It is revealing that when star conservative intellectual Yuval Levin cites an example of "cronyism" in the end-of-year budget legislation, it's related to the hated (for him) Obamacare law, and by the way, it's a provision that benefits Blue Cross/Blue Shield, which provides health insurance to over one-third of Americans -- some cronies!
Yet here's actual cronyism in the same law that goes unmentioned by him --
(3) by amending subsection (d) [of Dodd-Frank] to read as follows: ``(d) Only Bona Fide Hedging and Traditional Bank Activities Permitted.-- ``(1) In general.--The prohibition in subsection (a) shall not apply to any covered depository institution that limits its swap and security-based swap activities to the following: ``(A) Hedging and other similar risk mitigation activities.--Hedging and other similar risk mitigating activities directly related to the covered depository institution's activities. ``(B) Non-structured finance swap activities.--Acting as a swaps entity for swaps or security-based swaps other than a structured finance swap. ``(C) Certain structured finance swap activities.--Acting as a swaps entity for swaps or security-based swaps that are structured finance swaps, if-- ``(i) such structured finance swaps are undertaken for hedging or risk management purposes; or ``(ii) each asset-backed security underlying such structured finance swaps is of a credit quality and of a type or category with respect to which the prudential regulators have jointly adopted rules authorizing swap or security-based swap activity by covered depository institutions.
That's a provision that weakens an element of the Dodd-Frank banking regulation law which would have restricted the type of derivatives trading that deposit-taking banks can conduct; the amendment was a gift to banks with large investment banking operations. The list of trading that is now allowed -- as above -- is wide enough to get many of the good old pre-2008 stuff through. Now that's cronyism!
Levin's apparent blindspot on the financial sector is also evident in his Brooks-lauded First Things essay Taking the Long Way to Liberty which talks about all sorts of ways that society should have disciplines and constraints to be truly fulfilling, including that the poor should work, but not a word about the corrosive effect of huge returns to ethically and economically dubious financial activities.
Yet here's actual cronyism in the same law that goes unmentioned by him --
(3) by amending subsection (d) [of Dodd-Frank] to read as follows: ``(d) Only Bona Fide Hedging and Traditional Bank Activities Permitted.-- ``(1) In general.--The prohibition in subsection (a) shall not apply to any covered depository institution that limits its swap and security-based swap activities to the following: ``(A) Hedging and other similar risk mitigation activities.--Hedging and other similar risk mitigating activities directly related to the covered depository institution's activities. ``(B) Non-structured finance swap activities.--Acting as a swaps entity for swaps or security-based swaps other than a structured finance swap. ``(C) Certain structured finance swap activities.--Acting as a swaps entity for swaps or security-based swaps that are structured finance swaps, if-- ``(i) such structured finance swaps are undertaken for hedging or risk management purposes; or ``(ii) each asset-backed security underlying such structured finance swaps is of a credit quality and of a type or category with respect to which the prudential regulators have jointly adopted rules authorizing swap or security-based swap activity by covered depository institutions.
That's a provision that weakens an element of the Dodd-Frank banking regulation law which would have restricted the type of derivatives trading that deposit-taking banks can conduct; the amendment was a gift to banks with large investment banking operations. The list of trading that is now allowed -- as above -- is wide enough to get many of the good old pre-2008 stuff through. Now that's cronyism!
Levin's apparent blindspot on the financial sector is also evident in his Brooks-lauded First Things essay Taking the Long Way to Liberty which talks about all sorts of ways that society should have disciplines and constraints to be truly fulfilling, including that the poor should work, but not a word about the corrosive effect of huge returns to ethically and economically dubious financial activities.