Tuesday, March 23, 2010

Those little punk staffers don't understand that markets are self correcting

European governments demanded and got a measure of Wall Street banking reform in the wake of the Greek debt crisis over the lack of disclosure to regulators of credit market activity. They have pushed the new body in charge of collecting global trading data to provide more information to financial watchdogs. Regulators from around the globe including the US SEC will now be able to obtain breakdowns of trading activity in credit default swaps, including the identity of the investors.

The DTCC Trade Information Warehouse is a body set up by Wall Street clearing houses in the wake of the 2008 financial crisis to allow regulators to track positions and trading in over-the-counter credit derivatives (to avoid the government doing it). Their policy up until now was to not share information on what was really happening with those pesky regulators. The market is self correcting you know.

The looming financial crisis has apparently not escaped Senator Chris Dodd who has surprised everyone by ignoring Republican objections and is forwarding his bill to regulate the big banks to the full Senate. It had been expected to languish in his committee indefinitely. Critics of the bill question the regulatory effectiveness of the proposal but there is one important thing that the bill does do. It will provide authority to the FDIC to carve up and dispose of the corpse of any large bank or bank like institution deemed insolvent and creates a 50 billion USD fund for the purpose. Previously nobody really had the authority to do anything with the “too big” to fail banks. They were traditionally so well connected as to be above the reach of any puny Federal regulatory agency. The market is self correcting you know.

"Don't let those little punk staffers take advantage of you, and stand up for yourselves," Republican Congressman Boehner told the American Bankers Association last Wednesday. It was the practice of the Republicans to “write” legislation by reprinting word for word anything corporate lobbyists sent over. Apparently the punk Democratic staffers changed the fax number and put a “no corruption” block on the spam filter and Boner is telling the masters of the universe that they don’t need to put up with that.

The talking point the Minority Leader is pushing is that if Wall Street has to pay to clean up its own mess they won’t have any money to lend to mom and pop. The 50 billion called for in Dodd’s bill is a third of this year’s bonuses but they claimed those bonuses had nothing to do with the lack of lending. They brag about how much lending they are doing but it’s to corporate pirates who use it to further loot and pillage the wealth of the middle class and not for economic recovery. The markets are self correcting to make sure wealth flows to the wealthy, you little punk staffer. www.prairie2.com


PitchingDoc said...

Republicans still call in to C-SPAN's "Washington Journal" and state that TOO MUCH regulation caused the crisis, just as Steve Forbes said during his C-SPAN book interview:


by blaming the crisis on things like "Mark to Market Accounting" (stated at 2:30 of c-span clip).

What's your opinion on "Mark to Market Accoutning"?

ALSO...any opinion on Paul Craig Robert's new book from CounterPunch? (http://www.easycartsecure.com/CounterPunch/images/019_lg.jpg). Just purchased it.