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After all the commotion over the health care bill winds down, the financial market reform bill will probably take center stage next in Washington and this seems to be a pretty good summary of where things now stand.
From the Tom Toles collection at the Washington Post.
This seems to be showing up everywhere and, if you haven't already seen it, it's well worth ten minutes of your time if you're in need of a good chuckle.
Quite a contrast with that last item... Is there a way to invest in Jonco International?
Perhaps there is some context, somewhere, that makes yesterday's words from Fed chief Ben Bernanke's prepared remarks before the House Financial Services committee on the subject of the Fed's role in bank supervision seem less filled with hubris than they first appear. But, if there is, I couldn't find them.
Maybe he's confusing risk assessment and fostering stability with bailing out the big banks, something that the Fed chief has proven himself quite proficient at over the last few years.The Federal Reserve is uniquely suited to supervise large, complex financial organizations and to address both safety and soundness risks and risks to the stability of the financial system as a whole.
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The insights provided by our role in supervising a range of banks, including community banks, significantly increases our effectiveness in making monetary policy and fostering financial stability.
The Federal Reserve is uniquely suited toYes, that's much better.supervisebailout large, complex financial organizations and to addressboth safety and soundness risks and risks to the stability of the financial system as a wholefuture bailouts.
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The insights provided by ourrole in supervisingbailing out a range of banks, not including community banks, significantly increases our effectiveness in making monetary policy andfostering financial stabilityguaranteeing that there will be more bailouts.
Maybe before elected officials actually try to undertake reform of financial markets they should have a look at their own process for instituting reform and make a few changes there because, at this point, they seem to have more problems than Wall Street.
In the latest development in the ongoing saga of how to prevent the events of 2008 from happening once again, Bloomberg reports that talks have broken down between Senate Banking Committee Chairman Christopher Dodd (D-CN) and Bob Corker (R-TN) with Dodd now planning to go forward with his own bill.
The last paragraph notes that, tomorrow, the Federal Reserve's Consumer Advisory Council is expected to announce their opposition to leaving the consumer protection function within the central bank where it has been for many years (with little protection provided).Corker agreed to work with Dodd after talks broke down in February between Dodd and Senator Richard Shelby, the top Republican on the committee, over consumer protection issues. The bill is aimed at strengthening Wall Street rules to prevent a future financial crisis and a repeat of taxpayer bailouts of firms like American International Group Inc. and Citigroup Inc.
Dodd will release a “substitute” of legislative language he offered in November, which called for creating a stand-alone Consumer Financial Protection Agency and a national bank regulator in the merger of four agencies.
The new Dodd bill will include some elements negotiated with Corker. For example, it won’t propose the stand-alone agency, which Corker opposed, and will probably put the consumer unit in the Federal Reserve with an independent budget, a director appointed by the president and some enforcement powers, according to a person with direct knowledge of the plan.
From the Tom Toles collection at the Washington Post comes yet another way to look at the relationship between big banks on Wall Street and elected officials in Washington.
This was from early last week, that is, before the Volcker rule seemed to again be in favor at the White House but prior to the rumors and subsequent uproar in Congress about the consumer protection agency being consolidated at the Federal Reserve.
This 2008 George Carlin clip has been popping up all over the place in recent weeks - it must have crossed my computer screen three or four times in just the last few days.
The latest development in the ongoing saga of the Greek budget troubles and the European Union is that, apparently, the Greeks want some of their gold back that the Germans took in World War II. Either that or they want or an apology, or maybe even a thank you, according to this report in the BBC today.
Greece angers Germany in gold rowHere's where the story kind of breaks down:
Greek Deputy Prime Minister Theodoros Pangalos has accused Germany of failing to compensate Greece for Nazi occupation during World War II.Mr Pangalos made the remarks during a wide-ranging BBC interview about Greece's financial difficulties.
"They [the Nazis] took away the Greek gold that was in the Bank of Greece, they took away the Greek money and they never gave it back," he said.
"I don't say they have to give back the money necessarily, but they have to say thanks. And they [the German government] shouldn't complain much about stealing and not being very specific about economic dealings."It sounds as though conditions are not improving over there and downgrades (or the threat of downgrades) do not seem to be helping much.
Mr Pangalos' comments elicited an icy response from German Foreign Ministry spokesman Andreas Peschke. "I must reject these accusations," he said.
Elizabeth Warren was on Real Time with Bill Maher last Friday offering hope to the millions of Americans who continue to be confounded by soaring profits and lavish bonuses on Wall Street that go hand-in-hand with the lack of meaningful financial market reform after the worst financial market meltdown since the Great Depression.
If only the financial market innovation seen on Wall Street over the last few decades could somehow be adapted to space exploration...
From the Bruce Beattie archive at the Daytona Beach News Journal.
It could be that the world's tallest skyscraper - the Burj Khalifa - isn't the only thing in Dubai that's shutting down (see this item from a few days ago) as, earlier today, MarketWatch reported on new fears about the Dubai debt restructuring plan.
