Dismantling Dodd-Frank protections
derryb
Posts: 36,779 ✭✭✭✭✭
New spending bill "would undo a pillar of the Dodd-Frank financial regulatory overhaul by freeing banks to more readily trade the exotic investments known as derivatives."
Here we go again. The little bit of a return to the Glass-Seagall Act that Dodd-Frank Bill provided is slowly being undone. Got gold?
Here we go again. The little bit of a return to the Glass-Seagall Act that Dodd-Frank Bill provided is slowly being undone. Got gold?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
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Under the 2010 Dodd-Frank overhaul, banks are prohibited from using taxpayer-insured depositor funds for particularly risky derivative transactions.
That's not my understanding of it, especially considering that bank derivatives are now allowed to be "bailed-in" using depositor's funds.
Since the passage of Dodd-Frank, banks have pushed for exceptions to the regulations so they can use their deposits to underwrite some derivative trades. The new language would bow to this demand by effectively repealing portions of the “push-out” provision of Dodd-Frank, which requires banks to push some derivatives trading into separate units that do not have access to deposit insurance.
Last I knew, banks like Morgan Stanley pushed their derivatives into customer sectors of the bank to technically place the burden of those on depositors (ie the derivatives would have insurance coverage).
On the Senate floor, Warren said the changes in the spending bill “would let derivatives traders on Wall Street gamble with taxpayer money and get bailed out by the government when their risky bets threaten to blow up our financial system.”
They already are gambling with taxpayer money ever since bail-ins have been approved via the Financial Stability Board. Regardless of whose money is being used for the derivative's gambling, the risky bets are now covered by the taxpayers via Cypress type "bail ins." The latest G20 meeting in Australia basically approved this for everyone. It's not a law or regulation....just the way they will do business in a future failure.
How bail-ins will work
<< <i>That's not my understanding of it, especially considering that bank derivatives are now allowed to be "bailed-in" using depositor's funds. >>
the new spending bill allows financial institutions to trade certain financial derivatives from subsidiaries that are insured by the Federal Deposit Insurance Corp., putting taxpayers on the hook for losses caused by the risky contracts. FDIC protection is now going to be used to protect derivatives bets as well as the potential use of bail-ins that involve depositor accounts.
Presenting the $303 Trillion in derivatives that US taxpayers are now on the hook for
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
OOC quarterly report - pg 27 of 37 for bank holding companies
What could go wrong?
<< <i>Come on guys.
What could go wrong? >>
How about the banks making bad bets? Not like it hasn't happened before, except this time it involves Trillion$.
How about Wall St. getting greedy?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Credit Union
Credit Union
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Deposits in US commercial banks "protected" by FDIC: about $9.3 Trillion.
Bank derivative risk exposure now "protected" by FDIC thanks to the new "spending" bill: $300+ Trillion.
Yep, everything is under control.
Got Gold?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Well, uh............you get the idea.
I knew it would happen.
Box of 20
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>EW is quickly building a large following. >>
Ron Paul built a very large following. Even ran for president. He was never able to get off the launch pad. When Scott Brown (Rep) won the special election to replace Kennedy's Mass senate seat, it seemed like change might be coming. Elizabeth Warren (Dem) replaced him in 2012. The faces change....but not much else.
<< <i>
<< <i>EW is quickly building a large following. >>
Ron Paul built a very large following. Even ran for president. He was never able to get off the launch pad. When Scott Brown (Rep) won the special election to replace Kennedy's Mass senate seat, it seemed like change might be coming. Elizabeth Warren (Dem) replaced him in 2012. The faces change....but not much else. >>
Will be much more difficult to paint EW as a kook. While there were those that got his message, RP was his own worst enemy with his presentation.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i> Will be much more difficult to paint EW as a kook. While there were those that got his message, RP was his own worst enemy with his presentation. >>
But I suspect she'll eventually get sidestepped much the way Brooksley Born did.
The Born Ultimatum
She doesn't have to be painted as anything. She's learned the standard democrat methods of fabricating a personal storyline that looks unique, buying votes with tax money on a massive scale, and grandstanding in front of committees for zero effect. There's that horrible war on women diatribe to exploit to the nth degree as well, and no doubt she is up to the task. Throw Jeb Bush into the mix and we have another election cycle down the drain and we will be one more step closer to a government default.
Dodd Frank was mostly window dressing, no real protections to begin with.
I knew it would happen.
There are a lot of fun things in that bill . Just read this today bil allows existing pensions to be slashed
That is new territory right there
<< <i>
<< <i> Will be much more difficult to paint EW as a kook. While there were those that got his message, RP was his own worst enemy with his presentation. >>
But I suspect she'll eventually get sidestepped much the way Brooksley Born did.
The Born Ultimatum >>
BB was a political appointee who new her place, EW is a fast rising US senator who thus far refuses to be put in place.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i> BB was a political appointee who new her place, EW is a fast rising US senator who thus far refuses to be put in place. >>
Clearly, BB didn't know her place by taking on the establishment when it came to otc derivatives. Rather than "knowing her place," she resigned after 5 years on the CFTC (3 years as chairman) right after the Congress approved the non-regulation of otc derivatives. If she had "known" her place, she wouldn't have resigned after being there for 5 years. I would submit that those CFTC chairs that have since replaced there and not resigned, did indeed "know their place" and did what they were told.
Today's fast rising senator (like Ted Brown) is often tomorrow's ex-senator. But, at least EW is in the right state for the kind of views she holds. It will probably be difficult to unseat her with her visibility and popularity. Fwiw she was unsuccessful in several attempts to help the little guys against the system: first in the rewriting of consumer bankruptcy laws, then on the Congressional Oversight Panel created to oversee the Troubled Asset Relief Program (TARP), and finally the Consumer Financial Protection Bureau special assistant (all political appointments). Doesn't appear she has had any more success so far in bucking the system than BB did.
Box of 20
<< <i>Fwiw she was unsuccessful in several attempts to help the little guys against the system: first in the rewriting of consumer bankruptcy laws, then on the Congressional Oversight Panel created to oversee the Troubled Asset Relief Program (TARP), and finally the Consumer Financial Protection Bureau special assistant (all political appointments). Doesn't appear she has had any more success so far in bucking the system than BB did. >>
The key is "several attempts" that continue to this day. The difference is that EW has not given up and uses every opportunity, even though a first term senator, to loudly and publicly defend, both in and out of the senate chamber, the consumer and the taxpayer. She is a ray of actual hope. She has positioned herself with committee appointments to champion her cause. I applaud her continued attacks on Wall St. but do however disagree with her on most all other issues. As a disenfranchised consumer and taxpayer she is currently my loudest voice in Washington.
Note that while EW was the special advisor tasked with setting up the Consumer Financial Protection Bureau, when it came time to decide who would run it they feared letting her do so.
Too Pig To Fail
EW: “I agree with you Dodd-Frank isn’t perfect. It should have broken you into pieces!”
The preparations for the next crisis indicate that it is expected.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey