President Obama Announces Financial Regulation Reform

[Guest The White House]

As the culmination of a months-long process in which the President consulted with the most expert and experienced regulators, leaders in Congress, and his entire economic team, he announces his vision for desperately needed financial regulatory reform. A major brick in the new foundation for Americas.

 

[Guest Tula]

For decades, bankers have been only dealing to each other, inventing more and more exotic financial vehicles together and basically regulating themselves.

 

A 2006 Citigroup report clearly puts it all out there: While the rich are getting a greater share of the wealth, and the poor a lesser share, political enfranchisement remains as was—one person, one vote.

 

http://www.scribd.com/doc/6674229/Citigroup-Mar-5-2006-Plutonomy-Report-Part-2

[Guest Dick Morris]

Have you ever heard of a "depressflation"?

 

No surprise if you haven't. It's a term I coined myself, to describe the imminent -- and inevitable -- result of the Democrats' plans for "rescuing" the economy.

 

Think 1970s-style "stagflation" but much, much worse: massive inflation, even hyperinflation, together with Depression-like economic stagnation. A depressflation.

 

Why is this inevitable? Because with a bi-partisan consensus that deficits are vital in fighting the crisis (or easing the pain) there is no constraint on Obama and his party. The sky is the limit on spending, to the tune of a trillion-plus dollars over the next two years alone.

 

And there are only two ways to pay for it: (1) printing more money, which causes inflation, and (2) hiking taxes, which kills investment, businesses and jobs.

 

Then the question will be: When will we realize that government intervention is magnifying, not solving the problems that caused the crisis? When will the patience of the public with Obama's remedies run out?

[Guest Robert]

Healthy economic growth is supported by savings, rather than newly created money. People and businesses save and invest the money they don't need to consume right away. They make loans and investments that create computer equipment, copper mines, retail stores, and new homes. These loans and investments need not be cut off suddenly by a Fed worried about rising prices, as is the case when the Fed induces business activity by simply creating money.

[Guest LAW]

In this week’s address, President Barack Obama proposed a fee on major financial firms to recoup – on behalf of American taxpayers - the $700 billion paid out in TARP, saying “we want the taxpayers’ money back, and we’re going to collect every dime.” The President’s proposal will only affect the largest financial institutions with the most debt, so it will not only help recover the TARP funds and reduce the deficit, but also crack down on some of the banking practices that led to the financial crisis.

 

The audio and video will be available online at www.whitehouse.gov at 6:00 am ET, Saturday, January 16, 2010.

 

Remarks of President Barack Obama

As Prepared for Delivery

Weekly Address

January 16, 2010

 

Over the past two years, more than seven million Americans have lost their jobs. Countless businesses have been forced to shut their doors. Few families have escaped the pain of this terrible recession. Rarely does a day go by that I do not hear from folks who are hurting. That is why we have pushed so hard to rebuild this economy.

 

But even as we work tirelessly to dig our way out of this hole, it is important that we address what led us into such a deep mess in the first place. Much of the turmoil of this recession was caused by the irresponsibility of banks and financial institutions on Wall Street. These financial firms took huge, reckless risks in pursuit of short-term profits and soaring bonuses. They gambled with borrowed money, without enough oversight or regard for the consequences. And when they lost, they lost big. Little more than a year ago, many of the largest and oldest financial firms in the world teetered on the brink of collapse, overwhelmed by the consequences of their irresponsible decisions. This financial crisis nearly pulled the entire economy into a second Great Depression.

 

As a result, the American people – struggling in their own right – were placed in a deeply unfair and unsatisfying position. Even though these financial firms were largely facing a crisis of their own creation, their failure could have led to an even greater calamity for the country. That is why the previous administration started a program – the Troubled Asset Relief Program, or TARP – to provide these financial institutions with funds to survive the turmoil they helped unleash. It was a distasteful but necessary thing to do.

 

Many originally feared that most of the $700 billion in TARP money would be lost. But when my administration came into office, we put in place rigorous rules for accountability and transparency, which cut the cost of the bailout dramatically. We have now recovered most of the money we provided to the banks. That’s good news, but as far as I’m concerned, it’s not good enough. We want the taxpayers’ money back, and we’re going to collect every dime.

