The other day while most of America was sleeping from another of trying to earn a living….the police departments in several cities were attacking the Occupy movement to evict the people that were protesting…..we all, at least those of us that were interested, have seen all the vids and photos of what happened on that early morning raids……but while we were asleep and police were doing the dirty work of the government…..another issue was playing out under the radar thanks to the raids…..
Have I peaked your curiosity?
Congress is the culprit I speak of and here is what they are attempting to do……
We Love Bailouts Bill: HR 1838 (Stivers) would repeal a section of the Dodd-Frank Act that prohibits the Federal Government from bailing out big Wall Street derivatives dealers. What are they thinking? With Merrill Lynch right now attempting to transfer a total of $75 trillion in derivatives bets from its investment arm into Bank of America, its FDIC-insured parent company, why is the GOP eager to facilitate the next giant taxpayer bailout?
Dark Markets are Good for You Bill: HR 2586 (Garrett) would allow big Wall Street derivatives dealers to continue opaque bilateral trading and allow them to avoid price transparency required by the Dodd-Frank bill. Off-book gambling in the derivatives market was a key cause of the 2008 financial crisis, and Dodd-Frank made huge steps forward, requiring the vast majority of derivatives to be traded in open forums where everyone could see what is going on in this $600 trillion dollar market. Similarly, HR 2779 (Stivers) would exempt all transactions between related affiliates from derivatives regulations, creating less, not more, transparency.
Swap Till You Drop Bill for Pension Funds: HR 3045 (Canseco) would permit swaps dealers to get a blanket exemption from any duty to respect the best interests of pension funds when giving any advice on a swaps deal. Just last week, we saw the largest municipal bankruptcy in United States history, in Jefferson County, Alabama, which was caused when JP Morgan Chase bribed local officials into entering a swaps deal to refinance a sewage district.
Go Back to Sleep SEC Bill: HR 2308 (Garrett) would create a series of new hurdles for the Securities Exchange Commission (SEC) to jump before the institution can pass a new rule or regulation. SEC is not my favorite regulator and their fines on the big Wall Street banks have not been commensurate with the crimes, but compared to the U.S. Justice Department, SEC regulators have been veritable energizer bunnies, extracting billions in concessions.
AS promised, the Repubs are trying to gut the Frank-Dodd Financial Reform Act…….and as usual they are doing the dirty work for those they really work for….Wall Street and the Banks…….
People! The time has come for us to demand more from our government…….and these moves are no where in the best interests of the average American……speaks volumes on who really runs this government and YOU allowed it to happen…..
Today is the big day! The Prez will sign the new and improved FinReg bill into law….and it is everything they wanted….by they I mean Wall Street…..Obama has said….
“Because of this reform, the American people will never again be asked to foot the bill for Wall Street’s mistakes. There will be no more taxpayer-funded bailouts—period.”
The GOP immediately sent out their Agent Orange, Rep. Boehner, to condemn the bill and its passage (go figure)….which to me is astonishing because Wall Street made out like a bandit and the GOP should be pleased that the bill was so watered down…..or is it just a political tactic?
The bill authorizes the allocation of pubic funds to pay for the operation, without congressional approval, with the proviso that the major banks would subsequently be taxed to defer some of the cost.
This amounts to the institutionalization of financial rescue operations, instead of the ad hoc methods employed in the fall of 2008. The procedure is being put into place precisely because the regulatory overhaul fails to impose any real restrictions on the speculative activities of the banks.
It does not restore the legal wall between commercial banking and investment banking, a central reform carried out during the Depression of the 1930s to prevent deposit-taking commercial banks from engaging in the high-risk speculation that is the bread and butter of investment banks and brokerages. The weakening and final removal of this wall in 1999 during the Clinton administration encouraged the wave of speculation and swindling that led to the collapse in September 2008.
It does not cap executive compensation.
It does not eliminate or seriously limit trading in derivatives, the complex and opaque financial instruments that played a central role in the collapse of American International Group (AIG) and threatened to topple the entire banking system.
Instead, the bill sets up what some have called a Potemkin village of regulatory structures with little real substance, which Wall Street banks will have little difficulty manipulating and gaming. For the most part, the details concerning how much capital banks must hold in reserve, what percentage of their capital they can invest in hedge funds, which types of derivatives will be forced onto clearinghouses and exchanges and which will continue to be traded in the “shadow banking system,” etc. will be determined by the various regulatory agencies. It will grow the bureaucracy but will not cease the gambling by the Banksters with taxpayer money.
Once again the paid agents of Wall Street have successfully set the stage for another economic meltdown…….sooner rather than later……the only good thing is that youtube is up and alive and everything anyone has ever said about FinReg has been recorded and it will come back to them in the near future…….the American people are getting their Christmas goose early…..sorry to be a buzz kill!
