Has currency manipulation had been raised in the TPP talks?  Although Congress has been pushing the administration to bring up currency provisions in the negotiations for years, doing so would significantly alter, and perhaps torpedo, the deal with Japan.

Of course, currency manipulation is difficult to combat with a domestic law — since unlike trade pacts, domestic laws are not agreements with other nations that include internationally binding enforcement mechanisms. The bill would require the Department of Commerce to include currency manipulation subsidies in its calculations of unfair trade practices prohibited under other trade pacts, making it easier for the U.S. government to win trade cases against other countries, and to secure heftier judgments.

Both Republicans and members of the Obama adminsitration stress that they are seeking a “high-standards” agreement that would counter the power of China to weaken global regulations.   Three of the countries involved in the talks — Malaysia, Brunei and Vietnam — are serial human rights abusers.  They simply do not have the institutional infrastructure in place to enforce strong protections.

Is there a strong intellectual property proivision  included in TPP. Those copyright, patent and other provisions, however, are the subject of hot debate, with many tech experts warning they will crimp the development of new digital applications.

By granting pharmaceutical companies long-term monopolies on prescription drugs, moreover, those policies dramatically inflate the cost of medicine. The Indian government, for instance, recently authorized a generic version of a patented cancer medicine for $157 a month.

Doctors Without Borders, a humanitarian group that won the Nobel Peace Prize in 1999, points out the human cost of these provisions.

A fast-track bill would not only apply to TPP talks, but also to another pending deal with the European Union and any other future trade pacts covered by the timeframe of the bill. Any EU deal must include a financial services chapter. European negotiators have pressed U.S. regulators to loosen financial regulations for years in other international forums. Meanwhile, Republicans seeking to roll back the 2010 Dodd-Frank bank reform law have crafted bills to help banks dodge U.S. oversight by substituting weaker European rules and overseers.

Froman, Obama’s representative who worked at Citigroup before joining the Obama administration in 2009, pushed back against Hatch on that issue, saying USTR did not support a bank regulatory chapter in the EU deal.

Simon Johnson writes:   America’s presidential election is still nearly two years away, and few candidates have formally thrown their hats into the ring. But both Democrats and Republicans are hard at work figuring out what will appeal to voters in their parties’ respective primary elections – and thinking about what will play well to the electorate as a whole in November 2016.

Stephen S. Roasch writes:  Predictably, the European Central Bank has joined the world’s other major monetary authorities in the greatest experiment in the history of central banking. By now, the pattern is all too familiar.  Central banks take the conventional policy rate down to the dreaded “zero bound.”  They then embrace the unconventional approach of quantitative easing (QE).

Unable to cut the price of credit further, central banks shift their focus to expanding its quantity.  For the ECB and the Bank of Japan (BOJ), both of which are facing formidable downside risks to their economies and aggregate price levels, this is not an idle question. For the United States, where the ultimate consequences of QE remain to be seen, the answer is just as consequential.

J. Bradford DeLong looks at two books on the Great Recession and concludes that we acted incorrectly to solve the problems:

The first book is The Shifts and the Shocks, by the conservative British journalist Martin Wolf, who begins by cataloguing the major shifts that set the stage for the economic disaster that continues to shape the world today. His starting point is the huge rise in wealth among the world’s richest 0.1% and 0.01% and the consequent pressure for people, governments, and companies to take on increasingly unsustainable levels of debt.

The second book: Hall of Mirrors, traces our tepid response to the crisis to the triumph of monetarist economists, the disciples of Milton Friedman, over their Keynesian and Minskyite peers – at least when it comes to interpretations of the causes and consequences of the Great Depression. When the 2008 financial crisis erupted, policymakers tried to apply Friedman’s proposed solutions to the Great Depression. Unfortunately, this turned out to be the wrong thing to do, as the monetarist interpretation of the Great Depression was, to put it bluntly, wrong in significant respects and radically incomplete.    What Caused the Great Recession

Nader writes:  In May of 2014, financial firm Credit Suisse AG pled guilty to serious criminal charges. The giant bank aided and assisted approximately 22,000 wealthy U.S. taxpayers (whose names Credit Suisse AG escaped having to send to the Justice Department for law enforcement) for over a decade in filing false income tax returns and other documents with the Internal Revenue Service (IRS).

The full extent of these crimes, according to a Department of Justice news release, are as follows: “assisting clients in using sham entities to hide undeclared accounts;” “soliciting IRS forms that falsely stated, under penalties of perjury, that the sham entities were the beneficial owners of the assets in the accounts;” “failing to maintain in the United States records related to the accounts;” “destroying account records sent to the United States for client review;” “using Credit Suisse managers and employees as unregistered investment advisors on undeclared accounts;” “facilitating withdrawals of funds from the undeclared accounts by either providing hand-delivered cash in the United States or using Credit Suisse’s correspondent bank accounts in the United States;” “structuring transfers of funds to evade currency transaction reporting requirements;” and “providing offshore credit and debit cards to repatriate funds in the undeclared accounts.”

These elaborate illegal acts over many years are quite revealing. They show a deliberate willingness by Credit Suisse AG officials to knowingly engage in profitable activities that defrauded the United States Treasury and burdened honest taxpayers.

The Employee Retirement Income Security Act of 1974, or ERISA, was enacted to protect the retirement savings of retirement plan participants. The law, in theory, automatically disqualifies institutions like Credit Suisse AG who have committed serious crimes or pled guilty to serious crimes from serving as a “qualified professional asset manager” (QPAM) of ERISA assets or pension plans.

Unfortunately, the Department of Labor has not adequately enforced this law or its regulations in this area.

