Archive for the ‘Finance Regulation’ Category

by jhwygirl

The U.S. House of Representatives is expected to take an upteenth attempt at damaging U.S. economic stability and growth tomorrow with a number of bills coming to floor vote, six of which would once again embrace derivatives as a legitimate stable investment for our financial institutions.

Taxpayers beware. There is nothing prohibiting bailouts.

Passing out of House financial services on Tuesday and coming to a vote tomorrow is the Full Faith and Credit Act coming to a vote will prioritize U.S. debt and interest over the priority of running the government. Things like keeping the lights on, paying soldiers, social security & disability payments. You can see how willing to negotiate the House GOP Republicans are going to be for the upcoming debt ceiling discussion, estimated to come to Washington DC sometimes during that oh-so-pleasant month of August.

Six other bills which also passed out of financial services yesterday will weaken derivatives regulations within Dodd-Frank.

Addendum: Democracy Now reports that only six members of the House financial services committee voted NO to weakening the already
weak Dodd-Frank derivative regulations.

This’ll infuriate people who thought Dodd-Frank was weak to begin with. Pretty sure that both Lizard and JC fall into that category. I know I’m there.

HR992, the Swaps (meaning derivatives) Regulatory Improvement Act, will allow FDIC insured and uninsured foreign banking entities supervised by the Federal Reserve to utilize derivatives.

That’s right – one of the base elementary causes of the 2007 economic crash is being welcomed back for taxpayer insured FDIC banks.

As a bonus, the bill continues the bailout prohibition exemption for these banks. Which means in plainer language that FDIC insured banks can continue to be bailed out. Ahhh, the pleasures of Dodd-Frank.

I’ve seen or heard plenty saying that the Full Faith and Credit act isn’t likely to pass filibuster – but I’ve yet to see or hear the same for the nasty derivative porn. I say it’s amazing but it really isn’t anymore – the crap these electeds get away with. Because truth be told, it rests on us who keep elected these fools. But here we are, an already weak bill being weakened again. Embracing derivatives? Geezus.

What will Daines do? I’ll be calling his D.C. office first thing tomorrow morning (202-225-3211) to let his staff know where I stand – and that I’ll be watching.

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by jhwygirl

Just a quick hit on this one: I’m sure everyone’s heard the news earlier this week that President Obama has blessed his very own Super Pac, something he had rejected in the past.

Of course, he’s still cleaner, somehow. This, from Jay Carney, White House spokesperson:

He said Obama still refuses lobbyist and PAC money in his campaign account, “which distinguishes him from any of his potential … general-election opponents.”

Who’s out calming the bankers? Montana’s very own Jim Messina headed to Wall Street on Tuesday to let them know who Obama doesn’t have a problem with:

At the members-only Core Club in Manhattan, Messina provided a campaign briefing last night for some of the president’s top donors, including Ralph Schlosstein, chief executive officer at Evercore Partners Inc., and his wife, Jane Hartley, co-founder of the economic and political advisory firm Observatory Group LLC; Eric Mindich, founder of Eton Park Capital Management LP; and Ron Blaylock, co-founder of GenNx360 Capital Partners…..

In response to a question, Messina told the group of Wall Street donors that the president plans to run against Romney, not the industry that made the former governor of Massachusetts millions, according to one of the people, who spoke on condition of anonymity to discuss the private meeting.

Does this cause me some burn? You betcha. Messina – Obama’s campaign manager – justifies his actions by saying “We can’t allow for two sets of rules in this election whereby the Republican nominee is the beneficiary of unlimited spending and Democrats unilaterally disarm.”

Well..there’s certainly an element of truth to what he says – but it’s also a two-wrongs-make-a-right defense, imo. I don’t know that it makes it OK.

At the very least, it’s a trench on a high hill that has now been ceded by Obama.

by jhwygirl

The artist who did the original Hope poster for Obama – LA artist Shepard Fairey – has just designed his second #occupywallstreet poster.

Quite the message.

by jhwygirl

Payday loan lenders are fighting back, with television ads throughout the state saying “Don’t sign I-164”.

The ad features one of the two brothers who own several payday loan lending places here and throughout the state – E-Z Money. I’d reckon most people would recognize their smiling faces from their television ads.

I-164 has these guys and their sordid industry running scared. The television commercial I saw propagandized that they only fees they charge are $15 for a two week $100 loan, $25 for a two week $200 loan and $35 for a two week $300 loan.

That’s $390 in interest per year on a $100 loan – if the person who got the loan is able to at least meet the loan fee.

And if it isn’t the initiative that has these guys running scared, it’s a problembear, who is doing battle with one of their paid lobbyists in pb’s most recent post here at 4&20.

problembear has been out gathering signatures for I-164, and he has also been back to his blogging over at Problembear’s Weblog.

Goddess Bless him.

Imagine the dire straits someone would be in to head to a payday loan lender for a $100 loan. A mother or father with a sick child, perhaps? Working minimum wage (not unlikely, given all those high-paying job Missoula has, right?). These people are already down and behind, and that’s how these places get their hooks into desperate people. Making that kind of money, it’s hard to keep yourself up with that kind of paycheck to begin with – you’re already counting pennies just to make rent, keep food on the table and gas in the car to get to work.

The E-Z Money owner and the ad intentionally blurs the line as if payday loan lenders, title loan lenders and retail installment lenders are all one in the same. All are just as evil. Right now, under Montana law, payday lenders may charge up to 650% on a 14-day loan. Title lenders can charge 300% on a 30-day loan. Plus they can take the car when you default for 60 days.

Here’s the language from I-164:

