Posts Tagged ‘financial reform bill’

Financial Reform Bill as Mere Inconvenience

Financial Reform Bill as Mere Inconvenience

Courtesy of Joshua M. Brown, The Reformed Broker  

This cartoon caught my eye last week.  If you stare at the driver real hard, you can probably picture your favorite banker friend or Wall Street lawyer friend.

Whatevs, we knew that no matter how much outrage there was, the world would pretty much revert back to the natural order of things eventually.  The Financial Reform Bill is a speeding ticket, the reckless driver is still pushing a luxury sexwagon.

Source:

Cartoons of the Week (TIME)


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What Does The Financial Reform Bill Do Other Than Being Completely And Utterly Worthless?

What Does The Financial Reform Bill Do Other Than Being Completely And Utterly Worthless?

Courtesy of Michael Synder at The Economic Collapse 

Is it possible to write a 2,300 page piece of legislation that accomplishes next to nothing and is pretty much completely and utterly worthless?  The answer is yes.  Barack Obama has been trumpeting the Dodd-Frank financial reform bill as the "biggest rewrite of Wall Street rules since the Great Depression", but the truth is that after the Wall Street lobbyists got done carving it up, the bill that was left was so watered down and so toothless that it essentially accomplishes nothing except creating even more government bureaucracy and even more mind-numbing paperwork. 

The bill is so riddled with loopholes for the big banks that it is basically the legislative equivalent of Swiss cheese.  The Democrats in the Senate were ecstatic when they announced that they had secured the 60 votes needed to pass this legislation, but when they are asked about what the financial reform bill will do, most of them are left stammering for some kind of cohesive response.  The sad truth is that most of them probably don’t understand the bill and none of them will probably ever read the entire thing.

So will the financial reform bill do any good at all?

Well, yes.

A very, very small amount.

Essentially, it is kind of like going over to the Pacific Ocean and scooping out a couple of cups of water.

That is about how much good this bill is going to do.

But U.S. Senate Majority Leader Harry Reid is making this sound like this is some kind of history-changing legislation….

"We’re cleaning up Wall Street."

Oh really?

Charles Geisst, professor of finance at Manhattan College recently had the following to say about this absolutely toothless bill….

Like health-care reform, this bill is being drawn up to grab headlines but its details betray it as nothing more than a slap on the wrist for Wall Street. It is true that Wall Street can commit grand theft and apparently get off with nothing more than community service.

The truth is that most of us never expected the U.S. government to truly take on Wall Street.  The relationship between the two is just way too cozy for that to happen.

So does the financial reform bill actually accomplish anything?

Yes.

Let’s take a look…
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Mike Konczal Talks FinReg on GRITtv: Taxpayers Still on the Hook for Wall Street’s Recklessness

Mike Konczal Talks FinReg on GRITtv: Taxpayers Still on the Hook for Wall Street’s Recklessness

Courtesy of Tim Price writing at New Deal 2.0

Roosevelt Institute Fellow Mike Konczal joined Demos’s Nomi Prins and GRITtv host Laura Flanders last week to discuss the state of financial reform, whether the current bill does enough to change the culture of risk on Wall Street, and whether taxpayers are going to be stuck holding the bag — again.

Check out the full interview:

Mike notes that one of the key questions of reform is “who’s going to pay for this, and ideally we want the people who caused the trouble to pay for it, not regular citizens.” Instead, he says Republicans like Scott Brown have transferred the cost from banks to the FDIC and the savings accounts of average Americans.

On the subject of possible criminal charges for Goldman Sachs, Mike says that the lack of major arrests compared to previous crises “shows how much people haven’t internalized the disaster they’ve caused. The culture is still very much the same.” The problem, he explains, is that firms like AIG “thought they were being very clever when they were actually getting gamed.” The fact that we still aren’t sure how much of this was illegal “shows how disturbed the regulation is.”

Mike pushes back on AIG’s attempts to shift the blame for its reckless bets, noting that “when we talk about what AIG was doing, that’s millions of Americans who are actually in those bonds, that were given loans that they shouldn’t have so that AIG could juke some statistics.” Unfortunately, he offers a grim prognosis for AIG’s victims: “The foreclosure crisis is ongoing, it will be ongoing next year, and the President’s plan there, HAMP, has been a total failure that most credible people have walked away from at this point. We have a quarter of homeowners underwater and they have no relief, and they’re paying into a system that is pretty much insolvent.”

