Financial Reform Push By The Obama Administration Ignores Volcker Rule, 'Too Big To Fail': Simon Johnson

baselinescenario.com:

We agree completely with the administration's approach -- actually, with Elizabeth Warren's approach -- to consumer protection. (We make this clear in 13 Bankers.)

But the sticking point is "too big to fail." Mr. Geithner's Treasury (and Senator Dodd's bill) continue to rely on the complete illusion that a resolution authority (i.e., an augmented bankruptcy process for banks) based on US law will do anything to help manage the failure of a large cross-border financial institution. It simply will not.

Read the whole story: baselinescenario.com

Comments

[PhilipTaylor]

11:34 PM on 03/23/2010

Geithner LOYALITY to WallStreet is of Concern!

But Simon Johnson’s IMF loyalty is of even greater Concern as America does NOT need Control by a World Financial E1ite CLASS!

Geithner in Summary:

1. Financial Shock was greater than Great Depression.
2. Damage was catastrophic to Middle-Class livelihoods and economic security.
3. Geithner/Dimon expects significant financial crises every 3-5 Years = FED FAILURES!
4. Each shock FED lowers rates increasing liquidity but - NOT WORKING - Massive DEBTS.
5. Geithner Concentrates on TARP's 1% of GDP - Ignoring Gov Debt of 40% of GDP in Private Sector.
8. Geithner's LOW-BALL argues for LIGHT WallStreet Safeguards!
9. TRUE 40% doubles National debt to dangerous levels, Argues for Tough Regulations!
10. Geithner weak on “too big to fail!” Doesn't Mention Volcker Rules - No CAPS on Bank Size?

CONCERN: Johnson Argues for IMF-Like WORLD AUTHORITY - One World Financial System Control!

1. Geithner/D0DD continues illusion: US Resolution of Big cross-border financial institution.
2. Johnson's Concern for Resolution of cross-border argues for World Control?
3. He envisions World Resolution Authority for a Citigroup in 5 or 7 years, when it doubles in Size?
4. Why Nothing about CAPS on Bank Size?
5. Did Geithner Team already throw in the towel?

Geithner's LOYAL is to Partnership of NY City Group = Director Geithner+ Dimon+Blankfein+Mack+Fink +Thain + Schwartzman

But Johnson’s IMF loyalty is of greater Concern as America does NOT need Control of the World Financial CLASS!

[munki]

11:37 PM on 03/24/2010

Concerned with Geithner's abilities as well...

[Carolab]

09:55 PM on 03/23/2010

Regionals Get a Clue on Capital Ratios
2/18/2010

SunTrust Banks , Regions Financial , KeyCorp and Fifth Third Bancorp all bolstered their balance sheets last May following the stress tests that found capital deficiencies. Yet the FBR analysts say these banks may have to raise extra capital if they want to repay the government's capital injections. "[T]he blueprint so far suggests that additional raises may be necessary at some point in the future," the note says.

First Niagara Financial (PNC) is another small bank that has been to the public markets several times to raise opportunistic capital. The company paid its TARP tab of $184 million in late May 2009, and it ended 2009 with a tangible equity ratio of 10.5%. But CEO John Koelmel says future onerous regulation on capital levels will hinder growth in the industry and subsequently shareholder interest.

"You can't raise capital requirements and expect the industry to be able to produce the type of returns that are necessary to attract the higher levels of capital they want us to have," Koelmel said. "Higher capital levels, fewer loans; fewer loans, lower earnings; lower earnings, lower returns, investors move to other sectors."

http://www.thestreet.com/story/10676581/2/regionals-get-a-clue-on-capital-ratios.html

____________

It was just reported last week that Barclay's is shopping U.S. banks (again) after a huge investment from the Abu Dhabi ruling family, and their list included SunTrust, PNC and Fifth Third Bank.

SETUP.

