Posts Tagged ‘financial regulatory reform’

Wall Street Reform Could Cost Goldman Sachs BILLIONS

Wall Street Reform Could Cost Goldman Sachs BILLIONS

Courtesy of Ryan Grim and Shahien Nasiripour at The Huffington Post 

The proposed financial reforms pending before Congress could cost Goldman Sachs nearly a quarter of its annual profits, Citigroup analysts estimate in a new report.

Goldman, the most profitable securities firm on Wall Street, could lose up to $5.06 in earnings on a per-share basis if Congress passes a bill that forbids banks from trading for their own profit, owning or sponsoring hedge funds and private equity funds, and compelling them to move most of their derivatives dealing into regulated markets, according to the research note.

Combined with a potential fee to recoup taxpayer losses on TARP and higher deposit insurance assessments on its bank, Goldman could lose up to 23 percent of its profits, giving it the distinction of being the firm most impacted by the financial reform legislation.

Morgan Stanley is a close second as the team of Citi analysts, led by Keith Horowitz, estimate that it could lose up to 20 percent of its profits. Up to 18 percent of JPMorgan Chase’s profits are at risk, while Bank of America, the nation’s largest bank by assets, could see up to 16 percent of its profits evaporate.

The so-called "Volcker Rules," which would ban banks from putting their own capital at risk in hedge funds, private equity firms and through proprietary trades, and limit the growth of the largest ones, could shave four percent off the banks’ bottom lines, the Citi analysts estimate. Tighter restrictions on prop trading, which come in the form of a provision pushed by Democratic Senators Carl Levin of Michigan and Jeff Merkley of Oregon, could cost the big banks five percent of their profits.

Combined with the various other aspects of the pending legislation — like compelling banks to hold better-quality capital, making the biggest ones pay more for deposit insurance and robust regulation of heretofore unregulated derivatives — and the nation’s biggest banks could collectively lose up to 11 percent of their annual profits, the Citi analysts estimate in their Wednesday report. Goldman, Morgan, JPMorgan and Bank of America would be the most impacted.

"[O]ne of the biggest areas of risk for the group is tougher trading rules via [a] narrow definition of what constitutes banned proprietary activity," the authors noted. They were also careful to note that while their estimates required…
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WHY IS THERE OPPOSITION TO FINANCIAL REGULATORY REFORM?

WHY IS THERE OPPOSITION TO FINANCIAL REGULATORY REFORM?

Courtesy of The Pragmatic Capitalist 

Let me close with this thought. My father grew up in the Great Depression. Like so many of his generation, he was shaped by sacrifice – hardened by economic hardship and war – keenly aware of the financial recklessness that made his life so much harder than it needed to be. His generation learned the lessons of financial disaster so that the country could avoid it for decades. Let us learn the lessons of our time.  Let us be diligent and thoughtful today, so that our financial and economic system can rebound fully, and enrich and sustain the Americans of tomorrow.

- Phil Angelides

I think we are all fairly well versed in the various causes of the financial crisis by now.  This was a widespread break-down of the entire financial system.  Consumers got greedy, the banks got greedy, the government stopped enforcing the rules (or dismantled them altogether) and monetary and fiscal policy broke down on several levels.  I’ve spent a great deal of time here talking about the consumer break-down and how Americans spend more than they make and are generally fiscally irresponsible.  Fortunately, the consumer is de-leveraging and continues to reshape and improve their balance sheet.  Hopefully, this is a continuing trend.  Corporations have also been very effective in reducing leverage and paying down debt.  One of the few bright spots in all of this is that U.S. corporations remain quite robust.  Unfortunately, the monetary and fiscal response has been similar to what caused this crisis, but that is a mess derived from years of misunderstood (in my opinion) and backwards thinking with regards to our monetary system.  That is something that can only be resolved with time and education.  What remains entirely unresolved, however, is financial regulatory reform.  It’s time that we update our antiquated regulatory system and install a system that ensures the Enron banking system is contained.

