjar, Al-Samarrai, and Abu Mazen are hosted by Shaalan Al-Karim to discuss accelerating the se
Today at 5:03 am by Rocky
» Iraq asks the countries of the world to respond to its requests to extradite wanted persons: We have
Today at 5:02 am by Rocky
» “It is coming soon.” The Sudanese advisor sets the date for the referral of the Baghdad metro and th
Today at 5:01 am by Rocky
» Al-Mubarqa: Iraq reserves its full right to respond to the Australian behavior
Today at 5:00 am by Rocky
» Dollar exchange rates on Iraqi stock exchanges... recorded a decline, and this is the list
Today at 4:58 am by Rocky
» Mr. Al-Sadr supports the position of American university students
Today at 4:56 am by Rocky
» Iraqis are ranked 7th in the Arab world on the list of those most seeking immigration to America. He
Today at 4:55 am by Rocky
» Soon.. 3 new hospitals will open in Baghdad
Today at 4:52 am by Rocky
» Sponsored by Al-Sudani...the opening of the Arab Labor Conference in its fiftieth session in Baghdad
Today at 4:51 am by Rocky
» Al-Shammari chairs a meeting at the controlling headquarters to review the results of the security o
Today at 4:49 am by Rocky
» Arab Labor Organization: We commend Iraq's interest in the Arab Labor Conference
Today at 4:48 am by Rocky
» Al-Sudani: The development road project will provide many job opportunities
Today at 4:47 am by Rocky
» Sudanese advisor criticizes Kuwaiti analyzes regarding the development road project
Yesterday at 2:21 pm by Rocky
» Al-Mandalawi stresses the need to strengthen economic and trade cooperation between Iraq and Poland
Yesterday at 2:04 pm by Rocky
» Power maneuvers: America provides defensive weapons to Kurdistan in exchange for withholding from Ba
Yesterday at 10:26 am by Rocky
» Kuwait is drilling an oil well near Umm Qasr, towards Iraqi territory
Yesterday at 10:24 am by Rocky
» In the document... the first Iraqi ministry identifies the obstacles to changing the new official wo
Yesterday at 10:22 am by Rocky
» Italian Institute: Iraq is stuck in its own crises, including Baghdad’s efforts to undermine the “au
Yesterday at 10:21 am by Rocky
» The head of the Integrity Commission announces the holding of an international Interpol conference i
Yesterday at 10:18 am by Rocky
» Planning: Iraqi companies are not efficient in conducting the population census
Yesterday at 10:14 am by Rocky
» MM&C 4/25/24 National Bank of Iraq goes live with Temenos core banking and payments
Yesterday at 8:06 am by Rocky
» A banking official indicates a "danger" to Iraq by depriving more than half of its banks of dollars
Yesterday at 7:55 am by Rocky
» With the participation of the Association of Private Banks, investment opportunities are on the tabl
Yesterday at 7:45 am by Rocky
» Within a month... an Iranian border crossing recorded a noticeable increase in exports of goods to I
Yesterday at 7:44 am by Rocky
» The Association of Private Banks appreciates the efforts of the government and the Central Bank to c
Yesterday at 7:43 am by Rocky
» Al-Maliki's coalition presents a third candidate for the position of governor of Diyala
Yesterday at 6:57 am by Rocky
» Arab gathering: The Kirkuk problem is getting complicated and the Sudanese must intervene
Yesterday at 6:56 am by Rocky
» Next week.. a Kurdish delegation will visit Baghdad to meet with the Minister of Finance
Yesterday at 6:54 am by Rocky
» Under the pretext of salaries... Al-Party refrains from handing over port revenues to Baghdad
Yesterday at 6:53 am by Rocky
» Association of Banks: For the first time, we are witnessing a clear targeting of depriving half of t
Yesterday at 6:51 am by Rocky
» Parliament does not know the reason for the delay in sending the 2024 budget schedules: Voting takes
Yesterday at 6:49 am by Rocky
» Applicants for the 2024 Hajj are demanding that the Central Bank secure the dollar for them through
Yesterday at 5:09 am by Rocky
» Governmental and private banks will showcase their services tomorrow during Financial Inclusion Week
Yesterday at 5:08 am by Rocky
» Iraq's oil exports rise despite OPEC+ cuts
Yesterday at 5:06 am by Rocky
» A study explodes a "surprise"... Iraq is among the countries that export oil to "Israel": How is the
Yesterday at 5:04 am by Rocky
» Al-Araji emphasizes working to strengthen national identity
Yesterday at 5:02 am by Rocky
» Al-Sudani visits Saudi Arabia to participate in the World Economic Forum in Riyadh
Yesterday at 5:01 am by Rocky