Finally, responding to deficit hawks’ calls for cuts to programs like Social Security, Mike argues that “if they were very concerned about protecting anyone, they would go much harder into financial reform. Because this is really where the deficit’s coming from right now, the fact that we have a major financial crisis. There’s two things that
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Russ Feingold Votes With His Conscience, Against The “Regulation” Farce, And Denies Passage Of The Frank-Dodd Fin-Reg Mutant Love Child

Russ Feingold Votes With His Conscience, Against The "Regulation" Farce, And Denies Passage Of The Frank-Dodd Fin-Reg Mutant Love Child

Courtesy of Tyler Durden at Zero Hedge

Sen. Russ Feingold (D-WI) delivers his opening statement during Supreme Court nominee Sonia Sotomayor's confirmation hearing before the Senate Judiciary Committee on Capitol Hill in Washington on July 13, 2009. (UPI Photo/Kevin Dietsch) Photo via Newscom

In 1999, only 8 senators voted Nay on the Glass Steagall-repealing proposition S.900, better known as the Gramm Leach Bliley, that nearly destroyed the financial system as we know it and elevated moral hazard to the pedestal of supreme American communist-capitalism. Out of the 100 corrupt statesmen 11 years ago, these are the only 8 people who deserve to be in the Senate currently (where, oddly, we find such Yay-voters as Carl Levin who recently was browbeating Goldman Sachs for doing precisely what his legislation allowed it to do). One of the 8 was Senator Russ Feingold. Tonight, the Senator once again has the guts to stand up against the latest and greatest failure of a "reform" bill – the mutated and malevolent Frank-Dodd love child known as the Fin Reg "reform" which is nothing but a farce with lipstick on it. Reuters reports that Feingold "said on Monday that he will not vote to advance the financial-reform bill." With this decision the senator is denying "his fellow Democrats the 60th vote they need to clear a final hurdle in Congress."

"My test for the financial regulatory reform bill is whether it will prevent another crisis," Feingold said in a prepared statement. The bill "fails that test and for that reason I will not vote to advance it."

Senator, we salute you for standing up for what is right. 


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Which Has a Better Ring – The Hexopoly or The Systemic Six?

Which Has a Better Ring – The Hexopoly or The Systemic Six?

Courtesy of Joshua M Brown, The Reformed Broker 

The Financial Reform Bill, which I’ve nicknamed The Let’s Not Allow Our Largest Donors To Embarrass Us Again Act of 2010, is not a total failure, but it fails miserably to address perhaps the worst part of the crisis - Too Big To Fail.

The bill doesn’t really address the Hexopoly of Too Big To Fail Banks.  I’m also calling theseThe Systemic Six.

The big six banks (Goldie, Morgan, JP, B of A, Wells and Citi) will be limited in their hedge fund investments and trading activity, but not very limited.  The interconnectedness, however, is unchanged, and this is the very crux of the matter.

Citi was saved to prevent it from dragging Wells down, Wachovia, Merrill, Morgan were all "assisted" to prevent Goldman and JPMorgan Chase from going down, and on and on.  We were told that the dominoes were already falling after Lehman and so emergency measures (bailouts) were necessary.

And for arguments sake, let’s say this was true at the time or was the best option to prevent the Depression.  OK, fine.  But so why doesn’t the new legislation address that and seek a change for the fact that these six banks (and others) can cause such a massive chain reaction?  It’s a shocking gap in the provisions of the bill.

And don’t even get me started on the Fannie and Freddie omission (consider those cans kicked down the road).  If Finance Reform were a wedding, Fannie and Freddie would be placed at the farthest table from the action, over by the kitchen doors like the ugly cousins of the banks that they truly are.

Oh well, maybe we’ll get it right after the next economic evisceration.  For now, The Hexopoly orThe Systemic Six are here to stay. 

****

Picture credit MTTS (h/t Jr. Deputy Accountant)  


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Financial Reform Bill Is Like Watching An R-Rated Movie On TNT

Financial Reform Bill Is Like Watching An R-Rated Movie On TNT

Courtesy of Joshua M. Brown, The Reformed Broker 

Just going through the details of the Senate and House’s merged Financial Reform Bill, also known as the Let’s Not Allow Our Largest Donors To Embarrass Us Again Act of 2010.

Wall Street wins this round. The "teeth" of the Volcker Rule have been kicked in and there are enough holes elsewhere for White & Case to exploit on behalf of their clientele til the cows come home.  The Dems unanimously voted for it.  Interestingly, Republicans all voted against it.  They didn’t think the final version was strict enough or that it did enough to prevent Too Big To Fail.

Reading through the bill, I have to say, is a bit like watching Pulp Fiction or Goodfellas on TNT.  The plot is intact but the movie is still somehow rendered meaningless minus the blood, guts and f-bombs.  No, Ray Liotta didn’t just say ‘Fudge You’ and no, banks should not be taking deposits with one hand and rolling the dice with the other.

There will be some limitation to what large banks can do on a proprietary basis, but they will still be de facto giant hedge funds, albeit hedge funds with higher capital reserve requirements.

The ratings agency stuff in the bill was well done in my view – it adds liability into the mix, finally.

