In the end, financial reform is going to play out exactly how you always imagined it would, with a compromise favouring Wall Street.
[credit provider=”AP”] Late in the game this always happens.As final votes on any big piece of legislation draw near, crucial Senators use their clout to extract special compromises and concessions that affect only them.
After blatant attempts to support the housing market with U.S. government policy, the White House’s efforts are ‘working’. The market’s forecast for housing prices is rising, as shown by the chart below, which comes from the government’s own ‘score card’.
In an instance of odd timing, now that the financial reform bill will be back on the dock this week, there is word of two major banks, Citigroup and JPMorgan, both increasing the amount of money they have allocated to proprietary investments like private equity and hedge funds.
If JPMorgan continues the “advanced discussions” with the Brazilian hedge fund, Gavea, that have been reported in this morning’s Financial Times, there will be two large financial institutions that have essentially said “screw you” to the Volcker Rule, Citi and JPMorgan.(Citi announced last week that it would raise $3 billion […]
Not before, but after everyone already knew that George Osborne was disbanding the FSA and merging it into the Bank of England, Hector Sants, the CEO, told his employees the news.
Jose Ferreira has an interesting take on why the carried interest loophole should be kept open for venture capitalists, but not for other forms of private equity:
Last year David Cameron said that Gordon Brown’s financial regulation system, the FSA, was to blame for the entire country’s financial problems.He made plans do something about it: either get rid of the FSA or give someone the job of better supervising them.
For all the bailouts that have been arranged, safety nets that have been put into place, rules that have been bent, rights that have been trampled, and money that has been spent trying and “fix” the financial system, conditions still haven’t returned to “normal.”
[credit provider=”Wikimedia”] The SEC has long been behind both technologically and logistically in terms of having the manpower to solve some of Wall Street’s more complex cases.Now they’re turning the tables by hiring quants and mathematicians to find out why events like the flash crash of May 5th happened.
[credit provider=”AP”] Senator Blanche Lincoln is on a hunt to take down derivatives, or more specifcally radically alter the ability of bank holding companies to deal in them.But now, in an effort to broker some kind of compromise between the U.S. government and the banks, Lincoln may amend her derivatives […]
Dozens of financial industry lobbyists have ties to lawmakers serving on the conference committee negotiating financial reform legislation, according to data reported by Public Citizen. Among them are seven former chiefs of staff and a total of 16 former employees of Senate Banking Committee Chairman Chris Dodd (D-CT) and Sen. […]
[credit provider=”Wikimedia”] The SEC just approved stock-by-stock circuit breaker rules today. From now on, any stock in the S&P 500 that incurs a 10% change in price in a five-minute period or less will be subject to a pause in trading. FINRA and the various exchanges will be responsible for […]
While the market is down just modestly, financial stocks are getting hammered, as all the big ones are off more than 1%.
While we’re cheering U.K. conservatives’ push for fiscal austerity measures right now, two economics professors from Dartmouth, David Blanchflower and Elias Papaioannou, think otherwise.
Blanche Lincoln, the embattled Arkansas Senator, overcame a big push from the unionized left, to win her primary race and survive at least until November.
There are a lot of good arguments for stronger regulation on high frequency trading, and this segment on CNBC tries to focus on the main one: log all trades.
Want to hear something scary? BP (BP) has been fined by OSHA (Occupational Safety and Health Administration) 760 times. By contrast, oil giant ExxonMobil (XOM) has been fined only once. As The Stock Masters say: How is BP even allowed to operate? Let’s take a look back at BP’s horrid […]
One of the most controversial amendments to be included in the Senate’s version of the financial reform is Blanche Lincoln’s proposal to force banks to get out of the swaps business.
[credit provider=”CNBC”] Pay close attention today if you’re an investor in any one of the ratings agencies, like Moody’s (MCO) today.Warren Buffett will testify today in front of Phil Angelides’ Financial Crisis Inquiry Commission on the role of the ratings agencies in the financial crisis.
Steven Schwarzman is the CEO of the Blackstone Group, a multi-billion dollar money management firm. He is worth billions of dollars, and isn’t afraid to spend his money lavishly:
To: Wall Street chief executives From: Your man in Washington Re: Embracing the status quo Our earnings are robust, our compensation has returned to its naturally high levels and, as a result, we have very nearly regained our grip on the imaginations of the most ambitious students at the finest […]
The House has passed a bill this past week that would change the taxation of carried interest from capital gains treatment to ordinary income treatment.
Investment adviser Ken Starr was arrested Thursday for allegedly defrauding a long list of Hollywood stars like Uma Thurman. And the story keeps getting better (trashier): His wife, Diane Passage, is a former Scores stripper and pole dancer.
Senator Kaufman, who’s perhaps the biggest financial watchdog in the Senate right now, joined Jim Cramer last night on his super-popular show, Mad Money, and the pair spent about eight minutes freaking viewers out about High Frequency Trading.There’s a Wall Street gang that’s been growing high frequency trading like weed […]
Russell Goldsmith, CEO of City National Bank, spoke with CNBC today, and said that California would pull its way out of its current crisis because it has the right mix of industries.
TO CREATE life is the prerogative of gods. Deep in the human psyche, whatever the rational pleadings of physics and chemistry, there exists a sense that biology is different, is more than just the sum of atoms moving about and reacting with one another, is somehow infused with a divine […]
High frequency trader Manoj Narang told us he probably won’t stop trading today.He and his firm, Tradeworx, did stop trading on “Seis de Mayo” (his name for the flash crash, because he thinks it was “a day of vindication” for HFT traders).
Last week we wrote that Chanos doesn’t think hedge funds are the ones that need regulation; banks, insurance companies, and the rest of gamut are the guys to focus on.
Alan Greenspan’s perpetual bailouts in the face of even the smallest crises have made us a world of wimps, says Stephen Roach of Morgan Stanley. And until we toughen up and realise that the world won’t end if we take our medicine, we’ll be doomed to repeat Greenspan’s mistakes.
Did you realise that it’s election day this Tuesday?
What’s amazing is that in most of the discussions about the “Flash Crash” from two Thursday ago, there’s been very little talk about the parallels between it and the famous Black Monday crash of 1987.
Reuters’ Herbert Lash and Jonathan Spicer has found a document that reveals the mystery trade that triggered the market crash last Thursday.
[credit provider=”Charlie Rose”] Jim Chanos doesn’t think hedge funds need or deserve to be regulated. (Update: here’s a more thorough explanation of Chanos’ stance on regulation.)”Unlike almost all the other actors on the stage of financial regulation in Washington, we were the pure capitalists,” Chanos told Bloomberg.
There was an interesting split of opinion yesterday on the news that Andrew Cuomo is subpoenaing banks over their dealings with the ratings agencies, and whether they plied the raters with misleading to get those coveted AAA scores.
Today the Senate passed a tough amendment to deal with one of the most vexing problems out there: The ratings agencies.
Last Wednesday May 5th, Senator Kaufman proposed an amendment that would limit the amount of trading that is done off of the exchanges.
Time Magazine has launched a new issue lauding the three women charged with tackling the villains of Wall Street: Sheila Bair of the FDIC, TARP commander Elizabeth Warren, and SEC chair Mary Schapiro.
As I have said many times before, I suspect we will see a lot of discontinuity in policymaking this year – amid lots of panicking – and recent events show just how. In the past few months Beijing seems to have become so worried about signs of overheating that, after […]
Fannie Mae (FNM) and Freddie Mac (FRE) are among the least popular banking institutions in the country, and it would make sense that as part of financial reform, we took on firms that had a major role in financing the housing bubble.
Last year we awarded Dylan Ratigan one of our First Amendment Awards for Outstanding Journalism for his job calling out the scammers who were bringing down the economy. Dylan and I were chatting about how things have played out since then, and what we need to do to continue fixing […]
After Beijing’s property prices were slammed post-new regulations, all eyes are on Shanghai.
If you were mentioned in either The Greatest Trade Ever, The Big Short or The Quants, now may be a good time to talk to a lawyer.
It’s not just the U.S., Europe, and Japan who need to worry about bankrupting themselves with government spending programs.
Depending on what kind of firm they’re at, and how they’d be affected by the so-called Volcker Rule, it’s understandable that some on Wall Street would be less than pleased by Paul Volcker and the role he’s playing in shaping financial reform.