 

That is why, this week, I proposed a new fee on major financial firms to compensate the American people for the extraordinary assistance they provided to the financial industry. And the fee would be in place until the American taxpayer is made whole. Only the largest financial firms with more than $50 billion in assets will be affected, not community banks. And the bigger the firm – and the more debt it holds – the larger the fee. Because we are not only going to recover our money and help close our deficits; we are going to attack some of the banking practices that led to the crisis.

 

That’s important. The fact is, financial firms play an essential role in our economy. They provide capital and credit to families purchasing homes, students attending college, businesses looking to start up or expand. This is critical to our recovery. That is why our goal with this fee – and with the common-sense financial reforms we seek – is not to punish the financial industry. Our goal is to prevent the abuse and excess that nearly led to its collapse. Our goal is to promote fair dealings while punishing those who game the system; to encourage sustained growth while discouraging the speculative bubbles that inevitably burst. Ultimately, that is in the shared interest of the financial industry and the American people.

 

Of course, I would like the banks to embrace this sense of mutual responsibility. So far, though, they have ferociously fought financial reform. The industry has even joined forces with the opposition party to launch a massive lobbying campaign against common-sense rules to protect consumers and prevent another crisis.

 

Now, like clockwork, the banks and politicians who curry their favor are already trying to stop this fee from going into effect. The very same firms reaping billions of dollars in profits, and reportedly handing out more money in bonuses and compensation than ever before in history, are now pleading poverty. It’s a sight to see.

 

Those who oppose this fee say the banks can’t afford to pay back the American people without passing on the costs to their shareholders and customers. But that’s hard to believe when there are reports that Wall Street is going to hand out more money in bonuses and compensation just this year than the cost of this fee over the next ten years. If the big financial firms can afford massive bonuses, they can afford to pay back the American people.

 

Those who oppose this fee have also had the audacity to suggest that it is somehow unfair. That because these firms have already returned what they borrowed directly, their obligation is fulfilled. But this willfully ignores the fact that the entire industry benefited not only from the bailout, but from the assistance extended to AIG and homeowners, and from the many unprecedented emergency actions taken by the Federal Reserve, the FDIC, and others to prevent a financial collapse. And it ignores a far greater unfairness: sticking the American taxpayer with the bill.

 

That is unacceptable to me, and to the American people. We’re not going to let Wall Street take the money and run. We’re going to pass this fee into law. And I’m going to continue to work with Congress on common-sense financial reforms to protect people and the economy from the kind of costly and painful crisis we’ve just been through. Because after a very tough two years, after a crisis that has caused so much havoc, if there is one lesson that we can learn, it’s this: we cannot return to business as usual.

 

Thank you very much.

[Guest American for Progress]

Conservative and industry attacks on the bank tax ring hollow because the president is required by law to make sure the TARP does not contribute to the deficit and to have a revenue raising mechanism in place by 2013. The argument that the tax will hurt lending because it will drain capital is also weak. After all, banks were more than willing to dole out $145 billion in bonuses in the last year alone. And as The Progress Report's Pat Garofalo noted, "f the banks try to pass on the cost of the new tax, that simply gives other, smaller banks an opportunity to keep their prices stable and grab some market share.

[Guest Matt Kirsch]

Banks with assets of more than $50 billion will forced to finally pay.

[Guest Matt Kirsch]

I had to post this one last article.

 

British bankers have welcomed US President Barack Obama's announcement of a levy to raise 55 billion pounds to recoup the Wall Street bailout, saying it restores parity to the global banking sector.

 

Obama's plan appeared to catch European governments and central banks by surprise, as did the president's aggressive tone -- he called corporate bonuses "obscene" and vowed "we want our money back and we are going to get it."

 

The proposals also raised eyebrows because the United States has shown great reluctance to impose global rules governing bankers' bonuses.

 

But the announcement appeared to be timed to tap into public anger at the paying of billions of pounds of bonuses over the next few weeks in a sector which had to be rescued by governments worldwide just months ago.