Under Montana law, deferred deposit (payday) lenders may charge fees equaling one-fourth of the loan, which is the same as an annual interest rate of 300 percent for a 31-day loan or 650 percent for a 14-day loan. Title lenders may charge interest equaling one-fourth of the loan, which is the same as an annual interest rate of 300 percent for a 30-day loan. I-164 reduces the interest, fees, and charges that payday, title, and retail installment lenders may charge to an annual interest rate of 36 percent. It prohibits businesses from structuring other transactions to avoid the rate limit.

~~~~~~
This evil loan industry is putting out the same tired crap that they’ve used at the legislature for at least the last two sessions – “over 600 jobs at risk” and “over 100 businesses affected statewide” – and while that may have worked for the Republican legislators that wouldn’t allow bills even out on to the floor for a vote, it isn’t working for initiative signature gatherers, who I’ve been told (by problembear and others) aren’t have any trouble at all gathering the signatures that they need.

Again – Goddess bless ’em.

The lobbyist firm they’ve created to do battle with I-164 is Coalition for Consumer’s Choice. Here’s their contact information, just in case you want to write:

Coalition for Consumer’s Choice
Bernie Harrington, Treasurer
PO Box 81137
Billings, MT 59108

By JC

It seems that Montana’s junior Senator and Banking Committee member, Jon Tester, has been resorting to some two-stepping to add to his double-speak with his newest routine with Wall Street Lobbyists. Despite Jon’s contentions that he is doing what is best for his Montana constituents, it seems that a series of votes on the Financial Regulation package that just cleared the Senate speak volumes about his true intentions: preserving Wall Street campaign contributions.

Over at Left in the West, an OpEd written by “The Office of Sen. Jon Tester,” and published by the Huffington Post, seems to be designed to head off criticism of the Senator’s latest votes:

“The U.S. Senate made history on May 20. We passed a powerful bill that finally holds Wall Street accountable. It finally cleans up the schemes and abuses that nearly brought our entire economy to its knees.

Most importantly, the Wall Street reform bill once and for all ends taxpayer-funded bailouts of Wall Street banks and investment firms. It finally gets rid of the notion that one private company can somehow be ‘too big to fail.'”

Well, aside from the fact that our economy is still on its knees, having neatly “assumed the position” in many instances (Goldman and BP, I’m looking at you), once again our faux populist Senator would have us believe he’s doing the people’s business. As I wrote in my article a few weeks ago about Tester’s vote against the Brown-Kaufman amendment, which would have capped the size of big banks, relative to GDP, it seems that Jon’s actions spoke much louder than his words:

“The Brown-Kaufman amendment was the one strong point of regulation that would cut to the heart of why Wall Street has become immune to the will of the people. Crony capitalism, and corrupt corporatism are the guiding forces in Washington D.C. these days. It is no longer the will of the people–or the best intentions of once-innocent politicians–that governs our nation. It is corporate money and the influence it buys direct from Wall Street that has taken a stranglehold on our political and economic system.”

Well, after Tester’s latest attempt at foofaraw with his OpEd, I decided to take a look at what else is going on in the Senator’s world. It seems that he not only voted against Brown-Kaufman, he voted against Sen. Durbin’s bank card transaction fee amendment, which would have capped the fees we pay when we use our debit cards at the checkout counter. Those fees amount to a $19.71 billion dollar industry, with 80% being paid back to the issuing banks as profit. So your bank is profiting on you to the tune of 1.63% on each transaction. Which is more than your bank paid you for interest for a whole year of holding onto your money.

I guess Jon is OK with this. A little extra goodness for Wall Street to pay its lobbyists… so they can hold parties for, and give contributions to, senators who vote with them. Nothing like preserving almost $16 billion in profits for the big banks, after the regs were excluded from all the small community banks that Tester seemed to be protecting.

Senator Durbin designed this amendment to help small businesses and consumers–businesses because they lose 1.63% on each transaction they process with debit cards, and consumers, because those costs are taken directly out of their bank account and given to banks as a profit:

By early in the week Mr. Durbin’s staff was confident that a majority of senators would support the measure, particularly after he made changes to limit the impact on small banks, a powerful constituency that many senators are loath to cross.

The largest change limits the new price controls to cards issued only by the very largest banks, those with at least $10 billion in assets. As a result, the pricing controls will affect only about 65 percent of debit card transactions, staff members said.”

So Durbin tweaked the bill to attract senators who were worried by its impact on small banks, like Senator Tester claimed in a press release explaining why he voted against the Durbin amendment:

“My vote against this amendment was a vote to preserve the critical role community banks have in strengthening America’s small businesses and rural communities.

My vote against this amendment was a vote for Montana consumers, families, small businesses, farmers and ranchers and all who depend on their community banks. I stand with folks on Main Street as we reform Wall Street.”

I guess this is pretty much the definition of double-speak.

Now let’s get on with the two-step. It seems that on March 16th, our good Senator, who campaigned as a man of ethics and transparency, was the recipient of a “Pre-St. Patrick’s Day Reception” put on by a host of lobbyists–including bankers and Wall Street insiders. Now that couldn’t have had anything to do with any of his votes and attempts to sidestep any backlash from them, would it?

As the NY Times put it:

“And this was not an easy vote. Lobbyists for the wounded but formidable banking industry made clear to some senators that this decision would affect future campaign donations, according to people who participated in those conversations.”

Well, let’s just see who some of those lobbyists were that put on the party for Jon. According to the Sunlight Foundation:

“the fundraisers ranged from a “pre-St.Patrick’s Day” reception for Banking Committee member Jon Tester, D-Mont., on March 16 that asked for $100 to $1,000 in contributions, to a breakfast for Chuck Grassley, R-Iowa, of the Agriculture Committee on March 10 that asked for contributions ranging from $500 to $2,000…

Tester’s fundraiser was hosted by 28 people, at least two of whom have disclosed lobbying on financial reform this year: Mitchell Feuer who represents Goldman Sachs, the Citigroup Management Corporation, Barclays PLC, Genworth Financial, Visa U.S.A., the Appraisal Institute, FX Alliance LLC, the Farm Credit Council and the LCH.Clearnet Group, and Thompson Reuters; and Shannon Finley who represents the Edison Electric Institute, Rent A Center and the Home Depot…

In addition to raising money for the beneficiaries, the lobbyists hosting the events also had a chance for face time with other influential lawmakers.”

Face time. Yeah… Just whose face was where??? And as I wrote over at LitW yesterday:

“Worse, he’s turned into a poser

At least that’s what this sort of PR over FinReg shows me. He thinks his constituents are too stupid to understand finance and its regulation, and he can speak out both sides of his mouth. All the while pocketing Wall Street lobbyist money.

So now that he’s bought and paid for by Wall Street lobbyists, they held a big “Pre-St. Patrick’s Day” party for him in his honor a while back. Look over the names of the lobbyists who put it on, and you’ll get the message. Here’s a sample:

Mitchell Feuer of the Rich Feuer Group. Mitchell lists Goldman Sachs and Citigroup among his Wall street clientele.

Niles Godes: lobbyist for Sallie Mae

Shannon Finley: Lobbyist fot The Americans Bankers Association

And there’s more. But I’m headed to the (real) “Farmer’s” market. A dirt farmer no longer, that Tester fella. He’s got real dirt on his hands now with his new circle of partying friends.

Sad. So sad. Another one bites the dust. No wonder he didn’t vote for Brown-Kaufman. Doing damage control for his new Wall Street buddies.

Signed, sealed, and delivered. ‘Two-step’ Tester.
.
.
testerparty

Senator Tester then: ‘take “too big to fail” out of the equation’

Senator Tester now: “Nay” on Brown-Kaufman “too big to fail” amendment

By JC

Well, it was only a matter of time before our junior senator got all caught up in his double-speak. Despite being sent to Washington as a populist alternative to the corruption of Conrad Burns, it seems that Jon Tester doesn’t think that his constituency can see the hypocrisy between his proclamations, and his votes. And his vote against the Brown-Kaufman “too big to fail” amendment speaks volumes.

For those who aren’t following the FinReg bill closely, here’s what Brown-Kaufman would have legislated:

“The amendment, sponsored by Sens. Sherrod Brown (D-Ohio) and Ted Kaufman (D-Del.), would have required megabanks to be broken down in size and capped so that their individual failure would not bring down the entire system.

Under Brown-Kaufman, no bank could hold more than 10 percent of the total amount of insured deposits, and a limit would have been placed on liabilities of a single bank to two percent of GDP.

In practice, the amendment required the six biggest banks — Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley — to significantly scale down their size. It was touted as a way to end Too Big To Fail.”

Matt Taibi at the Rolling Stone had this to say about the Senate’s 33-61 vote:

“Brown/Kaufman was an obvious and logical response to the great cancer of our financial system, the rapid consolidation of power and market share in the hands of a few banks… it seems to me that it failed precisely because it was a real law with no loopholes.”

Last week marked the biggest [failed] opportunity for Congress to reign in Wall Street by passing an amendment to the current reform bill that would have limited the size of Wall Street banks and financial houses.

Here’s Jon Tester then, proclaiming an end to “to big to fail” in the Huffington Post:

“But our entire economy almost collapsed a year-and-a-half ago because there were no referees on Wall Street. And sadly, hardworking, honest taxpayers — and our entire economy — paid the price…

The best way to fix this problem — and to prevent it from happening again — is to rewrite the rules. To require big banks and huge financial institutions to play by those rules. And to take “too big to fail” out of the equation.”

And again in a press release a few weeks ago:

‘”Saying Montanans are “still steaming mad” about the Wall Street bailout, Senator Jon Tester is pushing his colleagues to reform the rules of Wall Street and end the notion of “too big to fail”’

