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petegz28
01-21-2010, 08:08 PM
Bloomberg Hammers Obama, Congress Over Bank Plan
Mayor Says President's Idea To Limit Size And Investments Will Lead To Big Problems For NYC, Including Layoffs
Hizzoner Suggests Salaries Of D.C. Lawmakers Be Held Back For Decade

President Barack Obama's demand Thursday that Congress clamp down on the size of banks and their investments got major blowback from New York City Mayor Michael Bloomberg, who said it could cause layoffs and hurt the city.

It's a clash between the president and the mayor. President Obama wants to whittle away at the size of the financial services industry.

"The American people will not be served by a financial system that comprises just a few massive firms," the president said.

But Mayor Bloomberg said the banks and Wall Street are part of the bedrock of the city's economy, and efforts to slash their business just means less tax revenue for the city, which brings up the dreaded "L" word.

"If that's the case then we'll have to lay off people because it will really hurt our industry," Bloomberg said.

The mayor was so upset about the move -- and a suggestion that Wall Street bonuses be put in escrow, which means the money wouldn't be spent here, wouldn't help the city economy -- he responded with a proposal of his own for members of Congress.

"Maybe we should hold back their salaries for a decade or so and see whether the laws they pass work out," Bloomberg said.

The mayor also demanded that the members of our congressional delegation go to the mat to protect the financial services industry, much like senators from Texas protect the oil industry.

Senator Charles Schumer said he will try to protect New York, but that some reforms are necessary.

"It's a careful balance. You can't say do nothing because we all know the banks made mistakes, but you can't be so draconian that you cause job loss or make the institutions not function properly," Schumer said.

The banking reforms still have to be negotiated by Congress, where people are still reeling by the effects of the Massachusetts Senate race, so it's anybody's guess what will happen.

Mayor Bloomberg also said that limiting the size of banks will hurt their competitiveness in the global economy.

http://wcbstv.com/politics/obama.banks.mayor.2.1441065.html

petegz28
01-21-2010, 08:11 PM
There isn't really a problem with big banks. The problem is the securities they trade on dark markets such as CDS's that cause the problems, among some other things. There is a need for some regulation. Limiting the size of a company and\or mandating their bonuses go into esrow is pure bullshit.

The Mad Crapper
01-21-2010, 08:12 PM
B.O. has the midas touch- Everthing he touches turns to shit.

petegz28
01-21-2010, 08:21 PM
Flanked by Paul Volcker, the former Federal Reserve chairman, who has advocated the move for months, Mr Obama called for banks to be banned from running their own trading desks and “owning, investing in or sponsoring” hedge funds and private equity groups.

Tim Geithner, the Treasury secretary, who has come under attack from Democrats on Capitol Hill, backed the plan, officials said, even though his own regulatory proposals have stopped well short of the sweeping Volcker reforms.

Republicans responded coolly, but did not reject the proposals out of hand. Richard Shelby, senior Republican on the Senate banking committee, called for more details and new hearings.

Others accused the White House of adopting a populist message to divert attention away from the blow delivered by the Democrats’ defeat in the Senate race in Massachusetts.

The measures, which require congressional approval, hark back to the response to the 1929 stock market crash that ushered in the Glass-Steagall Act, separating commercial and investment banking, which remained in law until 1999

Shares of the big Wall Street banks fell as Mr Obama announced the proposals, but those of regional banks rose.

Mr Obama called for new rules – beyond current regulations restricting banks from holding no more than 10 per cent of US deposits – that would place unspecified size limits on institutions.

“In recent years, too many financial firms have put taxpayer money at risk by operating hedge funds and private equity funds and making riskier investments to reap a quick reward,” said Mr Obama. “And these firms have taken these risks while benefiting from special financial privileges that are reserved only for banks.”

Congressional aides and administration officials said a lot of detail remained to be decided. Barney Frank, chairman of the House financial services committee, said he would support new rules if they allowed banks to dispose of newly banned operations over three to five years and thereby prevent a “fire sale”.