 

Until now, bankers in the City of London, the other main financial centre along with Wall Street, have claimed they were unfairly penalised by the tough conditions imposed by the Treasury when it intervened to prop up banks.

 

Banks have also argued that the government's imposition of a 50-percent tax rate on bonuses until April could cause high performers to pack their bags and head for jobs in countries with less restrictive rules.

 

A combination of the two factors, banks have warned, risks leaving them at a disadvantage compared to their colleagues in other financial centres.

 

So the British Bankers' Association (BBA), an industry body representing the sector, welcomed the Obama plan as a "levelling of the playing field."

 

"The US has moved up to the playing field that we are already on," BBA chief executive Angela Knight said.

 

"These are two distinctly different situations. The US has a deficit that it wants banks to meet. In the UK we are paying more and we started paying earlier and UK taxpayers will get back more than they contributed, which I think is only right."

 

Knight said the "real competition" for global banking jobs now was not between the US and the UK," but between the rest of the world and the fast-developing finance sector in China and elsewhere in Asia.

 

"If you are at a headquarters and you are deciding on strategic plans for the next two, or five to 10 years, what we don't want to see is action here in the UK that would see those centres being moved to the Far East."

 

She told AFP that however much people in Britain were concerned about the bonuses issue "they would be even more concerned if all the other jobs that hang off the sector and the tax that comes from them were to move elsewhere."

 

But some analysts think banks are deliberately exaggerating the potential risks of staff fleeing the traditional centres because it allows them to argue that they should continue paying themselves the multi-million salaries.

 

Keith Pilbeam, professor of international finance at City University in London, praised the Obama plan for spreading the repayments levy over 10 to 12 years, but said it failed to address the "central issue."

 

"The market failure is banking pay. The share prices are down massively and yet the bonuses and high pay are continuing," he said.

 

"Something does need to be done about that and it might be necessary to bring in pay caps through legislation."

 

He scoffed at suggestions that bankers were likely to flee the City and Wall Street if stricter restrictions were clamped on their pay and bonuses.

 

"It is just scaremongering from the banks. There is no way these guys are leaving London and New York. Some people around the margins might leave, but so what?

 

"And anyway, where is the talent they talk about when these guys have just destroyed shareholders' companies?"

 

Kevin Young, a Fellow in Global Politics at the London School of Economics, said neither the Obama plan nor premier Gordon Brown's bonus tax would lead to the wider reform of the financial system that many think is necessary.

 

"It is inevitable that many banks and their associations won't like it (the levy) -- but ultimately it is a very minor measure designed to recoup funds, and does so over a long period of time," he said.

 

"It is more than a drop in the ocean, but is not an ambitious plan for reform -- rather just a way for the US taxpayer to recoup their cash."

 

What the introduction of both measures would change the most, he said, "is the public's perception that these leaders are addressing a systemic problem.

[Guest Becky Todd]

I think getting taxpayer money is a good start.

[Guest Office of Rep. Welch]

awmakers rally for Wall Street Bonus Tax at Capitol Hill press conference

 

23 members sign on to Rep. Welch bill taxing TARP bonuses of $50,000 or more at 50 percent

 

Momentum continued to build Thursday for a tax on excessive Wall Street bonuses as 11 House members held a Capitol Hill press conference to rally for the Wall Street Bonus Tax Act (H.R. 4426).

 

Introduced by Rep. Peter Welch (D-Vt.) earlier this week and cosponsored by 23 House members, the bill would tax bonuses at firms that have received assistance through the Troubled Asset Relief Program at a rate of 50 percent for all bonus compensation in excess of $50,000. Revenues generated through the tax would fund a new direct lending program administered by the Small Business Administration (SBA).

 

Cosponsors of the bill include: Reps. Doggett, McDermott, McGovern, Hinchey, DeFazio, Cohen, Cardoza, Massa, Sutton, Slaughter, Schakowsky, Yarmuth, Hare, Garamendi, Capps, Kildee, Teague, Rothman, Michaud, Courtney, Braley and Kagen.

 

"Fifteen months after the American taxpayer threw Wall Street a life preserver, its biggest firms are about to break their own records of lavish, excessive and unearned bonuses. Paid for by hardworking Americans who continue to struggle through tough economic times, these bonuses are Exhibit A that Wall Street has not learned its lesson," said Rep. Peter Welch. "When you see a bank being robbed, you try to stop it. My bill will put an end to this breathtaking heist.”

 

"We’re having this press conference early in the morning, because it is time for a wake-up call. With double-digit unemployment in a recession they helped cause, there’s no justification for 7 or 8 digit banker bonuses. Every American knows about the speed limit. Today we propose a tax for those exceeding the greed limit. They don’t get it. This bill talks to them in the only language they understand," said Rep. Lloyd Doggett. “All they ever ask for is bigger and bigger slices of the American pie, but they never want to help bake it. We’re going to give them a chance to contribute some dough.”

 

"This is about economic justice,” said Rep Jim McDermott. "CEO pay at large Wall Street firms is now about 300 times that of the average worker, and yet unemployment is at 10 percent, more than 2 million homes were lost last year, and there are 6 unemployed people for every available job. Excessive doesn’t begin to describe this practice—it’s unconscionable. The TARP money we gave them last year was intended to help stabilize the economy, not line the pockets of executives. Hopefully this legislation will help them get the message.”

 

With ten percent of Shelby County citizens unemployed, we need to be doing more to create jobs and promote small business development,” said Rep. Steve Cohen. “The same Wall Street bankers who just last year came to Congress looking for a taxpayer bailout are now preparing to award record-breaking bonuses. That’s just not right. During these tough economic times, financial firms should be taking their windfall profits and helping to promote economic development – especially in the poorest communities in our country.”

 

“As we are all now painfully aware, it was Wall Street greed and a lack of sincere government oversight that drove our entire financial system onto the brink of collapse, forcing Congress to save our banking sector from the excess of its own mismanagement,” said Rep. John Garamendi. “It’s time we repaid the American taxpayer. This legislation will provide needed money to the small business owners around this country who are eager to expand and hire new workers.”

 

Wall Street banks are expected later this week to announce bonus packages for the year. According to the New York Times, five of the biggest banks to receive federal assistance last year – Citigroup, Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley – have collectively set aside $90 billion for compensation. Goldman is expected to pay employees an average of $595,000, while JPMorgan is expected to pay an average of $463,000.

 

Welch’s bill follows similar actions taken by Great Britain and France to tax excessive bonuses. A 50 percent tax on bonuses above 25,000 pounds in the United Kingdom is expected to raise more than 2 billion pounds in revenue – roughly $3.2 billion.

 

Revenue generated by H.R. 4426 would fund a temporary, direct small business lending program modeled after the SBA’s 7(a) loan program. It would offer low-interest, government loans to otherwise healthy businesses that are having trouble obtaining the credit they need for operating expenses and expansion.

 

Welch’s SBA direct lending program would help compensate for a distinct drop in lending to small businesses by TARP recipient firms. According to CNN, the 22 banks receiving the most in Treasury assistance have scaled back small business lending by $11.6 billion since April last year.

[Guest August]

The missing link is regulatory oversight to ensure that the banks do not pass on this tax by increasing fees or margins so that we do not end up paying for it all (again).

[Guest The White House]

This morning the President proposed what he called "the Volcker Rule," named after one of the fiercest advocates for financial reform over the past year, and who has been particularly focused on addressing the issue of banks being "too big to fail." He also proposed addressing one of the clearest issues leading to the financial crisis of the past years, namely banks that stray wildly from their core mission: serving their customer. Having met with Paul Volcker this morning, and having last week proposed new fees on Wall Street to ensure the taxpayers get their money back, the President came with a direct message for banks that might object to these changes:

 

I welcome constructive input from folks in the financial sector. But what we've seen so far, in recent weeks, is an army of industry lobbyists from Wall Street descending on Capitol Hill to try and block basic and common-sense rules of the road that would protect our economy and the American people.