And to quote the Senator in the same press release, “Actions speak louder than words” he followed up by voting against the Brown-Kaufman amendment to reign in “too big to fail”.

Yes Senator, your actions speak louder than your words, and again in your own words, “Montanans are still steaming mad.” Except this time, it is you who are the point of their rage. How can you take on “too big to fail” if you don’t do something about the “too big” part of the problem? You now own the “too big to fail” problem. Or more properly, I should say: Wall Street now owns you.

Nothing in the current version of the FinReg legislation does anything to tackle “too big.” And if nothing is done about it, then “too big to fail” banks will become “too big to save” banks, with fatal consequences to our future economy when they next fail.

Simon Johnson puts the Brown-Kaufman amendment into perspective:

“When you strip away the disinformation, false promises, and wishful thinking, this is where we are on really reigning in the power of the country’s largest – and most dangerous – banks …

The lack of debate over Brown-Kaufman – and its likely demise – is all about money. There is a tsunami of contributions from the financial sector washing over Congress right now. When the dust settles, the pattern will be clear: Wall Street (legally) bought off key senators.

There will be a reckoning, to be sure, at the polls. The supporters of big banks will go down hard in November and in 2012; there are no secrets over this kind of time frame. But by then it will be too late for this cycle of financial reform – and there is no guarantee that the backlash will bring stronger reformers to power (in fact, the White House and the biggest banks would be quite happy to see non-reformers prevail.)”

The Brown-Kaufman amendment was the one strong point of regulation that would cut to the heart of why Wall Street has become immune to the will of the people. Crony capitalism, and corrupt corporatism are the guiding forces in Washington D.C. these days. It is no longer the will of the people–or the best intentions of once-innocent politicians–that governs our nation. It is corporate money and the influence it buys direct from Wall Street that has taken a stranglehold on our political and economic system. We are entering an era of plutonomy, the likes of which this country has never seen. We are being governed from Wall Street.

I’ll leave this with another quote from Simon Johnson:

“To the victors last night in the Senate [the vote against Brown-Kaufman]: congratulations – your opponents have fallen back. Your generals are known to be invincible, your forces are the best, and your resources are without limit.

And so we wait for you again, on a gentle slope and behind a ridge – appropriately enough with our backs to Brussels. Welcome to Waterloo.”

too big to fail

Heads we win, tails you lose

By JC

Finance regulation is all over the media recently, and it seems that some legislation is finally moving in Congress. But what do we really know about all of this? For most people, health care reform was pretty arcane stuff, but we knew that somehow it had the potential to affect us, and we paid attention and learned as we went.

Finance and financial regulation is much more arcane, and it’s adherents speak a foreign language. And somehow we are all supposed to understand enough of this to figure out what our Wall Street money-soaked crony capitalist legislators are supposed to do in D.C. in order to fix it. And the less “we” know of it, the better “they” will make out.

I’m not going to bore all of you with a lecture on derivatives, CDOs, or default swaps. But I am going to leave you with some quotes from Goldman Sachs in emails released Saturday by the Senate Permanent Subcommittee on Investigations, via HuffPo.

Consider this an open thread on the future of our financial system.

goldman sacks america

The firm made money on the upside — originating, securitizing and selling subprime mortgage-based securities to investors — and on the downside, thanks to the insurance.

“Bad news [we lost $2.5 million],” a May 17, 2007, email began from one Goldman employee to another. A security the firm had underwritten and sold had just lost value, costing Goldman about $2.5 million.

Further down in the email, the employee, Deeb Salem, wrote “Good news…we own 10mm protection…we make $5mm.”

The firm made $5 million betting against the very securities it had underwritten and sold.

In a July 25 email that year, Gary Cohn, the firm’s chief operating officer, wrote Viniar to update him on the firm’s mortgage market activities. The firm lost about $322 million on residential mortgages — but it made $373 million on its bets against the market, bets that increased in value as the market tanked.

About 25 minutes later, Viniar wrote back, “Tells you what might be happening to people who don’t have the big short.” The firm made $51 million that day.

In a Nov. 17, 2007, email, Goldman’s chief executive officer, Lloyd Blankfein, wrote to his top lieutenants in response to an upcoming New York Times story about how the firm had profited off the souring subprime market:
“Of course we didn’t dodge the mortgage mess. We lost money, then made more than we lost because of shorts.”

You want to warn something about the whole mess? Head on over to The Baseline Scenario and start reading and following Simon Johnson. It doesn’t get much clearer than his rendition of what happened in “13 Bankers,” which is next up on my reading list.




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