Since the early 1980’s we have been slowly breaking down the regulatory system that helped the United States avoid a major financial crisis for almost 60 years.  As banks have evolved and financial innovation has grown the regulators have failed to keep pace.  As big banks and corporations sought to maximize profits…
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Senator Richard Durbin (D-IL): “Frankly, the Banks Own Congress” and You’re Getting Screwed Again

Senator Richard Durbin (D-IL): “Frankly, the Banks Own Congress” and You’re Getting Screwed Again

Courtesy of Larry Doyle at Sense on Cents

I wrote extensively in 2009 as to How Wall Street Bought Washington. Well, it would appear that the purchase and sales agreement between these two entities remains in place.

A recent press release highlights developments on Senator Chris Dodd’s proposed Financial Regulatory Reform along with a recent assessment by Washington insider and Illinois Senator Richard Durbin.

DEMOCRATIC FINANCIAL REFORM BILL EXITED SENATE BANKING COMMITTEE WITHOUT RESTORING KEY INVESTOR LEGAL RIGHT TO HOLD KNOWING AIDERS AND ABETTORS OF FRAUD ACCOUNTABLE 

Senator Durbin Says:  “Frankly, the banks own Congress,” as Investigation of Lehman Brothers Found Its’ Accountants and Lawyers Helped “Cook the Books”

March 24, 2010:   The Senate Banking Committee financial reform bill was voted out of committee on Monday afternoon.  On the previous Friday Senator Jeff Merkley (D-OR) offered an amendment to include the restoration of the legal rights of investors to hold accountable those who knowingly aid and abet fraud, a critical component of financial reform. The first draft of Senator Dodd’s bill, which was on the Committee Web site for months, contained this provision.

Chairman Dodd apparently dropped that important investor protection measure in a failed attempt to gain Republican and Wall Street support and the Democratic bill exited his Committee without it. As a result, Senator Merkley’s amendment was never even considered.  Therefore as it now stands the legislation heading to the floor of the Senate does not restore the lost right of investors to hold knowing aiders and abettors accountable to the investors they help rob.

As Senator Dick Durbin (D-IL) said (prior to Chairman Dodd’s mark-up): “Hard to believe in a time when we are facing a banking crisis, that many of the banks created, that the banks are still the most powerful lobby on Capitol Hill. They frankly own the place.“  Senator Durbin said this in a radio interview on Monday, March 15 (WJJG-AM: “Mornings with Ray Hanania,” a big Chicago area political call in show).

Separately, also on March 15, in a Senate speech, Senator Ted Kaufman (D-Del) said:  “Lehman Brothers was cooking the books.  Fraud and potential criminal conduct were at the heart of the financial crisis.”

Senator Kaufman was referring to the 2,200 page report issued last week on the investigation into Lehman Brother’s spectacular failure.  It documents in-detail how Lehman’s banking counterparties, lawyers and accountants knowingly structured faux


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Congressional Legislation Introduced By Barney Frank Pre-Approves $4 Trillion For Next Crisis

Congressional Legislation Introduced By Barney Frank Pre-Approves $4 Trillion For Next Crisis

Courtesy of Mish

House Democratic Leaders Discuss Emergency Aid To Automakers

Barney Frank introduced H. R. 4173 purportedly "To provide for financial regulatory reform, to protect consumers and investors, to enhance Federal understanding of insurance issues, to regulate the over-the-counter derivatives markets, and for other purposes."

The bill is 1,279 pages long. I did not read it in entirety but Bloomberg columnist David Reilly did. It is amazing the things Barney Frank buried in a bill that is supposed to protect consumers. The bill does nothing for consumers, but does allocate $4 trillion to fighting the next financial crisis.

Please consider Bankers Get $4 Trillion Gift From Barney Frank: David Reilly.

To close out 2009, I decided to do something I bet no member of Congress has done — actually read from cover to cover one of the pieces of sweeping legislation bouncing around Capitol Hill.

Hunkering down by the fire, I snuggled up with H.R. 4173, the financial-reform legislation passed earlier this month by the House of Representatives. I quickly discovered why members of Congress rarely read legislation like this. At 1,279 pages, the “Wall Street Reform and Consumer Protection Act” is a real slog.