 

So if these folks want a fight, it's a fight I'm ready to have. And my resolve is only strengthened when I see a return to old practices at some of the very firms fighting reform; and when I see soaring profits and obscene bonuses at some of the very firms claiming that they can't lend more to small business, they can't keep credit card rates low, they can't pay a fee to refund taxpayers for the bailout without passing on the cost to shareholders or customers -- that's the claims they're making. It's exactly this kind of irresponsibility that makes clear reform is necessary.

 

The President went on to explain the reforms he was proposing in more detail:

 

First, we should no longer allow banks to stray too far from their central mission of serving their customers. In recent years, too many financial firms have put taxpayer money at risk by operating hedge funds and private equity funds and making riskier investments to reap a quick reward. And these firms have taken these risks while benefiting from special financial privileges that are reserved only for banks.

 

Our government provides deposit insurance and other safeguards and guarantees to firms that operate banks. We do so because a stable and reliable banking system promotes sustained growth, and because we learned how dangerous the failure of that system can be during the Great Depression.

 

But these privileges were not created to bestow banks operating hedge funds or private equity funds with an unfair advantage. When banks benefit from the safety net that taxpayers provide –- which includes lower-cost capital –- it is not appropriate for them to turn around and use that cheap money to trade for profit. And that is especially true when this kind of trading often puts banks in direct conflict with their customers' interests.

 

The fact is, these kinds of trading operations can create enormous and costly risks, endangering the entire bank if things go wrong. We simply cannot accept a system in which hedge funds or private equity firms inside banks can place huge, risky bets that are subsidized by taxpayers and that could pose a conflict of interest. And we cannot accept a system in which shareholders make money on these operations if the bank wins but taxpayers foot the bill if the bank loses.

[Guest The White House]

Remarks by the President on Financial Reform

Diplomatic Reception Room

 

11:34 A.M. EST

 

THE PRESIDENT: Good morning, everybody. I just had a very productive meeting with two members of my Economic Recovery Advisory Board: Paul Volcker, who's the former chair of the Federal Reserve Board; and Bill Donaldson, previously the head of the SEC. And I deeply appreciate the counsel of these two leaders and the board that they've offered as we have dealt with a broad array of very difficult economic challenges.

 

Over the past two years, more than seven million Americans have lost their jobs in the deepest recession our country has known in generations. Rarely does a day go by that I don't hear from folks who are hurting. And every day, we are working to put our economy back on track and put America back to work. But even as we dig our way out of this deep hole, it's important that we not lose sight of what led us into this mess in the first place.

 

This economic crisis began as a financial crisis, when banks and financial institutions took huge, reckless risks in pursuit of quick profits and massive bonuses. When the dust settled, and this binge of irresponsibility was over, several of the world's oldest and largest financial institutions had collapsed, or were on the verge of doing so. Markets plummeted, credit dried up, and jobs were vanishing by the hundreds of thousands each month. We were on the precipice of a second Great Depression.

 

To avoid this calamity, the American people -- who were already struggling in their own right -- were forced to rescue financial firms facing crises largely of their own creation. And that rescue, undertaken by the previous administration, was deeply offensive but it was a necessary thing to do, and it succeeded in stabilizing the financial system and helping to avert that depression.

 

Since that time, over the past year, my administration has recovered most of what the federal government provided to banks. And last week, I proposed a fee to be paid by the largest financial firms in order to recover every last dime. But that's not all we have to do. We have to enact common-sense reforms that will protect American taxpayers -– and the American economy -– from future crises as well.

 

For while the financial system is far stronger today than it was one year ago, it's still operating under the same rules that led to its near collapse. These are rules that allowed firms to act contrary to the interests of customers; to conceal their exposure to debt through complex financial dealings; to benefit from taxpayer-insured deposits while making speculative investments; and to take on risks so vast that they posed threats to the entire system.

 

That's why we are seeking reforms to protect consumers; we intend to close loopholes that allowed big financial firms to trade risky financial products like credit defaults swaps and other derivatives without oversight; to identify system-wide risks that could cause a meltdown; to strengthen capital and liquidity requirements to make the system more stable; and to ensure that the failure of any large firm does not take the entire economy down with it. Never again will the American taxpayer be held hostage by a bank that is "too big to fail."