Tyler Durden is even, how shall we put this, …
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Grading Financial Regulatory Reform

Grading Financial Regulatory Reform

By Barry Ritholtz 

This morning, we learned of a huge compromise in regulatory reform. The expectation was that no one was happy with the bill, but the politicians, who all get to go home to the voters and say “Well, at least we passed something.”

Overall, I give this a C minus: There are simply too many Fs to give them a much higher grade. Let’s look at what was passed and grade each section of reform:

TOO BIG TO FAIL:  Grade: F

The new regulation does not directly address either the repeal of Glass Steagall or TBTF. The crisis legacy is a financial services sector that is highly concentrated with dramatically reduced competition. The six largest financial firms — combined assets: $9.4 trillion — will still dominate the industry.  Too-Big-to-Fail remains the law of the land.

More here.> 


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The Only Way to Prevent Another Bailout of Wall Street is to Cap the Size of Wall Street Banks

The Only Way to Prevent Another Bailout of Wall Street is to Cap the Size of Wall Street Banks

Courtesy of Robert Reich

Robert Reich The best way for Senate Dems and the White House to respond to the Republican charge that the Dem plan for financial reform doesn’t go far enough to prevent another bailout is to call their bluff — and simultaneously do what’s necessary to avoid another bailout: Cap the size of big banks, as the UK is close to doing for its big banks.

The so-called “resolution” mechanism the Dems are pushing to wind down any big bank that gets into trouble is a step in the right direction. But it won’t work if two or more giant banks are endangered at the same time — which is likely to be the case when the next crisis occurs because every big bank uses whatever profitable financial ploys every other bank uses (as they did in the runup to the crash of 2008).

Furthermore, as I’ve noted before, as long as the big banks are allowed to be huge and become even bigger, their political clout in Washington will remain huge and become even bigger.  And as long as they have this kind of clout, they’ll wangle a bailout from Washington the next time their bets get them into trouble regardless of any “resolution” authority.

So the Dem bill must cut the big banks down to size. The limit should be $100 billion in assets.

Banks complain that their global competitiveness will suffer if they’re held to this size. Baloney. No one has been able to show any competitive efficiencies above $100 billion in assets. And for Wall Street to suggest its global competitiveness is somehow tied to the competitiveness of the rest of the American economy is the height of hubris anyway. Wall Street is making deals all over the world (i.e. Goldman Sachs and Greece), it’s parking its money all over the world, its star employees reside all over the globe, and it invests wherever it can get the best deals all over the world.

The only competitive advantage to being a giant bank headquartered on Wall Street is to have the economic and political clout to get bailed out by American taxpayers when the next crisis hits. We have learned this once. We do not need to learn it again.

Repeat: The only sure…
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The Litany

The Litany

Side profile of a businessman sitting with his head in his hand

Courtesy of Joshua M Brown, The Reformed Broker 

Looks like it’s gonna be a tough one for stocks today.  Here’s a list of what you can expect to put pressure on the markets this morning…

1.  Germany and the UK are very much interested in the details of how a New York investment bank may or may not have ripped off their local banks.

2.  China (Shanghai Composite Index) sold off almost 5% on news that the government has told the banks to curb all loans for third home purchases.  In and of itself, not a big deal, but a reminder of the tightness to which that country’s rulers aspire.

3.  The Euro weakening against the dollar is a fairly obvious headwind for risk assets – especially commodities and stocks.

4.  Dr Copper, possibly the best leading indicator we’ve got these days, dropping 2.3% in London.  May crude contract down 2.4% this morning (81-ish).

5. Goldman’s ($GS) earnings conference call is coming up this week (April 20th), there is a hesitancy for any kind of dip buying until The Street gets a better sense of how big the debt derivatives business is for them.

6. The speed and degree to which all stocks and sectors sold off on Friday on news that was rather company-specific is indicative of a blustery Bull without strong underpinnings.

7. While we were celebrating the Intel ($INTC) quarterly earnings, we had gotten a handful of initial jobless claims and foreclosure stats that were overlooked.  These stats will now be circled back to – and they looked like Paula Abdul getting off an airplane with no makeup.

8.  Many savvy market participants are anticipating the next phase of the CDO fraud pile-on – who else did this, who’s next to be called out.  In addition, will state attorneys general be joining the fray?  And what will the impact on the financial industry be now that Finance Reform has become more a slam dunk to pass, politically speaking?

Good luck and be careful out there.

 


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Zero Hedge

BBC Claims Iranian Government Is Lying About Outbreak: Real Death Toll Is 210, Not 34

Courtesy of ZeroHedge View original post here.

Given the Iranian regime's recent history of brazenly lying to the public despite its obvious culpability, we were certainly intrigued when a local lawmaker in Qom told reporters that at least 50 people had died from the coronavirus in his city alone.

