As reported on HuffPost last week, Treasury Secretary Timothy Geithner has expressed opposition to the possible nomination of Elizabeth Warren to head the Consumer Financial Protection Bureau, according to a source with knowledge of Geithner’s views.
One can assume that Geithner, being very close to the nation’s biggest banks, is concerned that Warren, if chosen, will exercise her new policing and enforcement powers to restrict those abusive practices at our commercial banks that have been harmful to consumers and depositors.
Certainly, Warren is not the commercial banking industry’s first pick to serve in this new role. And unlike other legislation in which an industry’s lobbying effort would naturally slow or cease once the legislation is passed, the new financial reform bill is continuing to attract enormous lobbying action from the banks. The reason is simple. The bill has been written to put a great deal of power as to how strongly it is implemented in the hands of its regulators, some of which remain to be chosen. The bank lobby will work incredibly hard to see that Warren, the person most responsible for initiating and fighting for the idea of a consumer financial protection group, is denied the opportunity to head it.
But this is not the only reason that Geithner is opposed to Warren’s nomination. I believe Geithner sees the appointment of Elizabeth Warren as a threat to the very scheme he has utilized to date to hide bank losses, thus keeping the banks solvent and out of bankruptcy court and their existing management teams employed and well-paid.
There are a lot of reasons to like the idea of a consumer financial protection agency. My colleagues Barbara Kiviat and Michael Grunwald have made the more substantive ones here, here and here. But I think I have stumbled across possibly the most telling data point yet on why the CFPA is likely a good idea: Jamie Dimon is scared of debating Elizabeth Warren on the topic. It’s not because Dimon is not passionate about the topic. Privately, Dimon and other JP Morgan exeuctives have been strongly making their case in Washington against starting a new agency, even one housed at the Fed, to monitor consumer protection in the banking business.
But when White House Chief of Staff Rahm Emanuel called a top J.P. Morgan executive to ask for the bank’s support in creating a new consumer-protection agency, the executive—former Commerce Secretary William Daley—said no, according to people familiar with the conversation. His boss believed that sufficient consumer safeguards were already on the books.
Nonetheless, I have put some phone calls in and Dimon is unwilling to take Warren on in person and debate the topic. Dimon is a smart guy. So the fact that he is scared to debate Warren on the topic means that he knows he can’t win. Here’s why:
First a recap. Elizabeth Warren is a Harvard law professor that also heads up the Congressional Oversight Panel, which has monitored the TARP program with hearings and studies. A few years ago, after studying a number of abusive lending practices regularly engaged in by the nation’s largest banks, she came up with the idea of launching a Consumer Financial Protection Agency. In Warren’s vision, it would be federally funded and separate from other regulators. It’s only job would be to assess whether the loans and other products sold by banks are fair and safe for consumers. Much like the FDA does for drugs. Obama loves the idea. And so it has been batted around as part of the reform effort, and is included, in a weaker form, in Dodd’s reform bill. Here’s what FDIC chief Sheila Bair had to say about Warren and her proposal in the TIME 100 this week:
A bunch of legendary comedians got together to make a sketch, where the punchline is: "establish a Consumer Financial Protection Agency". It’s kinda a funny, but mostly because of the Darrell Hammond’s imitation of Clinton making sexual innuendos, and Fred Armisen’s impersonation of Barack Obama. It seems director Ron Howard was trying to find something to ‘do good’, so he chatted with the earnest and overeducated Elizabeth Warren, and decided consumer financial regulation was the kind of smart idea that would obviously work. After all, who’s against consumer protection?
I am! This is the same government that goaded banks to lower standard to lend more to historically damaged communities, and then when those borrowers defaulted, blamed such lending on the banks. Avoiding the poor is redlining, targeting the poor is predatory, which means, whatever goes wrong can be blamed on the banks. Government always wants to have its cake and eat it too: low taxes & high spending, high growth and union-type work rules, banks lending more today and raising their capital.