Bankers said the lack of detail and the likelihood of a protracted debate in Congress would give them the chance both to lobby for changes and to adapt their businesses, with, for example, Goldman possibly giving up the financial holding company status it adopted in the financial crisis.

http://www.ft.com/cms/s/0/44f593ee-06a7-11df-b426-00144feabdc0.html

petegz28
01-21-2010, 08:22 PM
I think there is some merit to the idea of some of the large investment companies not owning their own private trading desks and sponsoring hedge funds. But it is a fine line to walk.

petegz28
01-21-2010, 08:30 PM
UPDATE 3-Geithner aired concern on bank limits-sources

* Geithner has concerns over proposed bank limits--sources

* Treasury chief worried about competition, root of crisis

* Geithner tells PBS that limits not politically motivated (Adds comments from Geithner and Summers, analyst comment)

By Karey Wutkowski and Steve Eder

WASHINGTON/NEW YORK, Jan 21 (Reuters) - U.S. Treasury Secretary Timothy Geithner has expressed some skepticism behind closed doors about the broad bank limits proposed on Thursday by his boss, President Barack Obama, according to financial industry sources.

The sources, speaking anonymously because Geithner has not spoken publicly about his reservations, said the Treasury chief is concerned the proposed limits on big banks' trading and size could impact U.S. firms' global competitiveness.

He also has concerns that limits on proprietary trading do not necessarily get at the root of the problems and excesses that fueled the recent financial meltdown, the sources said.

But a White House official said Geithner was on board with Obama's economic team behind the proposals.

Geithner and Lawrence Summers, the director of President Barack Obama's National Economic Council, worked closely with Paul Volcker, who heads a panel of outside advisers, in developing the proposals, the official said.

"The plan was submitted to the president with a unanimous recommendation from the economic team," the official said.

In a television interview, Geithner said the proposal was driven by a desire to ensure a stable financial system, not by politics.

Geithner told PBS NewsHour the Obama administration decided to unveil the proposals months after its original sweeping financial reform plan to bring "a little more clarity" to how big banks could be reined in. Geithner had backed a proposal last fall to give regulators power to curb a firm's size.

Summers, in an interview with CNBC, said the latest proposal was written before a Democrat, Martha Coakley, lost a closely watched race for the Massachusetts Senate seat on Tuesday. Obama had painted her opponent, Republican Scott Brown, as a friend of Wall Street.

REFORM FOOTNOTES

Obama's proposals would prevent banks or financial institutions that own banks from investing in, owning or sponsoring a hedge fund or private equity fund.

He called for a new cap on the size of banks in relation to the overall financial sector that would take into account not only bank deposits, which are already capped, but also liabilities and other non-deposit funding sources.

The proposed rules also would bar institutions from proprietary trading operations that are for their own profit and unrelated to serving customers. For details [ID:nN21200151]

The administration had already sharpened its rhetoric against Wall Street where the announcement was met with disdain. Bank shares slid and the dollar fell against other currencies.

The proposals were largely driven by Volcker, a former Federal Reserve chairman who for more than a year has advocated curbs on big financial firms to limit their ability to do harm.

The White House official said Obama's economic team considered the concern that proprietary trading was not at the heart of the problems that fueled the financial crisis.

But it concluded that reform needed to be about more than just fighting the last war, it needed to address sources of future risk as well, the official said.

Lawrence White, a professor at New York University's Stern School of Business and a former regulator, said Obama's proposals were "a solution to the wrong problem."

"They have this rhetoric that it was proprietary trading that was the problem," White said. "That's wrong."

Obama has recently tried to capitalize on populist anger against the big banks, proposing last week a major tax on banks to recoup taxpayer losses related to the bailout.

Underscoring the high level of public anger at banks, a majority of 1,006 Americans surveyed in a Thomson Reuters/Ipsos poll said executive pay was too high. [ID:nN21222779]

Douglas Elliott, a former JPMorgan investment banker now with the Brookings Institution, said he didn't know Obama's motivations, but thought his move was "smart politics."