 

Now, limits on the risks major financial firms can take are central to the reforms that I've proposed. They are central to the legislation that has passed the House under the leadership of Chairman Barney Frank, and that we're working to pass in the Senate under the leadership of Chairman Chris Dodd. As part of these efforts, today I'm proposing two additional reforms that I believe will strengthen the financial system while preventing future crises.

 

First, we should no longer allow banks to stray too far from their central mission of serving their customers. In recent years, too many financial firms have put taxpayer money at risk by operating hedge funds and private equity funds and making riskier investments to reap a quick reward. And these firms have taken these risks while benefiting from special financial privileges that are reserved only for banks.

 

Our government provides deposit insurance and other safeguards and guarantees to firms that operate banks. We do so because a stable and reliable banking system promotes sustained growth, and because we learned how dangerous the failure of that system can be during the Great Depression.

 

But these privileges were not created to bestow banks operating hedge funds or private equity funds with an unfair advantage. When banks benefit from the safety net that taxpayers provide –- which includes lower-cost capital –- it is not appropriate for them to turn around and use that cheap money to trade for profit. And that is especially true when this kind of trading often puts banks in direct conflict with their customers' interests.

 

The fact is, these kinds of trading operations can create enormous and costly risks, endangering the entire bank if things go wrong. We simply cannot accept a system in which hedge funds or private equity firms inside banks can place huge, risky bets that are subsidized by taxpayers and that could pose a conflict of interest. And we cannot accept a system in which shareholders make money on these operations if the bank wins but taxpayers foot the bill if the bank loses.

 

It's for these reasons that I'm proposing a simple and common-sense reform, which we're calling the "Volcker Rule" -- after this tall guy behind me. Banks will no longer be allowed to own, invest, or sponsor hedge funds, private equity funds, or proprietary trading operations for their own profit, unrelated to serving their customers. If financial firms want to trade for profit, that's something they're free to do. Indeed, doing so –- responsibly –- is a good thing for the markets and the economy. But these firms should not be allowed to run these hedge funds and private equities funds while running a bank backed by the American people.

In addition, as part of our efforts to protect against future crises, I'm also proposing that we prevent the further consolidation of our financial system. There has long been a deposit cap in place to guard against too much risk being concentrated in a single bank. The same principle should apply to wider forms of funding employed by large financial institutions in today's economy. The American people will not be served by a financial system that comprises just a few massive firms. That's not good for consumers; it's not good for the economy. And through this policy, that is an outcome we will avoid.

 

My message to members of Congress of both parties is that we have to get this done. And my message to leaders of the financial industry is to work with us, and not against us, on needed reforms. I welcome constructive input from folks in the financial sector. But what we've seen so far, in recent weeks, is an army of industry lobbyists from Wall Street descending on Capitol Hill to try and block basic and common-sense rules of the road that would protect our economy and the American people.

 

So if these folks want a fight, it's a fight I'm ready to have. And my resolve is only strengthened when I see a return to old practices at some of the very firms fighting reform; and when I see soaring profits and obscene bonuses at some of the very firms claiming that they can't lend more to small business, they can't keep credit card rates low, they can't pay a fee to refund taxpayers for the bailout without passing on the cost to shareholders or customers -- that's the claims they're making. It's exactly this kind of irresponsibility that makes clear reform is necessary.

 

We've come through a terrible crisis. The American people have paid a very high price. We simply cannot return to business as usual. That's why we're going to ensure that Wall Street pays back the American people for the bailout. That's why we're going to rein in the excess and abuse that nearly brought down our financial system. That's why we're going to pass these reforms into law.

 

Thank you very much, everybody.

 

END

11:42 A.M. EST

[Guest Senator Jeff Merkley]

Oregon’s Senator Jeff Merkley made the following statement Thursday morning in advance of President Obama’s announcement on financial regulation:

 

For months, I’ve been pushing for the reestablishment of a firewall between risky activities and depository lending. This is an absolutely necessary step in shutting down the casino-like gambling that destroyed our economy and endangered the jobs, homes and savings of the American people. The president’s support is a critical turning point in the effort to see these firewalls enacted in a financial reform package this year.