Iranian authorities denied these ...



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Phil's Favorites

Don't fear a 'robot apocalypse' - tomorrow's digital jobs will be more satisfying and higher-paid

  Don't fear a 'robot apocalypse' – tomorrow's digital jobs will be more satisfying and higher-paid

Tomorrow’s good jobs will require digital skills like programming. alvarez/Getty Images

Courtesy of Christos A. Makridis, Massachusetts Institute of Technology

If you’re concerned that automation and artificial intelligence are going to disrupt the economy over the next decade, join the club. But while policymakers and academics agree there’ll be significant disruption, they differ about its impa...



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Kimble Charting Solutions

Financial Crisis Deja Vu: Home Construction Index Double Top?

Courtesy of Chris Kimble

Most of us remember the 2007-2009 financial crisis because of the collapse in home prices and its effect on the economy.

One key sector that tipped off that crisis was the home builders.

The home builders are an integral piece to our economy and often signal “all clears” or “short-term warnings” to investors based on their economic health and how the index trades.

In today’s chart, we highlight the Dow Jones Home Construction Index. It has climbed all the way back to its pre-crisis highs… BUT it immediately reversed lower from there.

This raises concerns about a double top.

This pr...



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Insider Scoop

A Peek Into The Markets: US Stock Futures Plunge Amid Coronavirus Fears

Courtesy of Benzinga

Pre-open movers

U.S. stock futures traded lower in early pre-market trade. South Korea confirmed 256 new coronavirus cases on Thursday, while China reported an additional 327 new cases. Data on U.S. international trade in goods for January, wholesale inventories for January and consumer spending for January will be released at 8:30 a.m. ET. The Chicago PMI for February is scheduled for release at 9:45 a.m. ET, while the University of Michigan's consumer sentime...



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Biotech & Health

Could coronavirus really trigger a recession?

 

Could coronavirus really trigger a recession?

Coronavirus seems to be on a collision course with the US economy and its 12-year bull market. AP Photo/Ng Han Guan

Courtesy of Michael Walden, North Carolina State University

Fears are growing that the new coronavirus will infect the U.S. economy.

A major U.S. stock market index posted its biggest two-day drop on record, erasing all the gains from the previous two months; ...



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The Technical Traders

SPY Breaks Below Fibonacci Bearish Trigger Level

Courtesy of Technical Traders

Our research team wanted to share this chart with our friends and followers.  This dramatic breakdown in price over the past 4+ days has resulted in a very clear bearish trigger which was confirmed by our Adaptive Fibonacci Price Modeling system.  We believe this downside move will target the $251 level on the SPY over the next few weeks and months.

Some recent headline articles worth reading:

On January 23, 2020, we ...



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Promotions

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TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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Chart School

Oil cycle leads the stock cycle

Courtesy of Read the Ticker

Sure correlation is not causation, but this chart should be known by you.

We all know the world economy was waiting for a pin to prick the 'everything bubble', but no one had any idea of what the pin would look like.

Hence this is why the story of the black swan is so relevant.






There is massive debt behind the record high stock markets, there so much debt the political will required to allow central banks to print trillions to cover losses will likely effect elections. The point is printing money to cover billions is unlikely to upset anyone, however printing trillions will. In 2007 it was billions, in 202X it ...

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Members' Corner

Threats to democracy: oligarchy, feudalism, dictatorship

 

Threats to democracy: oligarchy, feudalism, dictatorship

Courtesy of David Brin, Contrary Brin Blog 

Fascinating and important to consider, since it is probably one of the reasons why the world aristocracy is pulling its all-out putsch right now… “Trillions will be inherited over the coming decades, further widening the wealth gap,” reports the Los Angeles Times. The beneficiaries aren’t all that young themselves. From 1989 to 2016, U.S. households inherited more than $8.5 trillion. Over that time, the average age of recipients rose by a decade to 51. More ...



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Digital Currencies

Altcoin season 2.0: why bitcoin has been outgunned by crypto rivals since new year

 

Altcoin season 2.0: why bitcoin has been outgunned by crypto rivals since new year

‘We have you surrounded!’ Wit Olszewski

Courtesy of Gavin Brown, Manchester Metropolitan University and Richard Whittle, Manchester Metropolitan University

When bitcoin was trading at the dizzying heights of almost US$2...



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ValueWalk

What US companies are saying about coronavirus impact

By Aman Jain. Originally published at ValueWalk.

With the coronavirus outbreak coinciding with the U.S. earnings seasons, it is only normal to expect companies to talk about this deadly virus in their earnings conference calls. In fact, many major U.S. companies not only talked about coronavirus, but also warned about its potential impact on their financial numbers.

Q4 2019 hedge fund letters, conferences and more

Coronavirus impact: many US companies unclear

According to ...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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