"Everybody hates the bankers now and when you come out with something saying we are going to keep them from getting bigger and taking outrageous risks, of course it comes out favorable," Elliott said. "I do have some concerns about the public policy aspects."

http://uk.reuters.com/article/idUKN2123718120100122?pageNumber=1

BigRedChief
01-21-2010, 11:14 PM
What politician wiill stand up and defend these big banks, the bonus's etc. The resuming of the banking and financial practices that almost sent our economy into a depression. In this populist enviornment that will be suicidial.

blaise
01-22-2010, 06:03 AM
Maybe Bloomberg doesn't understand. This has to be done. Obama's approval ratings are down and he needs to get back to what's really important. Villifying people.

HonestChieffan
01-22-2010, 06:19 AM
Obama is making a move based on his emotion and not on any sound reason. This smells like a move based on "Ill show them" or desperation to show he is President after seeing a bunch of the dems start to run away from him internally.

The Mad Crapper
01-22-2010, 08:00 AM
http://i275.photobucket.com/albums/jj296/hco12345/fail.gif

BigRedChief
01-22-2010, 08:08 AM
Maybe Bloomberg doesn't understand. This has to be done. Obama's approval ratings are down and he needs to get back to what's really important. Villifying people.So you are supporter of the big banks?

headsnap
01-22-2010, 08:12 AM
So you are supporter of the big banks?

Life would sure suck if they disappeared tomorrow...




the same can't be said about BO... ;)

petegz28
01-22-2010, 08:50 AM
So you are supporter of the big banks?

Instead of being opposed to big banks. Why not just tell them their ass won't get bailed out? That fixes a lot of things right there.

The Mad Crapper
01-22-2010, 08:52 AM
Instead of being opposed to big banks. Why not just tell them their ass won't get bailed out? That fixes a lot of things right there.

But then how will B.O., Geitner and Bernanke extort a kickback?

KC native
01-22-2010, 08:59 AM
First off, Fuck Mayor Bloomberg and Fuck Tim Geithner. Bloomie is worried about NYC and could give a fuck less about what Wall St has done to the rest of the country. Timmy is, well he's Timmy. An incompetent idiot that has been in the pocket of the big banks all along.

This is a necessary step. I was listening to Austin Goolsby (one of obama's econ guys) on Bloomberg this morning and he fleshed the proposal out some. He said that the rule is designed to prevent firms (like Goldman Sachs) who now have access to the FED or firms that have had access to the FED from taking subsidized capital (borrowing from the fed/TARP) and using those funds for non-client related activities. Basically, Obama is proposing that you can't borrow money from the Fed at 0% and then turn around and dump those funds in the market for just the firm's benefit. Goolsby said that they aren't prohibiting banks from proprietary trading or owning hedge funds just prohibiting banks that have been taking subsidized capital.

This is a good proposal IMO and I think it doesn't go far enough. I really want to see more concrete proposals to pare down the size of institutions like JP Morgan, BofA, and Citi.

KC native
01-22-2010, 09:00 AM
Instead of being opposed to big banks. Why not just tell them their ass won't get bailed out? That fixes a lot of things right there.

That's what they're doing without explicitly saying it. They are saying that if you take federal funds we don't want you doing XYZ. If you don't then you are free to do what you want.

Bearcat2005
01-22-2010, 09:02 AM
If he really wanted to help things and is concerned about "a few massive banks", then end the fed.

petegz28
01-22-2010, 09:04 AM
That's what they're doing without explicitly saying it. They are saying that if you take federal funds we don't want you doing XYZ. If you don't then you are free to do what you want.

That isn't how I am reading it. I am reading it as they are trying to limit the size of companies. I don't like that. Telling them bonuses have to go into escrow? Don't like it. Telling them they can't have their own private trading desks? Ok, fair. If you want to trade for yourself you open a company that does just that.

KC native
01-22-2010, 09:04 AM
As far as the escrow, I have no problem with that provided it's reasonable (I think there are better methods to do this but if Wall St won't fix it then the government will). What they are trying to accomplish is making sure that the employee's goals are matched up with the goals of the institution. Too much of Wall St (and executive) compensation is tied to short term measures. This will help to make sure that these people are actually earning their bonuses by providing long term value instead of pumping things or engaging in activities that are detrimental to the firm and society in the long run.