The Department of Labor (DOL) already has granted Credit Suisse a temporary waiver to continue conducting their pension management business. On January 15th, the DOL held a public hearing—where I testified— to discuss whether Credit Suisse and its affiliates can continue this troubling trend of avoiding the consequences of their actions indefinitely. Credit Suisse AG is hoping to completely sidestep the mechanisms of justice for their admittedly serious crimes and carry on business as usual—a result that in itself is, unfortunately, business as usual.

This routine ability to evade proper punishment is the root of the issue of so much corporate and Wall Street crime—a slap on the wrist leads to a perpetual cycle of wrongdoing with no end in sight. Their corporate lawyers turn laws into “no-law” laws. Corporate crime pays.

The Department of Labor, which exists to defend workers, now has a unique opportunity to stand proudly at its post and to send a clear message—a firm signal—to other Qualified Professional Asset Managers that if they commit unthinkable criminal violations, they lose the ability to handle pension funds. On the other hand, allowing these institutions to continue to receive permanent waivers would be a clear signal that the DOL will tolerate cutting corners and criminal wrongdoing by powerful financial institutions at the expense of workers, complying taxpayers, democracy, and the rule of law.

Mark Roe writes: Last month, the United States Congress succumbed to Citigroup’s lobbying and repealed a key provision of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act: the rule that bars banks from trading derivatives. The Dodd-Frank law’s aim was to prevent another financial crisis like that of 2007-2008; the repeal reduces its chances of success.

Derivatives are contracts that derive their value from changes in a market, such as interest rates, foreign-exchange rates, or commodity prices. Banks can use derivatives to hedge risk – say, by ensuring that oil producers to which they lend lock in today’s prices for their product through derivatives contracts, thereby protecting themselves and the bank from price volatility. The borrower is thus more likely to be able to repay the loan, even if its product’s price falls.  It began when farmers looked at the sky and knew they could not rely on weather reports.

But derivatives can also be used for speculative purposes, allowing banks to take on excessive risk.  And this is where the big bucks are being mae today by big players.

The last crisis originated in the real-estate market, following a large and unexpected decline in home prices. It then spread to financial institutions that could not cope with the losses associated with mortgage delinquencies, foreclosures, and the depreciation of housing-related securities. Derivatives exacerbated the crisis, particularly after the portfolio of the bankrupt Lehman Brothers, then the world’s fourth-largest investment bank, was liquidated. The next day, the US government had to extend an $85 billion bailout to American International Group (AIG), the world’s largest insurer, owing to its inability to back up its deteriorating derivatives position. These failures disrupted worldwide derivatives markets, causing financial markets to seize up.

The Dodd-Frank rule that Congress just repealed, known as the “swaps push-out rule,” would have required that most derivatives-trading activities occur outside of government-insured banks. If a bank fails, the government stands behind most deposits. Though it does not formally guarantee anything else, it usually finds it easiest and quickest to bail out the entire bank – including its derivatives facility. If, however, derivatives are no longer embedded in the guaranteed bank, the government could more easily bail out a bank, while leaving the derivatives subsidiary to fend for itself.

This sub rosa government indemnification of major banks’ derivatives portfolios undermines financial stability. If a major bank defaults on its derivative trades, the banks with which it has traded could also fail. If several large, interconnected derivatives-trading banks collapse simultaneously, the financial system could be paralyzed, damaging the real economy – again.

And it is the large banks that are building up their derivatives portfolios the most. Indeed, this is another pernicious, albeit subtle, effect of the sub rosa guarantee of banks’ derivatives portfolios: the knowledge that, if a large bank fails, it will probably receive a government bailout – including for its derivatives desk – spurs traders to focus their dealings on big banks. Smaller independent dealers that the government could allow to fail thus become less appealing.

This explains, at least partly, why a handful of mega-banks in the US – namely, Citibank, Goldman Sachs, Bank of America, and Morgan Stanley – handle the bulk of derivatives trading. That creates a vicious cycle: the bailout option for too-big-to-fail banks concentrates the derivatives market among a few major institutions, increasing further their systemic importance.

The push-out rule sought to break this cycle. By separating derivatives trading from government-insured banks, it would have effectively eliminated the sub rosa subsidy. While the government would still have to back deposits for crisis-stricken banks – even if that meant bailing out the entire institution – it would have had the option of allowing the derivatives trading desks, functioning within separate organizations, to flounder.

This would have helped to undermine the perception that large derivatives dealers are invulnerable, thereby reducing their trading advantage. Mid-size dealers that could fail without causing excessive economic damage would get more business. And the financial sector would become more balanced – and less risky.

Against this background, the repeal of the push-out rule was a mistake.

It is possible that US regulators (and Congress) are so confident in the other steps they have taken to safeguard the financial system that they no longer believe this extra protective layer is necessary. But Citigroup’s success in lobbying for the rule’s repeal could also signal that regulatory efforts to mitigate systemic financial risk have reached the high-water mark in the US. If Citigroup – a poorly managed operation that had to be bailed out in the last crisis – could compel Congress to abandon such a rule, it is reasonable to ask whether the political tides have shifted, and financial regulation will not be tightened further. Perhaps, with each budget bill, Dodd-Frank will be rolled back further.

This outcome is not inevitable. The repeal can – and should induce regulators to reassess their approach. Specifically, they should revisit the consensus that banks will become gradually safer, and their required capital should amount to no more than 10% of their assets. If the banks are successfully lobbying for the right to pursue riskier activities, regulators should consider raising their capital requirements.

Only a few years have passed since the last financial crisis – and its effects are still being felt. Yet US lawmakers are already forgetting its lessons.   Dodd Frank Under Assault