Dubai debt concerns re-emerged Friday as the cost of protection against a default by the Persian Gulf emirate climbed to the highest level since November, according to data provider Markit.Apparently, their plan to "extend and pretend" isn't working out as planned - at least in the eyes of those who are buying and selling credit default swaps.The price of credit default swaps on Dubai government debt jumped to 630 basis points on Friday, up from 592 on Thursday, Markit data show. These CDS prices were last above the 630-point mark on Nov. 27, when they traded at 634 basis points.
Late last November, investors were concerned that state-owned conglomerate Dubai World and its Nakheel property-development unit couldn't meet imminent debt obligations. Dubai World said at the time that it wouldn't pay interest until May as it sought to reorganize more than $20 billion of debt.
CDS prices dropped after Abu Dhabi lent Dubai $10 billion to ease the cash crunch. However, broader sovereign-debt concerns have increased in recent weeks as Greece struggles with a large fiscal deficit and surging borrowing costs.
The world's tallest building - the Burj Khalifa in Dubai - that just had its grand opening last month is now closed to the public due to the harrowing experience of one of the last groups of visitors to make it to the observation deck as reported in the Times Online.
Terrified passengers were left stranded between floors in the world’s tallest building after a lift broke as they were descending in the Burj Khalifa tower in Dubai. Visitors queueing to descend from the observation deck on the 124th floor of the recently opened 828-metre (2,717ft) tower heard a crash and the sound of breaking glass from the lift shaft. Dust then billowed back into the room through the small gaps in the lift shaft doors.Recall that the name of the building was changed from Burj Dubai to Burj Khalifa after Dubai World was bailed to the tune of about $10 billion back in December by United Arab Emirates President Sheikh Khalifa. The name change may now have a little different feel to it over there in Abu Dhabi as angry visitors have to reschedule trips that were planned specifically to visit the observation deck of the skyscraper.The 15 passengers inside the lift were left stranded for 45 minutes before they were rescued by staff who dropped a ladder into the shaft and helped them to climb out to the observation deck.
Jonathan Weil must have had little wisps of steam coming out of his ears as he read the email response to his queries from the White House Office of Management and Budget and affixed a title to yesterday's commentary at Bloomberg.
Obama’s $6.3 Trillion Scam Is America’s ShameIt quickly progresses to calling the U.S. housing market a giant Ponzi scheme that sucks in America's newlyweds via the homebuyer tax credit and ends with a lame excuse from the OMB about why they won't include Fannie and Freddie in the government's official budget - it would be "too disruptive to change how they are accounted for".
Look through President Barack Obama’s proposed 2011 budget, and you’ll see a line calling for a $235 million increase in the Justice Department’s funding to fight financial fraud. Lucky for them, the people who wrote the budget can’t be prosecuted for cooking the government’s books.Whether on Wall Street or in Washington, the biggest frauds often are the perfectly legal ones hidden in broad daylight. And in terms of dollars, it would be hard to top the accounting scam that Obama’s budget wonks are trying to pull off now.
The ploy here is simple. They are keeping Fannie Mae and Freddie Mac off the government’s balance sheet and out of the federal budget, along with their $1.6 trillion of corporate debt and $4.7 trillion of mortgage obligations.
Never mind that the White House budget director, Peter Orszag, in September 2008 said Fannie and Freddie should be included.
The Associated Press reports that Fed Chief Ben Bernanke is warming up to the whole idea of allowing a little more light to shine on the AIG bailout that was foist upon the country back in late-2008, going so far as to pen this letter to the GAO requesting an investigation.
In the letter, Bernanke states that the government will be paid back in full by September 2013, five years after the bail-out. If I were Congress or the GAO, that's the first piece of data I'd ask to see - how could they possibly pay back everything by then?Federal Reserve Chairman Ben Bernanke took the unusual step Tuesday of asking Congress' investigative arm to conduct a "full review" of the Fed's role in bailing out insurance giant American International Group.
The Fed chief's move is aimed at defusing criticism of the government's $182 billion rescue. The bailout sparked public outrage and demands in Congress for more information, especially after it was revealed that millions in bonuses would go to employees in the AIG division most responsible for the company's need for a bailout.
The House Committee on Oversight and Government Reform has a probe under way that seeks to provide a fuller picture of the AIG bailout. Those lawmakers are especially interested in details involving billions in payments AIG made to Goldman Sachs and other Wall Street firms that did business with the insurer. Some lawmakers want to know why those firms were fully paid and why concessions weren't demanded.
"To provide a comprehensive response to questions that have been raised by members of Congress, the Federal Reserve would welcome a full review by GAO of all aspects of our involvement" in the AIG bailout," Bernanke wrote in a letter to the Government Accountability Office, the investigative arm of Congress.