Here are some of the nuggets I gleaned from days spent reading Frank’s handiwork:

For all its heft, the bill doesn’t once mention the words “too-big-to-fail,” the main issue confronting the financial system.

Instead, it supports the biggest banks. It authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. So much for “no-more-bailouts” talk. That is more than twice what the Fed pumped into markets this time around. The size of the fund makes the bribes in the Senate’s health-care bill look minuscule.

Oh, hold on, the Federal Reserve and Treasury Secretary can’t authorize these funds unless “there is at least a 99 percent likelihood that all funds and interest will be paid back.” Too bad the same models used to foresee the housing meltdown probably will be used to predict this likelihood as well.

The bill also allows regulators to “prohibit any incentive-based payment arrangement.” In other words, banker bonuses are still in play.

The bill isn’t all bad, though. It creates a new Consumer Financial Protection Agency, the brainchild of Elizabeth


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Goldman’s Sudden Boom Could Be a Bust for Obama

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Gambler, Goldman SachsThere you stood, everybody watched you play
I just turned and walked away
I had nothing left to say

cause you’re still the same
You’re still the same
Moving game to game
Some things never change

       - Still the same, Bob Seger

Goldman’s Sudden Boom Could Be a Bust for Obama

Courtesy of TIME, by Michael Scherer

Goldman Sachs chairman and CEO Lloyd BlankfeinIn a clear departure from the historical norm, the White House is not cheering the return of huge profits to Wall Street. On the contrary, the recent windfalls at Goldman Sachs and JPMorgan, and the promise of giant year-end paydays for banking executives and traders, has caused a bit of consternation in the West Wing, coming as it does so soon after the taxpayer bailouts saved the entire financial system from total collapse.

"If I were a Wall Street firm, I would perhaps be cognizant of the fact that the financial regulatory-reform process is only beginning in Congress," warns a senior White House official, speaking about the political problems that huge paydays at Wall Street firms could create later this year, when new laws to regulate the industry will be written on Capitol Hill. Officials have also begun to worry aloud whether the Wall Street firms learned anything from the catastrophic financial crisis that was largely of their making or whether they are now returning to the old business of making short-term profits that create long-term risks.

On July 14, Goldman Sachs posted second-quarter profits of $3.44 billion, more than the company made in all of 2008 and about on par with the precrisis gilded age, while announcing that it had set aside $11.4 billion this year to compensate workers, or $386,489 per employee. The huge profits were hailed on Wall Street as another sign that the crisis might be ending. On July 15, the Dow Jones industrial average jumped 3.1%, and other banking giants are expected to issue their own similarly glowing reports. On July 16, JPMorgan announced that it had earned $2.7 billion in the second quarter. (Read "Despite the Economy’s Struggles, Stock Market Soars.")

The good news for traders has created two distinct concerns for President Obama’s advisers. The first problem is political. For much of the year, populist revulsion at Wall Street greed has been palpable. Obama, who prides…
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Phil's Favorites

The world before this coronavirus and after cannot be the same

 

The world before this coronavirus and after cannot be the same

Gettyimages

Courtesy of Ian Goldin, University of Oxford and Robert Muggah, Pontifical Catholic University of Rio de Janeiro (PUC-Rio)

With COVID-19 infections now evident in 176 countries, the pandemic is the most significant threat to humanity since the second world war. Then, as now, confidence in international cooperation and institutions plumbed new lows.

While the...



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Zero Hedge

25-Year-Old California Man With No Underlying Conditions Dies Of COVID-19

Courtesy of ZeroHedge View original post here.

While coronavirus deaths have primarily been in those above 50-years-old, the disease has also been sending younger people to the ICU in larger than expected numbers - and in some cases, claiming younger victims.

In France, doctors have reported that 50% of ICU patients are under 60-years-old, while in the Netherlands, half are under 50.

Nearly 50% of c...



