The recently signed tax compromise bill-also unofficially known as Stimulus II-not only contains a two-year extension of the Bush tax cuts for everyone, including those who don't want it except for the politicians who obsessively pushed for it. It also included about 50 or so tax breaks for businesses.
I already detailed the bonus depreciation and R&D tax credit.
However, as usual there are many more targeted ones for the industries whose lobbying did the best j [...]
Employers may not like the uncertainty that the new health reform law has injected into their health care benefits plans, but they are not giving up on providing health care, as I wrote earlier this week. After years of wrangling, a bill passed. The law is on the books and employers are adjusting to a new reality.
Still, the effort to knock down health reform continues. This would seem to add more uncertainty into the plans of employers, who love nothing more than a fixed cost.
O [...]
While it hasn't received much attention, a bill introduced by Senator Kent Conrad (D-ND) in June could help many companies come tax time. The bill, S.3510, would permanently extend the 15-year recovery period for qualified leasehold improvement property, as well as qualified restaurant and retail properties. The bill has seven co-sponsors, including five Republicans. It mirrors a bill introduced in the House (H.R. 4306) in late December, by Rep. Kendrick Meek, a Democrat from Florida. Mee [...]
I've avoided rehearsing the on-going debate over the bleak macroeconomic picture, because it quickly descends into endless political back and forth along with the usual name-calling, as my colleague Steve Taub and I have been discussing internally today. But it's time to make an exception:
Is the private sector not hiring because it fears more aggressive action from the public sector, and so the public sector (read Obama administration) should leave the economy to itself [...]
There's some additional recent work out there that's worth citing in connection with Karen's post on Tuesday.
In particular, I would point readers to the piece posted Monday on voxeu.org by Enrico Perotti, a finance professor at the Amsterdam Business School. Essentially, Perotti's piece explains why Kotlikoff's prescription is necessary. As it did the US Congress, the banking industry has fought off international attempts to get the so-called Basel Committee to force the indust [...]
Submitted by Adrienne Gonzalez, republished from Going Concern, Accounting News for Accountants and CFOs.
If we still care about financial reform, we should especially care about proposed changes to the Government Accounting Standards Board because, let's face it, government accounting could really use a helping hand. Were government pensions forced to use the same reporting rules as every other pension, a $3 trillion hole would open up and we would see immediately that rules in des [...]
The latest revelations concerning the dispute between AIG and Goldman over collateral show how weak the new financial reform package really is.
After all, Goldman's demands for collateral from AIG as it was failing ended up costing taxpayers billions of dollars. Yet according to the testimony today during the crisis panel's latest hearings, the whole question hinged on what constituted fair value.
To hear Goldman CFO David Viniar tell it, the Vampire Squid can [...]
A survey released today by the Association of Financial Professionals will do nothing to dampen the austerity versus stimulus debate.
To wit: Forty-three percent of US corporations had larger US cash and short-term investment holdings this May than they did six months earlier. Only 24 percent of respondents reported that their short-term holdings had shrunk during the past six months.
In a press release accompanying the findings, the AFP described finance executives [...]
While many critics claim the financial regulation bill that emerged from Congressional negotiations on Friday will do next to nothing to reduce the chances of another banking crisis, there are some limits on risk taking that could do just that.
The one that strikes me as the toughest and most critical is the so-called Lincoln amendment, which would require banks to separately capitalize their trading in credit default swaps, which were central to the recent crisis.
Whil [...]
A panel sponsored by the Securities Industry and Financial Markets Association on Monday on what banks can expect from financial reform warned that higher capital reserves and other limits Congress imposes on their profitability would hurt the economy as they curbed their ability to lend.
Several panelists, including Adam Gilbert, head of regulatory policy in the corporate risk management group of JP Morgan Chase, and Gary Mandelblatt, chief risk officer of Nomura, warned repeated [...]
Despite the prospective "success" of financial reform legislation, my sense is that very little will change on Wall Street as the bills passed by the House and Senate are likely to emerge from conference committee. And that will prevent any economic recovery that isn't just another asset bubble in disguise.
The fundamental problem, or at least one such obstacle, as I see it, is that reform as currently likely will do little or nothing to restructure the banking industry, i [...]
I see that Ben Bernanke, Sheila Bair and even Paul Volcker are trying to convince Congress not to require big banks to spin off their derivatives operations, or make other fundamental changes besides getting out of proprietary trading, the so-called Volcker rule.
Bernanke, in particular, is defending the rest of the current set-up and insisting, in effect, that regulators can take care of all of the rest of the problems that banks that are too big to fail represent, with just a few tec [...]
The argument going on in Congress over the virtues of naked swaps for corporate hedging, or their lack thereof, is being echoed in the blogosphere today.
There are two posts on the topic at Berkeley economist Brad DeLong's site, for example. And in this one, a defender of such swaps points out that he has testified in Congress that companies need them to hedge business risk. He cites the hypothetical case of John Deere selling tractors in Greece. While the company could not buy&nbs [...]
Gretchen Morgenson's piece in Sunday's Times points out how Fannie Mae and Freddie Mac are serving as a source of back-door bailouts for the banks.
And she quotes Dean Baker, co-director of the Center for Economic Policy Research in Washingto,n DC, to the effect that their continuing status as half governmental agency, half private enterprise creates an irreconcilable conflict between taxpayers and shareholders.
While Treasury secretary Tim Geithner acknowledges the proble [...]
Lost in the hubbub over the end of the GOP filibuster of bank reform and Goldman Sachs' role in the crisis that spawned the need for it is the news that Tim Geithner's spine has stiffened on what exactly to do. Or at least that's how I read this Times article.
I'm talking about Geithner's position on the so-called bank tax. Several months ago, he threw cold water on the idea of a special levy on banks, despite pressure for such a tax from his European counterparts.
One bit of commentary I've noticed in the blogosphere following yesterday's Goldman show is that the bank could toggle back and forth between being an investment advisor and a broker dealer when it came to any fiduciary duty it owed to investors in its crappy mortgage deals.
That may or may not be a loophole that needs closing, as Senator Collins' line of inquiry suggested. Surely, banks like Goldman shouldn't be able to use it as such.
But it's important [...]
I didn't catch yesterday's Beltway circus act over Abacus et al except for a few silent TV close-ups afterward of sweaty, tight-knitted brows and Carl Levin's 40-year old reading glasses perched perfectly at the tip of his warty nose, this while downing a few with Matt Quinn and a couple of former colleagues. Oh, and I did notice that the senator has a potty mouth.
So I will leave the lawyering as well as the moralizing to others.
There's no problem with [...]
This is seriously speculative stuff on my part. But I wonder if the other shoe that Carl Levin says is about to drop on Goldman has to do with its failure to disclose the fact that it received a Wells Notice from the SEC last July about the Abacus deal.
Yes, the bank claims it was immaterial, just as it claims was its lack of disclosure of hedgie John Paulson's role in helping to design the CDO to go south so he could profit by shorting the deal was immaterial.
In fa [...]
I have to say that today's House Financial Services Committee hearing into Lehman Brothers' collapse leaves me confused in more than one respect.
Ben Bernanke told the committee that regulatory authority over Lehman rested with the Securities and Exchange Commission under a voluntary program set up in 2004.
But what about the New York Fed? Doesn't it have a close working relationship with major Wall Street banks? Remember Long-Term Capital Management in 1998? It was Ne [...]
Better late than never, I suppose. But Big Bob Rubin has apparently had a change of heart as to the virtues of financial deregulation.
Appearing before the Financial Crisis Inquiry Commission today with former Citigroup CEO Charles Prince in his capacity as former vice chairman of the bailed out bank, Rubin expressed much different sentiments about the need to prevent banks from becoming too big to fail and derivatives from adding untold amounts of undetectable leverage to the financial [...]