Well….sort of…..it is very very close…..
In the beginning there were these gamblers who made lots of money….but then they held a gun to their own heads and pulled the trigger….too bad it was a squirt gun……then they approached the government and made the case for if they went down the toilet they would take the whole economy with them…there gambling debts were quickly covered and the taxpayer got kicked in the ass…..by then the US Congress was up in arms at the way the people were treated (good political kabuki) with fake concern as make up and the vow that something like this would never happen again and they set off to make legislation of prevention…..they worked and they worked (about 3 days a week for months) until they had the perfect bill on financial regulation…..
Now the rest of the story…….
The Obama administration’s proposal to ban banks from proprietary trading, nicknamed the Volcker rule after former Federal Reserve Chairman Paul Volcker, was softened by Senate negotiators.
Banks will be allowed to invest in private-equity and hedge funds, though they will be limited to providing no more than 3 percent of the fund’s capital. Banks also can’t invest more than 3 percent of their Tier 1 capital.
The change alters language in a bill the Senate approved in May, which would have barred banks from sponsoring or investing in private-equity and hedge funds. Lawmakers offered the modification to appease Senator Scott Brown, a Massachusetts Republican who was concerned the ban would harm Boston-based State Street Corp. He was one of four Republicans to break party ranks and vote for the Senate bill.
The legislation defines proprietary trading as engaging as a principal for a trading account of a bank or non-bank financial company supervised by the Fed “in any transaction to purchase or sell, or otherwise acquire or dispose of, any security, any derivative, any contract of sale of a commodity for future delivery, any option on any such security, derivative or contract, or any other security or financial instrument” that regulators designate through rule-writing.
Negotiators also agreed to give regulators less say than previously proposed to define a ban on proprietary trading. Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, backed a change offered by Democratic Senators Jeff Merkley of Oregon and Carl Levin of Michigan that “more clearly defines the limits on proprietary trading” by writing the ban into the legislation. The earlier Senate bill would have let regulators write it.
Still does not seem to eliminate the Too Big Too Fail, and gambling is still allowed with taxpayer money, just to mention the ones that I personally think were a necessity for any reform bill…..and personally I am sick of the bullsh*t saying that it is not perfect but it is step in the right direction…..I know and you will soon know that that is just political speak….meaning they have done all they WILL do to reform the financial sector…..
So my friends, grab your ass with both hands….this WILL happen again!…..and I will be the first to say “I TOLD YOU SO!”
International Studies Group
Recently in Toronto there was a meeting of the mindless…a group called the G20……a meeting of the top leaders from 20 different countries that meet to plan the world economy and here is what they decided:
The communiqué called for governments to halve their budget deficits by 2013 and for the ratio of national debt to gross domestic product to be stabilised by 2016. This was seen as a win for Germany and other countries backing deficit reduction. But the document made clear that these targets were not binding and, in a concession to the US, expressed the hope that governments would follow “growth-friendly fiscal consolidation plans”.
In a further bid to walk both sides of the street at the same time, the communiqué declared: “There is a risk that synchronised fiscal adjustment across several major economies could adversely impact the recovery. There is also the risk that failure to implement consolidation where necessary would undermine confidence and hamper growth.”
The G20 resolution on fiscal consolidation allowed all sides to claim a victory even as the differences widen. German chancellor Angela Merkel said the outcome was “more than I expected”. She claimed that the views of continental Europe had prevailed. German officials noted that the US had learned its lesson about writing public letters that sought to change the position of others. In the lead up to the summit, Obama issued a letter to G20 participants warning that too rapid fiscal tightening could impede global recovery. He noted that earlier G20 agreements had pointed to the need for export surplus countries—a reference to Germany and China—to increase domestic demand.
As usual this meeting was nothing more than a photo op for the leaders to appear to be working on solutions when all they were doing is a slow tap dance. The reality is that the world cannot solve these problems it is up to the individual countries to find the answers and to pretend any thing else is just absurd.
In the beginning there was a massive amount of anger leveled at the Wall Street banks that took the US to the brink of collapse……..so much anger that the Congress set about to stop the gambling on the taxpayer’s dime…..regulation and oversight was the call of the day…..it showed promise….it showed that the Congress got the idea and started acting on behalf of the people……that was in the beginning….now it is something way less than the original intent…..
When the Senate bank reform legislation passed in May, Senate Majority Leader Harry Reid (D-Nevada) said it sent the message to Wall Street that they can no longer “recklessly gamble away other people’s money.” The bill told Main Street, “you no longer have to fear that your savings, your retirement or your home are at the mercy of greedy gamblers in big banks. And it says to them, ‘never again will you be asked to bail out those big banks when they lose their risky bets,’ “
The bill the Senate passed did protect the taxpayers from reckless gambling by the big banks, largely due to the last-minute inclusion of strong derivatives reforms authored by Senator Blanche Lincoln (D-Arkansas). So why is it that Senate and House leadership are now busy behind these scenes trying to kill the best provisions in their own banking reform legislation?