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Insider Scoop

'Psyched': Hawaii Considers Resolution For Shrooms, Champignon Eyes Ketamine Products

Courtesy of Benzinga

Psyched is a bi-monthly column covering the most important developments in the industry of medicinal psychedelics. We hope you follow us periodically as we report on the growth of this exciting new industry.

Champignon Brands Buys IP Company and Adds Ketamine and New Formulations To Its Portfolio

On March 19, Champignon Brands Inc. (CSE: SHRM) (OTC: SHRMF), a Canadian healt...



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The Technical Traders

These Index Charts Will Calm You Down

Courtesy of Technical Traders

I put together this video that will calm you down, because knowing where are within the stock market cycles, and the economy makes all the difference.

This is the worst time to be starting a business that’s for sure. I have talked about this is past videos and events I attended that bear markets are fantastic opportunities if you can retain your capital until late in the bear market cycle. If you can do this, you will find countless opportunities to invest money. From buying businesses, franchises, real estate, equipment, and stocks at a considerable discount that would make today’s prices look ridiculous (which they are).

Take a quick watch of this video because it shows you ...



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Kimble Charting Solutions

Broadest Of All Stock Indices Testing Critical Support, Says Joe Friday!

Courtesy of Chris Kimble

One of the broadest indices in the states remains in a long-term bullish trend, where a critical support test is in play.

The chart looks at the Wilshire 5000 on a monthly basis over the past 35-years.

The index has spent the majority of the past three decades inside of rising channel (1). It hit the top of this multi-decade channel to start off the year, where it created a monthly bearish reversal pattern.

Weakness the past 2-months has the index testing rising support and the December 2018 lows at (2).

Joe...



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Biotech/COVID-19

Coronavirus treatments and vaccines - research on 3 types of antivirals and 10 different vaccines is being fast-tracked

 

Coronavirus treatments and vaccines – research on 3 types of antivirals and 10 different vaccines is being fast-tracked

Scientific research on the novel coronavirus has progressed at unprecedented speed. Mongkolchon Akesin / Shutterstock

Courtesy of Ignacio López-Goñi, Universidad de Navarra

Just three months after China first notified the World Health Organization about a deadly new coronavirus, studies of numerous antiviral t...



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Chart School

Cycle Trading - Funny when it comes due

Courtesy of Read the Ticker

Non believers of cycles become fast believers when the heat of the moment is upon them.

Just has we have birthdays, so does the market, regular cycles of time and price. The market news of the cycle turn may change each time, but the time is regular. Markets are not a random walk.


Success comes from strategy and the execution of a plan.















Changes in the world is the source of all market moves, to catch an...

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Digital Currencies

Bitcoin Tested As A Safe Haven After Biggest Stock Crash Since 2009

Courtesy of ZeroHedge View original post here.

Authored by Horus Hughes via CoinTelegraph.com,

Gold and Bitcoin react to global panic

Amid all of yesterday's chaos in bond, commodity, and stock markets, with the yield on the 10-year US Treasury note dropping below 0.5% for the first time in history - a strong indicator that investors are desperately looking for safe harbors - two supposed safe-havens in 'alternative currencies' behaved qui...



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Members' Corner

Bloody Mob Sh*t: An Interview with Lincoln's Bible

 

Bloody Mob Sh*t: An Interview with Lincoln's Bible

We talk Trump, Mogilevich, Epstein, Giuliani, Fred Trump, Roy Cohn, and more.

Courtesy of Greg Olear at PREVAIL, author of Dirty Rubles: An Introduction to Trump/Russia

(Originally published on Feb. 21, 20.)

...

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ValueWalk

Entrepreneurial activity and business ownership on the rise

By Jacob Wolinsky. Originally published at ValueWalk.

Indicating strong health of entrepreneurship, both entrepreneurial activity and established business ownership in the United States have trended upwards over the past 19 years, according to the 2019/2020 Global Entrepreneurship Monitor Global Report, released March 3rd in Miami at the GEM Annual Meeting.

Q4 2019 hedge fund letters, conferences and more

The Benefit Of Entrepreneurial Activity ...

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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

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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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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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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