Treasury Secretary Jack Lew appears to have the right ideas. But, it doesn't seem like any of our elected leaders are listening. On Monday, Secretary Lew sent letters to members of the House financial services committee, urging them to uphold provisions of the Dodd-Frank Act that regulate derivatives. Yet, just one day later, a bipartisan group of law makers – including almost two dozen democrats – passed a bill through committee to do just the opposite.
In his letter, Secretary Lew explained that these provisions “constitute an important part of the reforms being put in place to strengthen our financial system by improving transparency and reducing risk for market participants.” But, the bipartisan committee advanced legislation that would allow FDIC insured banks to trade in derivatives. That means, if and when they get into trouble, the tax-payers will be on the hook – again – for the bail out. And, legislation like this ignores the fact that derivative trading was what caused our economic collapse in the first place. This is exactly what Jack Lew was warning them about.
Thankfully, this legislation isn't likely to overcome a Senate filibuster, and the White House has expressed opposition. As important as his derivatives warning was, it's not the only important statement our Treasury Secretary made this week. Yesterday, Jack Lew said, “deficit reduction alone is not an economic policy.” He called for “expanding our economy and getting people back to work” with an ambitious infrastructure program.
He knows that no nation, in the history of the world, has ever cut its way to prosperity – and we won't be the first. And our legislators need to start heeding his advice. We must invest in our nation, and our people. The question is, will lawmakers ignore Mr. Lew's warnings twice in one week? Let's hope not.
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