Russian Roulette: Taxpayers Could Be on the Hook for Trillions in Oil Derivatives | WEB OF DEBT BLOG
The sudden dramatic collapse in the price of oil appears to be an
act of geopolitical warfare against Russia. The result could be
trillions of dollars in oil derivative losses; and the FDIC could be
liable, following repeal of key portions of the Dodd-Frank Act last
weekend.
Senator Elizabeth Warren charged Citigroup last week with “holding
government funding hostage to ram through its government bailout
provision.” At issue was a section in the omnibus budget bill repealing
the Lincoln Amendment to the Dodd-Frank Act, which protected depositor
funds by requiring the largest banks to push out a portion of their
derivatives business into non-FDIC-insured subsidiaries.
Warren and Representative Maxine Waters came close to killing the spending bill because of this provision. But the tide turned,
according to Waters, when not only Jamie Dimon, CEO of JPMorgan Chase,
but President Obama himself lobbied lawmakers to vote for the bill.
It was not only a notable about-face for the president but
represented an apparent shift in position for the banks. Before Jamie
Dimon intervened, it had been reported that the bailout provision was
not a big deal for the banks and that they were not lobbying heavily for
it, because it covered only a small portion of their derivatives. As explained in Time:
