Financial Times:
Congress will next month start the biggest regulatory overhaul of the US financial system in decades, bringing into the open a frantic lobbying effort between banks, regulators and policymakers on what it contains and who pays for it.
U.S. to Toughen Finance Rules - WSJ.com
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I'm a real estate appraiser I can speak 1st hand about new regulation. Before 1989 we were unregulated. We depended upon our reputation for business.
After the Real Estate crash of 1987 we became heavily regulated and the regulations were written by the banks, not Congress. The result was less dependency on reputations and more dependency on bureaucratic rules.
After this latest crash, new regulations have been imposed which allows banks greater control in the appraisal process and lowers fees that appraisers receive but increases fees that borrowers pay. The difference goes to the bank. So now when you pay the appraisal fee, most of that fee goes to a 3rd company which may in fact be a subsidiary of the bank. The $350 appraisal fee does not usually go to the appraiser.
Thats the result of new regulation.
I am skeptical indeed that the Democratic legislative leaders can timely produce reasoned regulations to roll back even to the Glass-Steagall level of regulations.
As now President and then Senator Barack Obama said of someone else, I must now apply to the Obama Administration's demonstrated astounding deference to and largesse with bankers, “It is my personal estimation that he has far more often used his formidable skills on behalf of the strong in opposition to the weak."
I have simply lost all hope that Democratic leaders have any real intention of creating legislation that can help anyone but the corporate interests of bankers and insurance companies at the expense of the increasingly weakened average person. It would appear that the Obama Administration is only interested in increasing the tyranny of the financial institutions over the people.
What we had before Reagan de-regulated worked. It seems it would be so sensible to look at the way it was, tweak it for now, and go with that. How sad that we can't just reverse the "forward thinking" decisions of de-regulation and free trade that got us into these messes. It would seem that if they worked once, we can make them work again.
A) What we had before Reagan did not work. Double digit inflation and unemployment isn't what I'd consider "working." Not that budget deficits are good either. Reagan actually signed into law one of the largest tax hikes in history after his tax cuts. But no one hears about this.
B) There was no deregulation, only a rule change. People point to such things as the S&L law modification (which happened in 1979, before Reagan was in office) as being deregulatory without looking into the facts of the situation. Laws on the books were limiting interest rates for S&L, which was helping cause massive failure. So, what the government did was to increase their deposit insurance coverage, allow an increase in rates, and allowed them to make riskier wagers. There was not only more regulation but an increase in moral hazard, which allowed them to act unsafely.
C) There is no free trade when the market is controlled by a central bank.
That tax hike was from the bottom up to make up for his previous top down cuts.
Please don't call this "regulatory overhaul." It's just another meat-market for the buying of government influence: quite literally an auction of bribery, hosted by thieves.
"Old Joe" will surely be there, just as he was when observed by the Ghost of Christmas Future. And whose foreclosed house? ... whose now-tattered but once-pressed business suit? ... whose demolished pride and future might be carried to this "low-browed, beetling shop" in Washington's modern-day "sepulchre of bones?"
How many wretched and misbegotten "profits" will be secured in these coming days, in this place where "secrets that few would like to scrutinize are bred and hidden?" How many ingenious ways will these men find to trade upon the misery of millions of their own countrymen, as they "smoke their pipes in all the luxury of calm retirement?"
Bank b@@stards don't want ANY regulations they spent BILLIONS to lobby
All they want is bailouts after they screw things up
2 Major Points from FDR's Inauguration Speech:
"1. Strict supervision of all Banking and Credits and Investments.
2. Stop speculation with other people's money."
To be serious we need to vote congress/senate out of office and put in new people. I don't care what party, keep them there for 4 years and start all over again. Only this way will they remember to vote on the side of the people and not the corporations. But we have not hit bottom yet, I doubt
people are smart enough yet.
Sunday, May 17, 2009
Reforming Credit Default Swaps and OTC Derivatives
Not only are the largest derivative dealers fighting efforts to reform the CDS and other derivative instruments that caused the AIG fiasco, but regulators like the Fed and US Treasury are working with the banks to ensure that a small group of dealers increase their monopoly over the business of over-the-counter ("OTC") derivatives.
The immediate objective of JPM and the dealer community is to counter attempts to truly regulate and, most important, make standardized commodities of OTC derivatives, even as the dealers clothe the new regime proposed by Tim Geithner for clearing and trading OTC contracts in the language of reform, transparency and efficiency.
If the NYSE and CME were to trade derivatives, the big banks knew they would not be able to control their fees or capture the profits from clearing. Therefore, they sold The Clearing Corp. to the Intercontinental Exchange, or ICE, a recent start-up in the OTC derivatives business which had been funded with money originally provided by, you guessed it, the banks.
In the deal with ICE, the banks receive half the profit of all trades cleared through the company. And the large OTC dealer banks made sure, through their connections with officials at the Fed and Treasury, that ICE was the winner chosen over the NYSE and CME offerings. That's right, we hear that Geithner personally intervened.
http://mar
FDR would stop Credit Default Swaps and probably most if not all Derivatives:
"Stop speculation with other people's money."
Bankers are blind. The blinkers that they voluntarily wear are called "balance sheets." And the problem with all accountancy is that its view stops at the edges of that piece of paper.
Ol' Henry Ford knew a thing or three when he insisted that his factories (and supplier's factories) must pay higher wages: he wanted his workers to be able to afford to buy Ford cars, which they did. At the height of his power he could have traded derivatives based on just where his shadow would fall as he walked down the street. But that power came from much more than "selling Ford cars." It came from paying enough wages to make buying Ford cars possible, and by insisting that his suppliers not keep all the money for themselves.
Henry was no saint, to be sure. But he knew about business. There are thousands of people out there who watch computers pouring more "money" (sic...) into their own pockets every day who know absolutely nothing about business. They call themselves "bankers" but don't lend, and when they do lend they don't care who they lend it to. They call themselves "investors" but don't hold the notes; "insurers" but can't pay their obligations when called. So, they stand revealed as speculators and gamblers..
Great post!
Campaign Funds are Ruining Congress and America:
opensecret
% of Funds ----Senator-----
Bank Interest
50.1% Dodd,Chris CT D
44.8% Schumer,Charles NY D
42.7% Bennett,Robert UT R
42.6% Johanns,Michael NE NEW R
40.0% Bayh,Evan ID D
38.5% Risch,James ID NEW R
36.6% Carper,Tom DE D
35.4% Hagel,Chuck NE R
34.5% Isakson,Johnny GA R
34.3% Kohl,Herb WI D
33.5% Shelby,Richard AL R
32.6% Lieberman,Joe CT I
32.2% Enzi,Mike WY R
31.0% Martinez,Mel FL R
30.7% Reed,Jack RI D
30.6% Nelson,Ben NE D
30.2% Lautenberg,Frank NJ D
30.1% Bond,Christopher MO R
30.0% Baucus,Max MT D
30.0% Snowe,Olympia ME R
30.0% Ensign,John NV R
29.8% Bunning,Jim KY R
29.4% Corker,Bob TN R
29.1% Voinovich,George OH R
28.7% Collins,Susan ME R
28.3% Crapo,Mike ID R
28.1% Hutchison,Kay TX R
28.0% DeMint,James SC R
27.9% Gregg,Judd NH R
27.8% Johnson,Tim SD D
27.8% Reid,Harry NV D
27.6% Cornyn,John TX R
27.5% Warner,Mark VA NEW D
26.9% Alexander,Lamar TN R
26.6% Clinton,Hillary NY OLD D
26.5% Kyl,Jon AZ R
26.0% Smith,Gordon OR R
25.9% Lugar,Richard IN R
25.9% Hatch,Orrin UT R
25.8% Thune,John SD R
25.7% Cardin,Ben MD D
25.4% Wyden,Ron OR D
25.3% Murkowski,Lisa AK R
25.3% Grassley,Chuck IA R
25.3% Burr,Richard NC R
25.1% Nelson,Bill FL D
25.0% Lincoln,Blanche AR D
24.9% Kennedy,Edward MA D
24.5% Specter,Arlen PA D
24.1% Pryor,Mark AR D
23.9% Conrad,Kent ND D
23.6% Obama,Barack IL OLD D
23.5% Brownback,Sam KS D
23.5% Salazar,Ken CO OLD D
23.2% Chambliss,Saxby GA R
23.2% McCain,John AZ R
22.9% Whitehouse,Sheldon RI D
22.8% Warner,John WV R
22.7% McConnell,Mitch KY R
22.7% Menendez,Robert NJ D
22.3% Allard,Wayne CO R
22.0% Inouye,Daniel K HI D
22.0% Coburn,Tom OK R
21.7% Rockefeller,Jay WV D
21.4% Cantwell,Maria WA D
21.3% Feinstein,Dianne CA D
21.2% Durbin,Dick IL D
21.2% Kerry,John MA D
20.7% Vitter,David LA R
20.1% Shaheen,Jeanne NH NEW D
20.1% Roberts,Pat KS R
20.1% Dorgan,Byron L ND D
Why REFORM?
Just because they skimmed the Company profits off into their pockets leaving their Companies on the edge of bankruptcy even under half-way decent times. So what is the taxpayer has to salvage the SHELLS of companies they left behind! That is the way we do things on Wall Street in 2008 and if you don't like TOO BAD!
What is wrong with Wall Street getting 400 times the average worker when in 1985 it was 20 Times?
By the way in UK it is 22 time average Worker! In Canada it is 20 times average worker!
By the way doesn't 11 times, like it Japan, seem more reasonable based on Executive performance?
Are executives 20 times smarter than they were in 1985?
The head of Toyota USA gets less than $1 Million total income.
First law that needs to pass is to end lobbying by banks and the financial industries. Make it illegal for the banks to be involved in writing laws for government. Make it illegal for them to lobby.
Insurance companies spend about the same for lobbying.
Another law - prevent financial regulators from accepting jobs with any industry they regulate, which is a frequent occurrence. Going from about $150,000-$200,000 salaries to over a million per year causes considerable lack of independence.
The revolving door goes both directions and should be stopped. The SEC, CFTC, and other financial regulators had the authority to do much more, but ignored the issues.
That is not TRUE!
It is less than 1/3rd of Banking Interests!
Well said, nothing changes unless the root cause is fixed - lobbying and blatent payoffs to politicians from corporations. Without that being fixed, even if something good is done now, it will be reversed in another few years.
You can bet the bank lobbyists are writing the regulations that our elected officials will never read yet vote into law. We have some 40,000 pages of FDIC regulation. We need to wipe these regulations off the books and start from scratch and ban all lobbyists, no matter how much money they give our elected officials.
Something needs to change. We cannot continue down the same road of the past. The survival of this country financially and morally must change! Like it or not, we cannot survive otherwise.
This is where the rubber meets the road if Americans are serious about preventing another economic meltdown. Everyone needs to pay very close attention here. A good model for legislators is to bring back every bit of regulation that was repealed since the great depression, starting with the Glass-Steagall Act which after its demise allowed banks to become "too big to fail".
agreed and fanned.
I agree, but as it stands now in regards to comments made by Obama & Co., no such plans are on the table, particularly Glass-Steagall, which IMO should be a priority.
But of course the standardized response will be that too much is built on the system as is to go backwards, and that there's no real need to go that far....
REAL change in regards to financial system regulation isn't going to happen.
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Posted: 05-17-09 10:05 PM