 

Proprietary trading, where banks bet with their own capital, is a recent innovation and has turned out to be a bad deal for both our financial institutions and the taxpayer. Over the last fifteen years, as the legal and ethical prohibitions on high-risk trading were removed, banks raced to increase their leverage and gamble with their balance sheets. As recent history has demonstrated, these dangerous bets resulted in financial collapse, both for Wall Street and American families. Common-sense limits on high risk activities will make our economy more stable and less reliant on government intervention.

 

To succeed, banks have to return to their mission of providing customers with prudent lending and investment opportunities instead of aspiring to be hedge funds. Success for the American financial system isn’t defined by record profits or massive bonuses. Success is the ability to lend to small businesses, to create jobs, and to drive real economic growth.

 

The restoration of rules that prevent banks from gambling with their depositors’ money is crucial to righting our economic ship and ensuring the future stability of our financial system. I look forward to working with President Obama, Banking Committee Chairman Dodd, and my Senate colleagues to reestablish the firewall between risky activities and depository lending and make banking boring again.

[Guest Nigel]

I have been a City based investment manager for 35 years. I lived through "Big Bang" in 1986 when banks were allowed to own stockbrokers. My colleagues and I thought at the time that it was wrong. We hated the greed culture of the banks - particularly the American ones - and so it has come to this. It is interesting to see the bankers arguing against these proposals but, in the end, anything that removes unnecessary risk from a borrowing/lending institution can only be for the best. I relish the future world of finance under the new regime.

[Guest philosopher's stone]

The President's proposal has fueled a 213-point slide in the Dow. Investors also weighed reports that some congressional Democrats are growing skittish about confirming Bernanke to a second term as Fed chairman.

[Guest Blue Dog]

Instead of shoveling money at Wall Street forever, we need to send this money instead to the Small Business Administration, so that they can lend this money directly to American small businesses, to jumpstart our economy. Small businesses create around seven of every ten jobs in America, and they have been hurt by the tight credit situation on Wall Street.

[Guest Sen. Bernie Sanders]

Sen. Bernie Sanders (I-Vt.) issued the following statement today after President Obama proposed tough new restrictions on the size and activities of the nation's largest financial institutions:

 

“President Obama’s proposal is a major step forward to limit the greed and reckless behavior of Wall Street that has caused so much damage to the economy. We need to do everything we can to limit the size of too-big-to-fail financial institutions and end the gambling addiction on Wall Street.

 

“One of the reasons I am strongly opposed to the re-nomination of Ben Bernanke is that, in truth, he has had the power to do this from day one. Our goal must be to create a new Wall Street that invests in the productive economy creating decent paying jobs for all Americans."

 

Sanders is the author of legislation that would require the Treasury Department to break up too-big-to-fail financial institutions (S.2746, The Too Big to Fail, Too Big to Exist Act)

[Guest Rob Nichols]

It is a strategic advantage to our nation to foster an environment that allows for big institutions. If you're a big company, you need a large globally active institution that has the reach and array of products and size to manage it. And we should foster an environment where small, medium, and large institutions can prosper. And I think a big part is a new supervisory architecture. I am acknowledging the industry contributed to this. There were severe regulatory failures as well. So that’s where we ought to focus our policy on.

[Guest Drew Hammill]

The combined resources of Goldman Sachs, GSGH and Gao Hua represent the largest team among international investment banks in China.

 

Beijing

Beijing Gao Hua Securities Company Limited

Winland International Center, 18th Floor

7 Finance Street

Xicheng District, Beijing 100140

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Tel: +86 10 6627 3000

 

Goldman Sachs (China) LLC

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Goldman Sachs Gao Hua Securities Company Limited

Winland International Center, 18th Floor

7 Finance Street

Xicheng District, Beijing 100140

People's Republic of China

Tel: +86 10 6627 3333

 

Hong Kong

 

Goldman Sachs (Asia) LLC

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Beijing Gao Hua Securities Company Limited

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43/F, The Center

989 Chang Le Road

Shanghai 200031

People's Republic of China

Tel: +86 21 2401 8888

[Guest 84Saints]

Just so you understand that American Banks are in bed with China.