(The following guest post is an actual letter sent from an NYSE floor trader to New Jersey Senator Robert Menendez. The author prefers to remain anonymous.)
So the SEC now confirms what everyone else figured very quickly on Thursday: there was no fat-finger error. Nobody tried selling 1.5 million S&P e-mini futures, but accidentally sold 1.5 billion or some such nonsense.
For those who still have an income, one upshot of the economic downturn is that the amount of taxes Americans pay relative to income is at its lowest level in 60 years.USA Today:
[credit provider=”AP”] Now that everyone’s stopped freaking out that that “the uncontrollable machines” are taking over (or literally KILLING) the market, let’s look at the arguments that HFT exacerbated the crash Thursday.The arguments against HFT can be summed up in three points.
It doesn’t come as too much of a surprise that the measure to audit the Federal Reserve is coming under continuous fire from the central bank and its cronies. For the first time since the Federal Reserve was created nearly a century ago, they have hired an actual lobbyist to […]
Philadelphia Federal Reserve President and CEO Charles Plosser was on CNBC discussing financial regulation and when the Fed is likely to allow interests rates to move to 1%.
[credit provider=”AP”] Recently, a group of privacy commissioners from the governments of 10 different countries sent Google a public letter expressing their concerns about Google’s privacy policies, especially with respect to the launch of Google Buzz.Google has now issued a response, and, “in the spirit of transparency”, has published its […]
Earlier today we announced a secret meeting Senator Kaufman was holding to discuss how high frequency trading played into what happened yesterday.
UPDATE: Here’s what happened in the meeting.
Everyone is gearing up for a huge debate about high frequency trading today.
Yesterday’s glitch is producing some fascinating tension between the NASDAQ and the NYSE, or more broadly, tension between old-style trading, and super-fast electronic trading.
In a newly released transcript of a Federal Reserve Board meeting in March 2004, former Chairman Alan Greenspan argues against disclosing too much to the public lest the Fed “lose control of a process that only we fully understand.”
[credit provider=”C-SPAN”] A JP Morgan Chase (JPM) top economist has released a scathing research report, attacking the intellect of U.S. Senators saying that its time for “grownups” to take over the financial reform debate.The Huffington Post, which first pubbed the report, characterise characterises this as a “memo”, but really this […]
[credit provider=”ap”] Why Jamie? He isn’t toxic yet. A few other business notables are coming, too, but Lloyd Blankfein isn’t among them.
Last week the financial reform bill was allowed onto the floor for debate, and Democratic Senators got their chance to enter in various amendments going after Wall Street.
Europe needs to ditch cover-up solutions for the continent’s credit woes before anyone can be confident that the union truly understands what the root of their debt problem is.
Normally, MarketTicker.org impresario Karl Denninger is busy ranting about crooked Wall Street banks and our corrupt government officials. But today, he sees hope. That hope comes in the form of the SAFE Banking Act (link to PDF) which has been put in front of both the Senate and the House. […]
Oh, protesters. You cause so much trouble and create such a spectacle.
Last night the Democrats dropped a very aggressive financial reform amendment that would force the breakup of big banks.
Boo! We were hoping tonight would see some great Mr. Smith Goes To Washington theatrics, but no.
Yesterday was an amazing day in The Senate, as Goldman Sachs (GS) execs tussled in an epic hearing over their behaviour during the financial crisis.
It’s easy to score political points attacking banks these days. It’s also easy to derail an economic recovery restricting and discouraging bank activity as well.
[credit provider=”C-SPAN”] If there’s one thing we’ve learned today, one thing, it’s that Michigan Senator Carl Levin REALLY doesn’t like the fact that Goldman Sachs (GS) could have had positions that were directionally opposed to its clients.He’s been talking about it all day, from his opening soliloquy to his late-night […]
(This is a guest post from Patriarch Partners.)
Good stuff on CNBC this morning, as both Jim Chanos and Bill Ackman are on “Defending the Shorts,” which has a big tone of self-aggrandizement and triumphalism, though it’s still interesting.
Starting today at 10:00, Goldman Sachs (GS) will get the full-body treatment in front of the US Senate.