Behind the scenes, Senate Banking Chair Chris Dodd (D-Connecticut) and House Financial Services Chair Barney Frank (D-Massachusetts) have made it clear they are not fans of Lincoln’s proposal. Neither is the U.S. Treasury Department. Treasury official Michael Barr has been running around telling anyone who will listen that these derivatives rules were not part of the administration’s four “core objectives” for financial reform.
But opponents of strong derivatives reform have a big problem. They can’t just yank it out of the bill with an outcry from consumer advocates and reform groups like Americans for Financial Reform, who have been working hard on the issue. So they have cooked up a new scheme. They will replace the Lincoln language with the strengthened version of the Volcker Rule offered (but never voted on) by Senators Merkley (D- Oregon) and Levin (D-Michigan). They want to convince everyone that a strengthened Volcker Rule takes care of all the issues raised by Lincoln.
In case you are not sure what the Volcker rule is…let me help….The Volcker Rule deals importantly, but narrowly, with derivatives trading for a bank’s own account. This is called “propriety trading,” and banks would be barred from trading any financial instrument (mortgage-backed securities and stocks, as well as derivatives) for their own as opposed to a customer’s account. Merkley-Levin would make this reform a statutory ban rather than leaving it to the discretion of regulators and would further crack down on Goldman-style conflict of interest trading. But big banks would still be allowed to deal and trade on behalf of their clients and their derivatives business would still be backed by the taxpayer guarantee.
Watch the slight of hand by the Congress…the bill that is the final version will be far from the regulation needed to prevent the economy from collapsing again….with the Congress being paid by the banks to water any reform down….we can look ahead ten years or so and see all this economic woes occurring again…….Politicians need to think about that when they are so concerned about our children’s future…….
With the heated back and forth of the health reform, very little has been reported on the new financial reform bill….Sen. Dodd and some Repub from Tennessee are quietly negotiating for the passage of a financial reform bill….now that it is pretty close Dodd has hit the airways to try and block any “tea bag”-esque attacks that the health reform bill has received.
I was going to write a piece trying to explain Dodd’s lame attempt to regulate the thieves but the Washington Post beat me to it and theirs is a lot simple and more understandable than mine would have been:
1 A Consumer Financial Protection Bureau, housed inside the Federal Reserve, would write and enforce rules protecting borrowers from abuse by lenders.
WHAT IT MEANS: The location of the agency is a nod to Republicans and conservative Democrats who oppose the creation of a free-standing consumer agency, but everything else about this proposal is designed to please liberals, giving the consumer agency sweeping powers and imposing few checks on that authority.
2 A Financial Stability Oversight Council, chaired by the Treasury secretary, would coordinate federal efforts to identify and manage risks to the financial system and the broader economy.
What it means: Dodd wanted to give the council broad responsibility for policing systemic risks. After massive administration pressure, he agreed instead to give much of that power to the Fed. The oversight council will instead function essentially as the Fed’s board of directors on regulatory issues, signing off on its decisions.
3 A new process would allow for the liquidation of large, failing financial firms.
WHAT IT ME ANS: Companies could be liquidated by joint agreement of the Treasury Department, the Fed and the Federal Deposit Insurance Corp., which already administers bank failures and would play a similar role in the new process. Costs would be paid from a $50 billion pool of money gathered from large financial companies.
4 Credit-rating agencies would be regulated and liable for errors.
WHAT IT MEANS: Breaking with the administration and the House version of financial reform, Dodd’s bill would hold Moody’s, Standard & Poor’s and other rating agencies potentially liable for their judgments about the safety of bonds and other investments. The industry also would be regulated by the Securities and Exchange Commission.
5 Banks would face new limits on trading and investment activities.
WHAT IT MEANS: The bill would restrict banks from running their own investment portfolios or hedge funds, an administration proposal known as the “Volcker Rule” that Dodd initially had rejected. The bill also would regulate the massive trade in derivatives, increasing the proportion of such trades that are publicly reported.
6 Some renovations would be made to the structure of federal banking regulation.
WHAT IT MEANS: Dodd abandoned his earlier proposal to create a single banking regulator after critics argued that the upside was not worth the effort. The bill still would eliminate the Office of Thrift Supervision. The Fed’s authority over smaller banks would be split between the FDIC and the Office of the Comptroller of the Currency.
Is something better than nothing? I hear a lot of the henceforths and heretowiths …..in other words legal-ese and the “too big to fail” group will still have its relief valve….US, we will still be on the hook whenever they screw up….I guess it is a start….but like health reform…..it is NOT reform….it is a tweak of an already broken system.