KC native
01-22-2010, 09:05 AM
That isn't how I am reading it. I am reading it as they are trying to limit the size of companies. I don't like that. Telling them bonuses have to go into escrow? Don't like it. Telling them they can't have their own private trading desks? Ok, fair. If you want to trade for yourself you open a company that does just that.

Well the size of these companies is one of the biggest problems. These behemoth institutions are huge systemic risks. These firms need to be drastically reduced in size.

petegz28
01-22-2010, 09:05 AM
As far as the escrow, I have no problem with that provided it's reasonable (I think there are better methods to do this but if Wall St won't fix it then the government will). What they are trying to accomplish is making sure that the employee's goals are matched up with the goals of the institution. Too much of Wall St (and executive) compensation is tied to short term measures. This will help to make sure that these people are actually earning their bonuses by providing long term value instead of pumping things or engaging in activities that are detrimental to the firm and society in the long run.

Tht is dictating how particular companies do business. I don't like it. I agree about the short term incentives being a bad seed. I am not sure putting a bonus in escrow is the answer.

petegz28
01-22-2010, 09:06 AM
Well the size of these companies is one of the biggest problems. These behemoth institutions are huge systemic risks. These firms need to be drastically reduced in size.

I don't disagree. But I don't want the Fed Gov dictating such. It is a fine line to walk.

KC native
01-22-2010, 09:06 AM
If he really wanted to help things and is concerned about "a few massive banks", then end the fed.

JFC, just go away. The Fed isn't going away and it serves no one to say such things.

petegz28
01-22-2010, 09:07 AM
JFC, just go away. The Fed isn't going away and it serves no one to say such things.

While I agree the Fed won't go away, it needs too.

KC native
01-22-2010, 09:09 AM
Tht is dictating how particular companies do business. I don't like it. I agree about the short term incentives being a bad seed. I am not sure putting a bonus in escrow is the answer.

It's only dictating to those that the government has/is subsidizing. If those companies want to step away from the Federal safety net and do whatever they want then they can do that.

On the compensation, I agree that I don't think escrow is the answer. It is kind of a ham handed approach. That being said, Wall St has done zero to fix their principal/agent problems. If Wall St doesn't want to have the government invovled then they need to fix compensation now and not later.

KC native
01-22-2010, 09:10 AM
I don't disagree. But I don't want the Fed Gov dictating such. It is a fine line to walk.

If the government doesn't dictate it, who will? We have trust legislation for a reason (even if it hasn't been used in years).

Donger
01-22-2010, 09:14 AM
I hate Big Bank.

BigRedChief
01-22-2010, 09:15 AM
Instead of being opposed to big banks. Why not just tell them their ass won't get bailed out? That fixes a lot of things right there.any politician who opposes this will be committing political suicide. I can see those effective political ads now. Will make swiftboating look like childs play.

patteeu
01-22-2010, 09:24 AM
B.O. has the midas touch- Everthing he touches turns to shit.

Repost

You're right. The debt created by Obama will probably be much worse. If crap were gold, Obama would be Midas.

:p

The Mad Crapper
01-22-2010, 09:25 AM
Repost



:p

Great minds think alike!

ROFL

patteeu
01-22-2010, 09:25 AM
Instead of being opposed to big banks. Why not just tell them their ass won't get bailed out? That fixes a lot of things right there.

Good answer.

talastan
01-22-2010, 09:28 AM
There isn't really a problem with big banks. The problem is the securities they trade on dark markets such as CDS's that cause the problems, among some other things. There is a need for some regulation. Limiting the size of a company and\or mandating their bonuses go into esrow is pure socialism.

FYP ;)

The Mad Crapper
01-22-2010, 09:29 AM
Citibank and BOA should be gone by now. Something better would have replaced them. But then B.O., Geitner, and Bernanke wouldn't have been able to extort kickbacks.

petegz28
01-22-2010, 09:31 AM
Citibank and BOA should be gone by now. Something better would have replaced them. But then B.O., Geitner, and Bernanke wouldn't have been able to extort kickbacks.