[NewArtz]

04:39 PM on 03/23/2010

Is the banking system of the United States, or even the government of the United States too big to fail? If 1% of the citizens of the US control 95% of the wealth, then the failure of the 1% would leave the 99% of its citizens with 5% of the wealth as "operating costs."

We trust our future to those who have proven by their advancement that they are the greediest individuals that our system could produce. They have manipulated markets and managed to pocket a seriously hefty amount of financial resources.

Our entire system is built upon the fabrication of a means of barter essentially worthless but for the trust with which we invest it. Our foundation is money.

What was that story about the foolish man who built his house on sand? The rain came down, the streams rose, and the winds blew and beat against that house, and it fell with a great crash.

Who established our foundation?

"No one can be my disciple who does not give up all his own possessions."

Christ knows it wasn't whoever said that.

[lohu]

06:09 PM on 03/23/2010

So you trust the politicians in power to do right for the people? Which politician did you know that never lies or better yet tells the truth?

[NewArtz]

07:34 AM on 03/24/2010

At what point did I say I trusted politicians to do what's right?

Politicians are people who love money, too,

[Bpeirce]

03:52 PM on 03/23/2010

The Banks need to be regulated. If Geitner is in the way he needs to be removed.

[eyepatch]

04:18 PM on 03/23/2010

Secretary Geithner needs to be removed! because the
banks are back to trading derivatives and other kinds
of risky proprietory trading that tanked the economy
in 2008....

Mr Geithner doesn't mention the Volcker rule because
he a product of Wall St and doesn't want to do anything
to disturb the status quo.....Which is why if we want
real reforms in the financial sector Mr Geithner must
be relieved of his duties, because he will not regulate
his colleagues with the type of regulations needed
to insure that the economy won't go in the tank again...

[sonofsamphm1c]

04:33 PM on 03/23/2010

First, the article is disingenuous.

Geithner's Treasury proposals did not include the Volcker Rule, but the Volcker Rule resulted from a collaboration between Geithner, Summers, and Volcker during the fall of 2009.

And Geithner fully endorsed it in congressional testimony..

What comes out of the senate reflects what senators endorse.

[Truth4Voters]

04:35 PM on 03/23/2010

Agreed. Geithner smacks a little much of the Fox-guarding-the-hen-house.

[lohu]

03:30 PM on 03/23/2010

Progressives are saying the government is nationalizing the major industries in this country. The dictionary shows that nationalizing and socialism go hand in hand.

[Truth4Voters]

04:35 PM on 03/23/2010

We tried it your way for several decades. The American people suffered for it. Time for change.

[lohu]

03:27 PM on 03/23/2010

Taken from AOL dictionary
The motives for nationalization are political as well as economic. It is a central theme of certain brands of 'state socialist' policy that the means of production, distribution and exchange, should be owned by the state on behalf of the people or working class to allow for rational allocation of output, consolidation of resources, and rational planning or control of the economy. Many socialists believe that public ownership enables people to exercise full democratic control over the means whereby they earn their living and provides an effective means of distributing output to benefit the public at large, and a means for providing public finance.

[Truth4Voters]

04:37 PM on 03/23/2010

Yawn. Move along folks. Nothing to see here. GOP propaganda.

[lohu]

03:24 PM on 03/23/2010

The progressives don't like that I said the government is going to socialize all the major industries in this country. Ok, Al Sharpton said we elected a socialist president. Then the socialist president wants to nationalize(socialize) all of our major industries in this country.

[Matt12]

03:16 PM on 03/23/2010

Bernake got reappointed under the pretense that continuity was important to keep the markets stable. To ignore Volker’s proposals over Geithner financial doctrine is to acquiesce to the status quo which has impoverished the American people.

On the other hand:

"Dan Senor and Saul Singer point out in their book, Start-Up Nation, Israel has more companies listed on the NASDAQ than any country other than the United States—more than China or India or Britain"

“Israel has become a rich country, with a median income around $37,000 (adjusted for purchasing power), which is higher than Singapore, Hong Kong, Ireland, and some U.S. states, and just below the United Kingdom and Switzerland.”

Who's working for whom?

Fareed Zakaria, Newswwek
http://www.newsweek.com/id/235229

[FoonTheElder]

03:10 PM on 03/23/2010

Once again, like health care, Obama is proposing a watered down financial reform bill that does little more than require a few side steps by Wall Street to get around. What Volcker has proposed isn't going to change much on Wall Street. Don't forget that Volcker is a big part of the Wall Street establishment himself.

It's like health care, now instead of being 50 years behind the rest of the developed world, in a few years we will be 30 years behind. Germany has had universal health care since 1890.

http://www.businessinsider.com/big-banks-have-already-figured-out-the-loophole-in-obamas-new-rules-2010-1

[TJCole]

02:46 PM on 03/23/2010

No it's Geithner verse The People...!

Volcker; is hardly pushing anything extreme or even sufficient but this is a good example of the myopic arrogance and elitism that is endemic and systemic within our corrupted banking upper eschelon...

Why did Obama surround himself with this bunch of losers the biggest losers in recorded history...irresponsible degenerate gamblers of other people's money and they got rewarded for this huge fraud and embezzlement..

[4AmericaTheBeautiful]

02:04 PM on 03/23/2010

It is not always the case that the right thing politically coincides with what's best for the country.

In this case, it does. Getting REAL reform through would be both popular AND right. Therefore, if Obama sides with Geithner over Volcker, there will be NO excusing it. NONE. No more talking Obama. We don't want to see more finger-wagging or lecturing -> those words are worthless. Do the right thing.

[saintjule]

01:49 PM on 03/23/2010

I truly hope Paul Volcker and Elizabeth Warren win this one. We will at least see the level of corruption in our government.

[Truth4Voters]

04:37 PM on 03/23/2010

Hear. Hear.

[lohu]

01:42 PM on 03/23/2010

So which european country will we end up like Greece or Greenland?

[saintjule]

02:07 PM on 03/23/2010

ICELAND

[lohu]

02:57 PM on 03/23/2010

Oops you are right.

[lohu]

01:37 PM on 03/23/2010

Fannie and Freddie is such a good example of a government run company. They basically ruined the housing market and put this country in a tail spin. Barney Frank and his friends now want to help ruin all the other finacial companies now, with their midas touch. Fannie and Freddie gets a blank check no regulations and all other companies gets the governments foot on their backs. We a socializing the rest of the US...

[getcaption]

01:45 PM on 03/23/2010

Try proving ONE of your sentences. Just one.

[lohu]

01:54 PM on 03/23/2010

Did you see they socialized the healthcare industry? Read or google info on freddie and fannie with Barney Franks and you will see all the facts.

[4AmericaTheBeautiful]

02:09 PM on 03/23/2010

Fox owns your brain.

Just a polite suggestion: read Michael Lewis' new book. He's the guy who wrote "Moneyball," "The Blind Side," and "Liar's Poker" -> in other words, he has written multiple bestsellers praising "market systems" so he's hardly a leftie. Learn what really caused the meltdown -> it wasn't Fanny, Freddie, or Barney.

[sposton]

01:31 PM on 03/23/2010

On economic policy Obama administration obeys the wishes of Wall Street banksters. The economic policy is run by banksters' agents like Geithner and Summers. I don't think Americans are made aware of what has really happened and what is not going to happen with this crew in power. No amount of speeches can hide the underlying facts to anyone who does his own thinking. In an absence of of substantive changes all speeches from Geithner and such are just more hot air.

Democrats, Liberals and Progressives are suckered into supporting Wall Street agenda simply because Obama is doing it. The loony Tea Party Right's loud and seemingly irrational accusations of Obama's socialism helps this process immensely. With the same policies, same people in charge of those policies under Bush, we would all be a lot less acquiescing. This proves Wall Street's support for candidate Obama a sign of political genius.

We Americans of all political stripes have become stupidly naive, our senses deliberately numbed down.