[credit provider=”AP”] Ok, this financial reform fight might drag on for a while.Tonight Harry Reid held a so-called test vote, or a procedural vote, to move forward with financial reform, but he was unable to get to the magic 60 mark that was required to avoid a filibuster.
Louise Uchitelle’s review of Simon Johnson and James Kwak’s book 13 Bankers nicely summarizes the conventional post-crisis thinking.
According to the National Association for Business Economics (NABE), which is a professional organisation of business economists within corporations, job creation has already begun in the U.S., in the first quarter of 2010, and it will now continue robustly over the next two quarters.
On Thursday, President Obama went to Manhattan, where he urged an audience drawn largely from Wall Street to back financial reform. “I believe,” he declared, “that these reforms are, in the end, not only in the best interest of our country, but in the best interest of the financial sector.”
From The Washington Post: The trouble with Wall Street isn’t that too many bankers get rich in the booms. The trouble, rather, is that too few get poor — really, suitably poor — in the busts. To the titans of finance go the upside. To we, the people, nowadays, goes […]
Thanks to the upcoming April 30 expiration of the government’s new-home-buyer tax credits, in March the U.S. just experienced the sharpest spikes in new home sales back to 1963.
[credit provider=”aSIMULAtor on flickr”] Japan immediately challenged a compromise on the whaling ban offered today by the International Whaling Commission.
Bloomberg Television just ran a map of the countries willing to support the bank tax, and it’s looking rather sparse.
Lloyd Blankfein found in Obama’s favourite Reverend, Al Sharpton, a welcome escape from all the craziness at Obama’s financial regulation speech yesterday at Cooper Union.
Goldman Sachs, we can be sure, will vigorously contest the civil suit brought against it by the United States Security and Exchange Commission (SEC). But, regardless of the eventual outcome, the case has far-reaching implications for the financial reform legislation that the US Congress is now considering.
Now that Goldman Sachs director Rajat Gupta is under investigation for passing inside information to Galleon’s Raj Rajaratnam, we might as well get to the bottom of what happened with Goldman board member Stephen Friedman during his tenure on the board of the New York Fed.
Jim Chanos spoke with CNBC immediately following President Obama’s speech to the banking community on financial reform today. Chanos said he felt the crowd was more optimistic about reform now, and the President’s relationship with Wall Street.
(This guest post previously appeared at NewDeal2.0)
The battle over regulation is basically over, which is why Barack Obama didn’t give much of a “castigation” to Wall Street today.
The White HOuse
[credit provider=”The White House”] Thursday should be a very interesting day in the debate over financial reform, as Barack Obama heads to the Cooper Union Institute to deliver what will be a very closely followed speech on financial reform.Coming as it does on the heels of SEC vs. Goldman Sachs […]
Texas’s economy fared far better than most of the U.S. during the downturn, and it’s rebounding strong as well. The state has been already adding jobs since the fall for 2009 according to The Big Money (TBM).
The White House has launched their response to Larry Lindsey’s memo on financial reform, a memo that mimics the anti-financial reform talking points of Frank Luntz. They take direct aim at the idea that Sen. Dodd’s bill supports “too big to fail.”
Truthout / CC BY-NC 3.0 The financial reform bills moving through Congress offer some hope for a more stable financial system. While there is still much up for grabs, it is likely that whatever gets through Congress will improve regulation of derivatives, increase regulators’ ability to restrict leverage and establish […]
President Clinton was forthright on ABC’s “This Week” yesterday when asked whether Larry Summers and Bob Rubin had given him bad advice about regulating derivatives (the advice was don’t regulate them.)
(This guest post comes courtesy of Frontlinethoughts.com)
So in case it isn’t obvious, all of the Republicans opposed to the Dodd Bill are in a MUCH tougher position today than they were yesterday.
(This is a guest post first appeared on House Republican Leader John Boehner’s Blog)
Riffing off of the fact that 47% of Americans aren’t expected to pay federal income tax for 2009, and the fact that the highest 40% earners pay 86% of total federal taxes, we have a small suggestion.
Arkansas Senator Blanche Lincoln is proposing drastic limitations on bank use of derivatives, according to The Washington Post.