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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ValueWalk

PPP changes pass House as small businesses hit first loan deadlines

By Jacob Wolinsky. Originally published at ValueWalk.

Small businesses need all these adjustments in the Paycheck Protection Flexibility Act, but there are still multiple gaps, including data collection

Q1 2020 hedge fund letters, conferences and more

On the passage of the Paycheck Protection Flexibility Act in House today, Executive Director of the Main Street Alliance Amanda Ballantyne has this to say:

Paycheck Protection Flexibility Act Addresses PPP Flaws

“The Paycheck Protection Flexibility Act is ...



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Phil's Favorites

The PhilStockWorld.com Weekly Webinar - 05-27-2020

 

For LIVE access on Wednesday afternoons, join us here at Phil's Stock World!

 

Major Topics:

00:01:40 - Yang 4 Day Work Week
00:12:21 - DIS
00:19:01 - Bonds
00:25:49 - COVID-19 Update
00:41:12 - Trading Techniques
00:45:18 - US Corporate Taxes
00:52:27 - US National Debt
01:04:36 - Beige Book
01:09:25 - Hedge Funds
01:10:08 - States Reopening
01:14:16 - May Portfolio Review
01:14:52 - STP & LTP
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Phil's Weekly Trading Webinars provide a great opportunity to learn what we ...



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Biotech/COVID-19

How coronavirus contact tracing works in a state Dr. Fauci praised as a model to follow

 

How coronavirus contact tracing works in a state Dr. Fauci praised as a model to follow

Pairing widespread testing with fast, effective contact tracing is considered essential for controlling the coronavirus’s spread as the U.S. passes 100,000 deaths. AP Images/Rick Bowmer

Courtesy of Jenny Meredith, University of South Carolina

After weeks of keeping people home to “flatten the curve,” restrictions on U.S. businesses are loosening and the coronavirus pandemic response is moving ...



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Zero Hedge

Futures Tread Water In Calm Before US-China Storm, Trump Twitter Crackdown

Courtesy of ZeroHedge View original post here.

The S&P's remarkable stretch of posting gains in the overnight session continued for another day, with the S&P rising as high as 3,053, and last trading 9 points higher at 3,044, tracking global stocks higher, with Europe's Stoxx 600 rising 1.3% to session highs as investors weighed again increased friction between America and China and the official passage of China's National Security Law in defiance of Trump, against fresh fiscal stimulus promised by the European Union. Treasuries edged up, while the dollar was modestly lower even as traders "treaded water...



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Kimble Charting Solutions

Tech Indicator Suggesting A Historic Top Could Be Forming?

Courtesy of Chris Kimble

Tech stocks have been the clear leader of the stock market recovery rally, this year and since the lows back in 2007!

But within the ranks of leadership, and an important ratio may be sending a caution message to investors.

In today’s chart, we look at the ratio of large-cap tech stocks (the Nasdaq 100 Index) to the broader tech market (the Nasdaq Composite) on a “monthly” basis.

The large-cap concentrated Nasdaq 100 (only 100 stocks) has been the clear leader for several years versus the ...



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The Technical Traders

M2 Velocity Collapses - Could A Bottom In Capital Velocity Be Setting Up?

Courtesy of Technical Traders

M2 Velocity is the measurement of capital circulating within the economy.  The faster capital circulates within the economy, the more that capital is being deployed within the economy to create output and opportunities for economic growth.  When M2 Velocity contracts, capital is being deployed in investments or assets that prevent that capital from further circulation within the economy – thus preventing further output and opportunity growth features.

The decline in M2 Velocity over the past 10+ years has been dramatic and consistent with the dramatic new zero US Federal Reserve interest rates initiated since just after the 2008 credit crisis market colla...



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Lee's Free Thinking

US Southern States COVID19 Cases - Let's Give Credit Where Due

 

US Southern States COVID19 Cases – Let’s Give Credit Where Due

Courtesy of  

The number of new COVID 19 cases has been falling in the Northeast, but the South is not having the same experience. The number of new cases per day in each Southern state has been rangebound for the past month.

And that’s assuming that the numbers haven’t been manipulated. We know that in Georgia’s case at least, they have been. And there are suspicions about Florida as well, as the State now engages in a smear campaign against the fired employee who built its much praised COVID19 database and dashboar...



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Chart School

Is this your local response to COVID 19

Courtesy of Read the Ticker

This is off topic, but a bit of fun!


This is the standard reaction from the control freaks.








This is the song for post lock down!







What should be made mandatory? Vaccines, hell NO! This should be mandatory: Every one taking their tops off in the sun, they do in Africa!

Guess which family gets more Vitamin D and eats less sugary carbs, TV Show



...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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