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Tag >> wall street
Jul 09

Banks not united against financial reform

Posted by Karen1 in wall streetICBAfinancial reform billfinancial reformBanksbanking reform


During 2009 and the first quarter of 2010, 850 businesses and organizations spent $1.3 billion to lobby elected officials on Capitol Hill. While the disclosure forms don't show the exact amount allocated just to financial system reform, it's likely that the subject accounted for several hundred million dollars of the total, according to the Center for Public Integrity.

So it may come as a surprise to find that not all businesses are dead-set against all proposed reforms. Case in point: while the Independent Community Bankers of America has not taken a public stance on a specific bill, information on its website and comments from IBCA leaders indicate that it's in favor of reforming the system, and that some of the rhetoric surrounding the issue has obscured the probable potential impact on community banks. "The community banks had huge differences from the Wall Street crowd," says Steve Verdier, ICBA's executive vice president and director of Congressional affairs. "We viewed ourselves just like any small business that had suffered from the excesses of Wall Street."

While Wall Street banks also profess to favor reform, their rhetoric hardly matches reality in so far as they've worked to gut or at least soften the legislation's toughest provisions, breathlessly and repeatedly warning about their potential to harm the economy. Now consider the section of the ICBA site entitled, "Myths and Facts about the Senate Financial Reform Bill." The ICBA notes that concerns about potentially burdensome regulation that may result from The Restoring American Financial Stability Act of 2010 (S. 3217)  "can be exaggerated to the point that the benefits of the bill are overlooked." The site also points out the bill would not allow for endless bailouts of large financial firms, but would instead extend authority to the FDIC to administer a fund to wind down or sell off operations of failed financial firms.

Elsewhere on the site, the ICBA says that it wants to preserve the Federal Reserve's authority over its state member banks. Without this, "The Fed would become the central bank of Wall Street, not the United States." Similarly, the group advocates ending the commercial ownership of banks by firms such as General Motors or Wal-Mart. As others, including members of the Fed's Board of Governors, have noted, these industrial loan companies (ILCs) have many of the privileges of banks, such as access to the Fed's discount window and payment system, but don't have to follow the same rules that other banks do.

To be sure, some state community banking associations have indicated their opposition to regulatory reform. The Montana Bankers Association issued a release in May that said of the Senate reform bill, "It's a tragedy that this 1,500-plus page bill now moves forward."

Camden Fine, ICBA's president and CEO appears to see things differently. Consider his blog post of June 23:
Ever wonder about the millions, nay hundreds of millions, in Wall Street and megabank dollars spent on countless legions of lobbyists? For Wall Street and the megabanks, lobbying the financial reform bill is all about protecting billions of dollars in profits. It is about keeping their too-big-to-fail status and the market advantages and perks such status gives them. It is about preserving the privileged place in the financial services sector they have gained through legislation and regulations over the past 30 years.

Dec 10

It’s all about the bonuses

Posted by MQuinn in wall streetTARPpaycompensation


That's it. The argument is over as far as I'm concerned. This whole financial disaster revolved around one thing and one thing only: Compensation. There were many enablers to the crisis, but they were just avenues to an end. That end was getting paid. Paid gross amounts of money. And defending the ability to go after that end is the only fight left for banks now that the government has guaranteed their survival.

I'm not trying to let anyone off the hook. Not the Federal Reserve, not Congress. But I just don't want to hear all the noise about pay not being the root cause.

Oct 22

Like the whole thing never happened

Posted by MQuinn in wall streetRegulationfinancial crisisBanking


In yet another sign that Wall Street is ready to party again after finding itself on the precipice of complete collapse, some of the most powerful players in finance turned out earlier this week to celebrate the release of New York Times reporter and columnist Andrew Ross Sorkin's book on the financial crisis, "Too Big to Fail".

Pardon me if I find it a bit unwholesome for everyone to mingle and laugh a little more than a year after the collapse of Lehman Brothers, especially given the continued rise in unemployment and home foreclosures.

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