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.
  • A new systemic risk council stuffed with the same players, the Federal Reserve, the Treasury and then the FDIC, the SEC. a 75% vote on this council can overturn any rulings of the CFPA.
  • OTC (Over the counter) derivatives are to be regulated but as we saw in the House Bill, there are enough loopholes and exemptions to drive a Mac truck through them.
  • Empty, non-binding shareholder vote on executive compensation which does nothing (Say on Pay bill).
  • It appears the Volcker Rule is out.
  • It appears Audit the Fed is completely dead, not even mentioned, so much for discovery on $2 trillion dollars in loans.
  • Smaller bank holding companies, if they have a federal charter, would be overseen by a new regulator formed out of the Office of the Comptroller of the Currency, which already oversees national banks.
  • The Federal Deposit Insurance Corporation, which already oversees state-chartered banks that are not members of the Fed system, would gain oversight over those that are.

From the New York Times, here is the guaranteed derivatives loophole, which has been demanded by the Banksters:

Companies that do not primarily deal in derivatives and are not major participants in the swaps market would be exempt from the new requirements. The size and extent of that exemption has been a key focus of behind-the-scenes negotiations over the past several months.

Right. All you have to claim is this isn't your main business and wala, you are exempt.

There will assuredly be more. After all, why regulate the #1 element which brought down the globe and has us in hock past our asses?

Then, through a lot of bureaucratic, legalize gobbledygook, they are killing the CFPA. Why waste the paper, just write in the bill fuck you American consumer and save the taxpayers the money from creating a toothless new agency.

Folks, this is just an overview. Firstly we must parse through the actual legislation itself and then, with amendments, one can get an entirely different piece of legislation after a bill is introduced. Then, assuming a miracle happens and the Senate actually passes something (after 18 months from the biggest financial Armageddon since the Great Depression), they must reconcile the House and Senate versions of the bill. We have some overview here on what the House actually passed.

One thing I find hilarious is the claim Senate aids have been working on legislation for months. Even something as complex as this, I'm positive even we could write it in 6 months. What are they doing? Architecting a massive document to make sure it does nothing and has no teeth? Burying loopholes and exemptions to make sure few will see them until after the bill is passed?

Seriously, this is offensive. It's 18 months past this debacle and we get bought and paid for empty nothing to guarantee another Financial Armageddon will happen.

Subject Meta: 

Forum Categories: 

Amazing isn't it?

This is an excellent recap of Dodd's effigy. He will go down in infamy, as he deserves to. That is funny about the 16 months.

Nice: "Right. All you have to claim is this isn't your main business and wala, you are exempt.

There will assuredly be more. After all, why regulate the #1 element which brought down the globe and has us in hock past our asses? "

CDS, the belle of the ball retains her crown.

They could do two things right away. Restore Glass-Steagall and repeal the Commodities Futures Modernization Act. That's what started it.

I have a question for you. A week ago, the President of the European Commission said this: "In this context, the Commission will examine closely the relevance of banning purely speculative naked sales on Credit Default Swaps of sovereign debt."

What if they actually did this? What would the impact on the CDS market be? The European sovereign debt market must be a significant part of the overall CDS market (I presume, don't know).

Could this move by Europe crash the CDS market?

Michael, you're not logged in

When you have to fill out a CAPTCHA, that means you're not logged in and thus cannot track your comments, uprate posts and so on.

I don't know but assuredly a $600 trillion dollar market would have to be wound down with great care even if we could get the much needed reforms.

Now, I don't know the market size, what's going on, but a naked CDS purchase is a glorified naked short in a lot of ways, so requiring a 100% payout to god knows how many parties if say Greece defaults does seem like a sure fire way to cause a massive Economic Armageddon and wildfire contagion.

Your country is goin' down! Your nation sucks! Now pay up on the insurance I bought guaranteeing your crappy countries debt!

(where can I place this bet?) CDSes drive me nuts because they violate the mathematics in the first place and then one CDS can have an infinite number of buyers, in no way affiliated with the underlying asset.

Anywho I would imagine a ban would have a similar affect of banning naked shorts and even if there was a consequence, from the above scenario is sure sounds like something all should do fairly quickly.

Betting on national demise. 100 Quatloos on the newcomer!

Spreading the word

I reposted this few places.  It's excellent

The Agonist    DailyCensored   COTO Report

Thanks for the answer on CDS.  It it can fail, they'll figure out a way to make it happen.



I just did some quick reading

and it is like a naked short in that the purchaser does not have to own or be affiliated with the underlying bond. I also found out the CDS values are influencing the interest rate and terms of borrowing more as well as current sovereign debt, which of course would make the problem worse.

I see various articles defending this stuff and this time looking at Greece, saying it's a $9 billion vs. $400 billion ratio of CDS to bonds, but I don't know who the actual issuer is. Aka AIG issued CDSes, not the underlying issuer of the CDO or securitized whatever it was, so who actually is the issuer, I don't know that either but bottom line to me, that's just ridiculous. There is risk to invest and sometimes you lose you ass and if you want to insure something, do it the old fashioned way with a policy that can't be traded.

Ugh, these things just remind me of collapsing house of cards because while the thing should stand up by the theory...someone forgot that small breeze in the doorway in their construction and there it all goes down.