financial regulatory reform

Senate to Debate Financial Reform Bill

The GOP has removed their block against moving forward with Financial Reform.

The bill was reported to the floor Wednesday night and debate is set to begin on Thursday.

The real question is what compromised, watered down, ineffectual, lobbyist driven compromise was made? (as if the Dodd Bill itself wasn't swiss cheese).

Senate Republican Leader Mitch McConnell (Ky.) released a statement Wednesday afternoon touting “a key agreement” to resolve disagreements over a $50 billion fund to liquidate troubled banks.

As a result, there will not be any more votes on the Senate floor Wednesday and Democrats will not keep the chamber in session overnight.

Warren Buffett Denied by the Senate, GOP Stopped Current Bill

Update: The GOP managed to stop the current bill by a vote of 57. Back to "negotiations" it goes. "Democratic" Ben Nelson voted with the GOP.

Did you know Warren Derivatives are Weapons of Mass Destruction Buffett was lobbying Congress to exempt existing derivatives contracts from collateral requirements? Did you know that Brookshire Hathaway, Buffett's company, has a $63 billion derivatives portfolio?

Well, this is a first. Warren Buffett's lobbyists were denied a derivatives provision in the Senate bill, according to The Wall Street Journal.

Simon Johnson points to amendment to break up the "Too Big to Fail" Financial Institutions

Simon Johnson is pointing to the Kanjorski amendment as a way to break up the 6 large banks who pose systemic risks, right now.

This is to patch up the Dodd bill and gives an in to go ahead and break up the 6 big banks now.

The approach in the Dodd bill simply will not work.

There is still a feasible alternative, based on a different approach – that proposed by Representative Paul Kanjorski (chairman of the Capital Market Subcommittee of the House Financial Services Committee) and adopted as an amendment in the House bill.

Dodd to release Senate Financial Reform Bill Monday, a few details now

Both the New York Times and the Wall Street Journal have been finding out details before the Senate Financial Reform bill is released.

Some key points these reporters mention:

  • CFPA - the much fought for Consumer Financial Protection Agency, has been put under the Federal Reserve. Bear in mind advocates have been fighting for an independent agency as well as the Federal Reserve has always had consumer protection power. Banksters - score 1, Americans - 0.
  • Federal Reserve to oversee banks with $50 billion or more, and a vaguely defined "systemically risky institutions", in other words the same players who brought you the bail out are still running the show.

"New Democrats" Are At it Again.

According to this report from Huffpost, two Democrats will offer amendments to Sarbanes-Oxley Act to weaken it. John Adler and Carolyn Maloney are the guilty parties.

Sarbanes-Oxley was passed as a response to Enron, Worldcom and other past accounting scandals. It applies to publicly traded companies. The purpose was to restore some level of credibility to publicly disclosed information particularly financial statements. It requires a third-party audit of internal reporting controls.

But I guess that is too much for these two Democrats. First, Adler's potential amendment:

Adler, a member of the pro-business New Democrat Coalition, is proposing to exempt publicly-traded firms with market capitalization less than $700 million from a provision of Sarbanes-Oxley mandating an external audit of the firm.

Obama Regulatory Reform Plan - Updated: Others Weigh In, Big Business Opposes Consumer Protection

See update below:

Today Yesterday was the big day to get the details of the Obama administration's financial regulatory reform proposal.

The actual Report is uploaded to EP and available here.

Some tidbits I noticed:

  • We propose to enhance the Federal Reserve’s authority over market infrastructure to reduce the potential for contagion among financial firms and markets. (p. 7, 2nd para)
  • New agency, modeled on, but not FDIC, for non-financial institutions and holding companies.(p. 8, para. 7)
  • New Financial Oversight Council reports to the Federal Reserve (p. 9, I.a.1)
  • Repeal of just reporting of Gramm-Leach-Bliley Act (?) (p. 11, para 1)
  • YAA(yet another agency) National Bank Supervisor created
  • Consolidated Institution Regulation moved to....Federal Reserve