Wall Street Banks Panic As Congress Prepares To Fund Infrastructure Spending By Cutting Their Subsidies

Big bank executives are begging Democratic and Republican lawmakers alike to keep paying them hundreds of millions of dollars in government subsidies, instead of slashing them to fund repairs to America’s crumbling infrastructure.

That’s right, I said Democratic AND Republican lawmakers.

Even though House Republicans remain in complete disarray over who will lead them as the next House Speaker, it appears that both sides could very well unite by the end of this month to take care of a very critical issue that has plagued the United States for years now.

Across the nation, highways and bridges are in desperate need of repair and innovation to keep the country moving. But Republicans have repeatedly blocked efforts to put American workers and money into such a massive project, citing the cost.

But the Congressional Progressive Caucus has led the way in pushing to cut a government subsidy for the biggest banks from 6 percent to 1.5 percent, which would free up 17 billion over the next ten years that can be used to fund the infrastructure bill.

And Senate Republicans are on board with this idea and they already passed it despite a large scale effort by banking lobbyists to convince lawmakers to reject it.

Senate Majority Leader Mitch McConnell even recently told Wall Street bank executives in a private meeting that he refuses to remove the language from the bill.

Now it’s up to House Republicans to pick up the bill and pass it and they only have until the end of the month to do it.

According to Bloomberg, the subsidy “is an annual dividend of 6 percent the banks receive from the Federal Reserve, which totals less than $350 million apiece for JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co.” It was first established in 1913 as a reward for banks to join the Federal Reserve system. But clearly, these multi-billion dollar institutions no longer need the $350 million gift that each of them receive.

Nevertheless, that isn’t stopping the greedy banking executives from whining about the negligible cut to their profits.

American Bankers Association Incoming President Rob Nichols complained that, “The idea that going forward that we are going to pay for our nation’s infrastructure on the backs of one industry sector is a really flawed public policy.”

However, it’s not like the banks can’t afford to lose $17 billion over the next ten years when they already make billions of dollars a year anyway. Besides, I seem to recall a time about seven years ago when those same big banks nearly collapsed the entire economy and caused a loss of trillions of dollars during the Great Recession that we are still recovering from today. Banking executives should be thankful that their heads aren’t on pikes right now or that their banks weren’t broken up or that they weren’t forced to repay all the money lost. By all rights, they should be giving up more than $17 billion over the next ten years to fund a plethora of other funding needs such as education, science, housing, and healthcare. It would be the least they could do considering none of their executives are sitting in prison at the moment.

And for now, it appears that their whining is falling on deaf ears as lawmakers on both sides of the aisle have a general disdain for big banks.

“It’s more awkward for the mega banks to lobby this issue,” said Camden Fine, president of the Independent Community Bankers of America, which advocates for smaller banks. “If the mega banks were high in popularity we could pretty easily get this knocked out, but they’re not.”

“The industry is in a very dangerous spot because it is a pot of gold,” Karen Shaw Petrou of Federal Financial Analytics added. “With the general political climate I don’t know a lot of people on Capitol Hill that like banks.”

In short, big bankers are throwing a temper tantrum because the two sides controlling our government are poised to come together to slash a subsidy and use the money to fund repairs that our transportation system desperately needs. It’s also hypocritical since the banks had no problem taking hundreds of billions of dollars in taxpayer money to keep themselves from failing, but have absolutely no concern about our infrastructure failing.

If House Republicans join Democrats to pass the Senate bill intact and help cut that subsidy to the benefit of the American people, they should get credit for doing so. Banks and corporations have been starving the government of crucial tax dollars for decades now. It’s time we take some of that back to pay for what needs to be done to improve the country for the public good and this subsidy cut is a good start.

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