 

Bank of America said Monday it would nearly double its stake in one of China’s largest banks, China Construction Bank, in spite of the spreading global financial crisis.

 

JPMorgan Chase & Company (JPM) said on Monday that it has appointed Zili Shao as chairman and chief executive of its China operation. It has also appointed Fang Fang as vice-chairman of its Asia Investment Banking operations.

 

Citibank (China) Co., Ltd. ("Citi China") today officially opened its Chongqing branch, its ninth in China. The branch offers banking and wealth management services to both corporate and individual customers in and around Chongqing. A ceremony was held to mark the occasion, attended by Mr. William R. Rhodes, Senior Vice Chairman, Citigroup, and Senior Vice Chairman, Citibank, Mr. Andrew Au, Chairman of Citibank (China) Co., Ltd., Mr. Huang Xiaoguang, President of Citibank (China) Co. Ltd., Mr. Anand Selva, Executive Vice President of Citibank (China) Co. Ltd., as well as local government officials of Chongqing.

 

GSR Ventures - Affiliated with Mayfield Fund here in the U.S., this China-focused early-stage technology investor closed its third fund at $383 million in early 2009. Investors weren’t disclosed, but GSR previously received capital from J.P. Morgan.

 

Wachovia announced today that it has opened a branch in Shanghai, China. The Wachovia branch will facilitate customers' global trade by allowing companies and correspondent banks outside of China to direct trade transactions involving Chinese trading partners through the new branch. The Shanghai launch marks the opening of the fifth Wachovia branch in Asia.

[Guest Deb]

The shadow banking system has been implicated as significantly contributing to the financial crisis of 2007–2010. In a June 2008 speech, U.S. Treasury Secretary Timothy Geithner, then President and CEO of the NY Federal Reserve Bank, placed significant blame for the freezing of credit markets on a "run" on the entities in the shadow banking system by their counterparties. The rapid increase of the dependency of bank and non-bank financial institutions on the use of these off-balance sheet entities to fund investment strategies had made them critical to the credit markets underpinning the financial system as a whole, despite their existence in the shadows, outside of the regulatory controls governing commercial banking activity. Furthermore, these entities were vulnerable because they borrowed short-term in liquid markets to purchase long-term, illiquid and risky assets. This meant that disruptions in credit markets would make them subject to rapid deleveraging, selling their long-term assets at depressed prices.

 

Nobel laureate Paul Krugman described the run on the shadow banking system as the "core of what happened" to cause the crisis. "As the shadow banking system expanded to rival or even surpass conventional banking in importance, politicians and government officials should have realized that they were re-creating the kind of financial vulnerability that made the Great Depression possible--and they should have responded by extending regulations and the financial safety net to cover these new institutions. Influential figures should have proclaimed a simple rule: anything that does what a bank does, anything that has to be rescued in crises the way banks are, should be regulated like a bank." He referred to this lack of controls as "malign neglect."

[Guest x]

The government attached far too few conditions on the receipt of taxpayer aid (even apart from the problem of allowing wealth transfer from taxpayers to private corporations in the first place), but adding post-hoc conditions that did not exist at the outset, as well as punishing banks that did not accept taxpayer money (who have already been punished with implicit taxation by the government intervening on behalf of their competitors), is unjust. Governing is about doing the right thing, not getting even in petty political vendettas.

[Guest LAW]

Financial reform legislation faces an uncertain future in the Senate where Republicans stand opposed to creating a new consumer protection agency. Rep. Barney Frank (D-Mass.), who ushered a financial overhaul through the House last month, explains how the agency was tempered in his bill and may not survive the Senate. President Obama has said creating the agency is a must.

[Guest IRead]

Wake up America and stop being pop culture morons.

 

Why not put a consumption tax on raw goods that we buy? Because 97% of the wealth & means of production is held by 1% of an elite population.

 

The elite don’t want to pay people!