Here's a fascinating look into how the mind of Treasury Secretary Tim Geithner works. While others have focused on the comments about the AIG bailout, this item at the Business Insider providing a transcript of the objectionable comments, I was more taken by how Geithner doesn't "understand" certain concepts that everyone else does.
HARWOOD: As you know, you've been asked to testify before Congress about some memos that came out, Congressman Issa released regarding AIG and advice the New York Fed gave to not disclose the full repayments to some counterparties of AIG. Now, I know you've said that you--or your spokesmen have said that you were not involved in those memos. But did you agree with the advice in the memos? Was it sound advice?You can bet on Geithner's longevity at his current post over at Intrade.
Sec. GEITHNER: You know, I haven't looked at those memos, actually. I wasn't involved in that decision. But I do think the Fed--the Fed did disclose all that information subsequently. I think they made the right thing disclosing it. It's important for the American people to see all that information. But you know, John, what this is about is is a deep sense of anger and frustration that the government thought it was necessary to come in and prevent AIG from failing. That was a hugely consequential decision, a very offensive decision to most people. Deeply offensive to me, too. But it was necessary to do. And we did it in a way that I believe was not just least cost to the taxpayer, best deal for the taxpayer, but helped avoid much, much more damage than would have happened without that. If we could have done it differently, we would have done it differently. But this was the best way to do it.
HARWOOD: You still believe it was the right thing to pay counterparties 100 cents for the dollar?
Sec. GEITHNER: Oh, absolutely. Again, the way--this is a tragic failure in the system, and we had no effective legal means to step in and prevent default without doing what you said, helping this firm meet all its legal obligations. That's why at a centerpiece of the president's reform proposals is to give the government the tools to unwind, dismember, break up, sell these institutions without the taxpayer being put in the position of having to absorb their losses. That's the basic--one of the most important reasons why we have to get reform in place. We had no choice at the time other than to do this. And I'm, personally, very confident it was the right thing to do, and we did it in the best way possible for the American people.
Clearly, President Obama must have studied Robert Reich's Financial Times commentary the other day - Why Obama must take on Wall Street - and figured this would be a good start.
I don't know. If, instead of getting ready to turn 50, I were a teenager whose home equity withdrawal-enabled lifestyle was being yanked out from under me in a rude awakening to a different new world or, if I was still in or just out of college and the events of the last couple years were being discussed in ways that older generations just don't understand, the last 60 years of American life looking a lot better than the next 60, I'd pledge to do something to.
Writing in the Huffington Post today, MSNBC host Dylan Ratigan lists five reasons why Treasury Secretary Tim Geithner should do the nation a favor and step down.
During normal times, the details behind each one of these five transgressions would probably have been enough to send Geithner on to what will likely be a financially rewarding position at some big investment firm or at a K Street lobbyist. Or, maybe former Interim Assistant Treasury Secretary Neel Kashkari needs some help staffing his new department at Pimco.COUNT 1: The AIG Emails.
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COUNT 2: He wasn't even a regulator!
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COUNT 3: The Christmas Eve Taxpayer Massacre.
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COUNT 4: He's too cozy with certain banks.
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COUNT 5: TARP Special Investigator Neil Barofsky's report says Geithner's New York Fed overpaid the big banks through AIG by billions of dollars.
From last Friday on BNN, Charles Biderman of TrimTabs talks about the odd goings on in U.S. equity markets last year where low volume and the lack of identifiable buyers have caused more than a few people to suspect that things are not as they appear.
It seems that both the Treasury Secretary and the Fed Chairman may see things get even worse during the second week of the new year than they were in the first week.
Rebuttals to Bernanke's speech last week by luminaries John Taylor and Edward Chancellor appear in today's papers, while the Geithner-AIG controversy enters a more serious phase, the New York Fed, the White House, and Congress supporting the Treasury Secretary amid more calls for him to step down. Bloomberg reports on the circling of the wagons:
Click to play in a new windowIt appears that the recovery on Wall Street is nearly complete, key elements of banking activity quickly returning to "normal" as detailed in this report($) in the Wall Street Journal.
Banks are boosting their lending to hedge funds and private-equity firms to levels unseen since before the financial crisis, raising their risk levels and adding fuel to the buying power of key players across the stock, debt and buyout markets.It seems the big banks that survived the last few years due to the generosity of Uncle Sam are now thumbing their noses at the American public by catering to hedge funds and private equity firms rather than small businesses and consumers, this report noting that the big banks can make lots of money on the former and seem to have had their fill of the the latter.Banks and investment banks, including Citigroup Inc., Bank of America Corp., J.P. Morgan Chase & Co. and Morgan Stanley are offering levels of borrowing—known as leverage—that they haven't provided in more than two years, according to people familiar with the banks and funds.
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While leverage injects risk into the financial system, borrowed money has always been an essential lubricant to both the economy and the Wall Street money-making machine.
By borrowing, hedge funds can amplify their bets on stocks, bonds and other securities. The leverage can boost gains if the wagers pay off but can prove costly if they sour.
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