Skip to main content

Cromnibus and the Swaps Pushout

White House insists things are good with Elizabeth Warren

President Obama apparently decided to support the omnibus budget bill late Thursday morning, December 11th. He supported the bill because Senate Majority Leader Harry Reid told him the threat of a government shutdown in the first quarter of 2015 was otherwise a real one, and the President should act quickly to get that off the table.

The next few hours appear to have been hectic ones, as alliances formed and shifted both for and against the bill, across party lines. The bill came to be called "cromnibus," apparently for "Continuing Resolution Omnibus." [Personally my first impression was that the "cr" stood from "cram." Alas not.]

At 9:37 Thursday evening, the bill passed the House, 219 to 206. Obama and House Speaker Boehner had both kept enough of their troops in line to get the result they both wanted.

The Senate passed it on Saturday night, with a vote of 56 to 40. The 40 who voted "no" included both Elizabeth Warren and Ted Cruz.

The cromnibus was indeed crammed: with various goodies for various important political lobbies and constituencies. Of these one of the most symbolically resonant is a repeal of a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 that had prohibited banks (beneficiaries not only of the 208 bail-out but in general of depositor insurance arrangements going back to the 1930s) from trading interest-rate swaps.

Kevin Yoder, the nominal author of the repeal amendment, isn't talking about it.

For those who came in late: an interest rate swap is a bet that one referenced index rate will go up or down relative to another. And no, in case you're wondering, interest-rate swaps didn't have a lot to do with the crises of 2007-08. But frankly -- or even doddly, they don't have a lot of social utility either. They are essentially gambling. And I understand that the federal government, which [again I should mention, insures depositors], might not want to let the bankers take depositors' money to Vegas with them for a fun weekend.

Anyway, the Obama administration invested a lot of energy and political capital in securing passage of Dodd-Frank. And then in working to get the necessary implementing regs through various agencies. Now they have made themselves complicit in the gutting of part of that ill -- a part with more intuitive appeal than much of it.

I have to say I am unsurprised at Senator Warren's reaction.

I also think we're seeing one of the issues of the Democratic primary campaign of 2016 take shape. Yes, I know, everybody thinks Hillary is a steam-roller and there won't be any primary campaign. But Hillary has associated herself quite closely with this administration. Four years in the top cabinet approach made that inevitable. Even now that she is in a position where she could distance herself she isn't doing so.

This leaves her open to challenge. It might be Warren who does the challenging. It might be someone else. We'll have to see.


Popular posts from this blog

Great Chain of Being

One of the points that Lovejoy makes in the book of that title I mentioned last week is the importance, in the Neo-Platonist conceptions and in the later development of the "chain of being" metaphor, of what he calls the principle of plenitude. This is the underlying notion that everything that can exist must exist, that creation would not be possible at all were it to leave gaps.

The value of this idea for a certain type of theodicy is clear enough.

This caused theological difficulties when these ideas were absorbed into Christianity.  I'll quote a bit of what Lovejoy has to say about those difficulties:

"For that conception, when taken over into Christianity, had to be accommodated to very different principles, drawn from other sources, which forbade its literal interpretation; to carry it through to what seemed to be its necessary implications was to be sure of falling into one theological pitfall or another."

The big pitfalls were: determinism on the on…

A Story About Coleridge

This is a quote from a memoir by Dorothy Wordsworth, reflecting on a trip she took with two famous poets, her brother, William Wordsworth, and their similarly gifted companion, Samuel Taylor Coleridge.

We sat upon a bench, placed for the sake of one of these views, whence we looked down upon the waterfall, and over the open country ... A lady and gentleman, more expeditious tourists than ourselves, came to the spot; they left us at the seat, and we found them again at another station above the Falls. Coleridge, who is always good-natured enough to enter into conversation with anybody whom he meets in his way, began to talk with the gentleman, who observed that it was a majestic waterfall. Coleridge was delighted with the accuracy of the epithet, particularly as he had been settling in his own mind the precise meaning of the words grand, majestic, sublime, etc., and had discussed the subject with William at some length the day before. “Yes, sir,” says Coleridge, “it is a majestic wate…