The CFPA tries to do what most regulators try to do: improve efficiency, eliminate waste, consolidate regulations,simplify regulations, protect consumers, and protect jobs! It seems banks are greedy and basically uregulated, leading directly to the 2008 housing crisis. There are seven government bodies already regulating banks, highlighting how incredibly naive this proposal is. If there’s a magic bullet for improving efficiency, etc., share it with existing regulators…unless you think that all the regulators have been captured by some interest group, which if true just means we are bringing in one more interest group to advocate why they should get a better deal.
More importantly, if your concern is about the irrational poor people easily duped by huckster bankers, lower prices and penalties on the poor doesn’t help them, it enables them. Life has carrots and sticks, and one definition of a vice is that which generates bad outcomes in the long run. If you are constantly overdrafting your account, don’t have enough money to make a 20% down payment on a property, you need better financial discipline. Helping the poor from being trapped by debt should try to minimize they amount of debt they have, say by increasing rather than lowering prices on credit cards.…
IAC/Interactive Chairman Barry Diller spoke with Bloomberg's Erik Schatzker about many things including the state of the TV industry, Tinder, and Jack Dorsey at the Bloomberg Markets Most Influential Summit in New York today. However, the one thing that caught our attention was the prominent Democrat's characterization of what he would do if Donald Trump wins the presidential election.
"If Donald Trump doesn’t fall, I'll either move out of the country or join the resistance. I just think it's a phenomenon of reality television as politics and I think that that is how it started. Reality television, as you all know, is based on conflict. All he is is about conflict and it's all abou...
Most of the gains were posted pre-market, but bulls were able to hold gains after a couple of days of bullish strength.
The S&P is on course to finish with a spinning top doji. The 50-day MA is just overhead and close to 2,000 psychological resistance. Technicals are close to turning net bullish.
The Nasdaq closed above 20-day MA and has room to run to overhead resistance. Like the S&P, it 's close to turning net bullish technically. Today was a typical consolidation, which given recent price action should be viewed as bullish.
Former Fed Chair Ben Bernanke: What Did He Know and When Did He Know It
Will the American people ever get an honest writing of the 2008-2009 Wall Street collapse? If you think it is to be found in the new book released on Monday by former Fed Chairman Ben Bernanke (which we seriously doubt you are thinking) you will be disappointed.
What you will find in Bernanke’s book are photos of his grandparents, a photo of the Time Magazine cover with himself named “Man of the Year,” a photo of Bernanke with the masterminds of the repeal of the investor protection act known as Glass-Steagall (Robert Rubin, Alan Greensp...
China’s yuan overtook Japan’s yen to become the fourth most-used currency for global payments, shrugging off a surprise devaluation to rise to its highest ranking ever and boosting its claim for reserve status.
Uncertainty about the health of the global economy led investors to flee U.S. equities during Q3, primarily driven by worries about China's growth prospects and the Federal Reserve’s decision to not raise rates. Sure, there are plenty of real and perceived headwinds, but on balance it seems that a recession here at home is not in the cards. And when you consider sentiment and the technical picture, it appears that a continuation of Friday’s bounce is in store. The question remains as to whether the seasonally strong Q4 will be able to propel the bulls through levels of resistance that have built up.
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With the VIX index jumping 120 percent on a weekly basis, the most in its history, and with the index measuring volatility or "fear" up near 47 percent on the day, one might think professional investors might be concerned. While the sell off did surprise some, certain hedge fund managers have started to dip their toes in the water to buy stocks they have on their accumulation list, while other algorithmic strategies are actually prospering in this volatile but generally consistently trending market.
Stock market sell off surprises some while others were prepared and are hedged prospering
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Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).
Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself.
Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene
The replay is now available on BNN's website. For the three part series, click on the links below.
Part 1 is here (discussing the macro outlook for the markets)
Part 2 is here. (discussing our main trading strategies)
Part 3 is here. (reviewing our pick of th...
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at firstname.lastname@example.org with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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