Citi, BoA, Merryl, GM, GMAC, AIG, Chrysler, etc, etc.

The Mad Crapper
01-22-2010, 09:40 AM
Citi, BoA, Merryl, GM, GMAC, AIG, Chrysler, etc, etc.

Ford is being punished by having to compete with GM and Chrysler who are propped up by the feds.

What happened to America?

talastan
01-22-2010, 09:43 AM
I believe if the guberment stayed out of the bailout business in the first place we'd have already had viable and much more stable competitors step into the place of these institutions that we ended up bailing out; only to come back now and say you better do and act as we say. Again all this is is a power play for government control of another portion of our economy.

The Mad Crapper
01-22-2010, 09:43 AM
http://www.moonbattery.com/obamashame.jpg

petegz28
01-22-2010, 10:02 AM
Ford is being punished by having to compete with GM and Chrysler who are propped up by the feds.

What happened to America?

Corporate and Union greed and ownership of our government???

The Mad Crapper
02-27-2010, 01:57 PM
Despite bailouts, Fannie & Freddie continue to lose billions

By Anthony G. Martin

Hoping to keep the news low-keyed and under-reported, Fannie Mae announced late Friday afternoon after the markets closed that it had lost over $74 billion in 2009, bringing its 3-year loss totals to $137 billion.

This is in addition to Freddie Mac's $80 billion loss during the same period.

Fannie and Freddie have continued to squander taxpayer dollars even after the massive bailouts by the federal government. In fact, the mortgage giants lost more money after the bailouts than they did before.

Tom Blumer at NewsBusters put it in these terms:

For those keeping score at home, Fan's three-year losses of $137 billion, as reported by the Associated Press's Alan Zibel yesterday evening, plus the roughly $80 billion lost in the same period at kissing cousin Freddie Mac ("Fred"), is over three times the highest-end estimate of $66 billion in total losses at household word Enron, and over four times the roughly $50 billion investors lost to household name Bernie Madoff. Enron and Madoff are history; Fan and Fred are just warming up, and a large portion of the public has no idea who they are.

However, the big news in the midst of this late-Friday afternoon announcement is that Fannie Mae says it will need another $15.3 billion in taxpayer cash by the end of March.

The very entities that are responsible for the financial meltdown in 2008, Fannie and Freddie, continue to be 'enabled' by the government to go on their spending binges with little or no incentive to curtail their reckless habit.


Not only that but the 2 mortgage giants engaged in outright fraud concerning the nature of the mortgages they were purchasing:

New research by Edward Pinto, a former chief credit officer for Fannie Mae and a housing expert, has found that from the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime or Alt-A.

In general, a subprime mortgage refers to the credit of the borrower. A FICO score of less than 660 is the dividing line between prime and subprime, but Fannie and Freddie were reporting these mortgages as prime, according to Mr. Pinto. Fannie has admitted this in a third-quarter 10-Q report in 2008.

An Alt-A mortgage is one in which the quality of the mortgage or the underwriting was deficient; it might lack adequate documentation, have a low or no down payment, or in some other way be more likely than a prime mortgage to default. Fannie and Freddie were also reporting these mortgages as prime, according to Mr. Pinto. (Source: Wall Street Journal).

With government constantly scolding private corporations, the U.S. Healthcare System, and automakers like Toyota over their shortcomings, one would think that the Obama Administration would be quick to cut off funding from Fannie and Freddie and demand criminal investigations.

Not so fast:

Speaking of which, the Obama administration, which is constantly scolding us that the status quo in the best health care system in the world is unacceptable, seems perfectly comfortable with things as they are at Fan and Fred, and even with expanding their damage. (Source: Newsbusters).


Not only will Fannie Mae get the extra bailout money it needs but apparently under this administration the 'culture of corruption' keeps growing.

http://image3.examiner.com/images/blog/EXID37620/images/0b949d98-c2a4-4825-b6b8-0c2f6b362b56.jpg

http://www.examiner.com/x-37620-Conservative-Examiner~y2010m2d27-Despite-bailouts-Fannie--Freddie-continue-to-lose-billions