Representative Barney Frank, co-sponsor of the Dodd-Frank bill that sought to re-regulate the financial services industry, as offered a new bill to plug one of the holes created when passage of the original bill depended on cutting certain provisions. It relates in many ways to the crisis of AIG, the international insurance agency.
You see, all those “shitty deals” that Goldman Sachs wrote, all those fancy credit default swaps and derivatives that the hedge fund managers played poker with, they were insured. There was no risk at all to any of the people who indulged in what was obviously a game to them. So, Barney wants to eliminate that no-risk aspect of the game.
Dodd-Frank, Sarbanes-Oxley and other laws were intended to allow federal regulators to recoup compensation or impose fines on persons and institutions that break the law or engage in unsafe trading behavior, like the jerk in London who just flushed over $3 billion of JPMorgan money. Frank explained that “The creation of insurance policies to insulate financial executive from clawbacks is one more effort by some in the industry to perpetuate a lack of accountability.” Americans were totally pissed off that the executives who caused our economic meltdown were still getting huge salaries and bonuses and were not held accountable in any way for their behavior. The new bill would make those who engage in these reckless trades to be personally responsible for fines and compensation for damages caused by their behavior. There was an insurance program launched in 2011 by Marsh, a large brokerage, to protect executives and corporate directors from being hit with compensation claims (clawbacks) by the FDIC. The program does not provide legal protection in case of fraud, but pays attorney’s fees and other costs. A Marsh executive told InsuranceNewsNet in October that executives from “dozens” of financial firms had signed up.
Democrats Henry Waxman and Collin C. Peterson have co-sponsored the bill. The odds of it making it out of the Republican-controlled House is somewhere between snowball’s-chance-in-hell and never-on-God’s-green earth. Accountability for tanking our economy is not a Republican value.