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Finance Reform Gearing Up

post #1 of 31
3/30/10 at 2:56pm
Thread Starter 
On to the next big'un.

I'm pretty cynical that we're going to see a major change on this front; Obama and his staffers seem to be listening too closely to the people who trashed the economy in the first place. Or...in some cases, they ARE those people. Still, maybe there'll be some incremental change.

What I am sort of relishing is the fact that the Republicans are now going to have to spend the rest of the year arguing against finance reform and putting limits on the captains of industry. I mean, they're doing it already, but now this is going to be first and foremost, and if there's any truth at all to the Tea Party characterization as "people who are angry at both sides over the economy", you have to think that would rile them up just a little against the Repubs.
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post #2 of 31
3/30/10 at 2:58pm
The Tea Party will go the direction that they're told to go in by their patron pundits, don't worry about that.
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post #3 of 31
3/30/10 at 3:03pm
The Senate FineReg bill, like the health care bill was to PHARMA, is a sloppy blowjob to the banking industry. Unlike the health care bill, there aren't that many Senators whose passion for bank regulation checks or even trumps their interest in campaign cash.

Also, they can't go the reconciliation route with this, so every single way the current health care bill actually got teeth cannot and will not apply to FineReg. Don't get your hopes up on this, it'll only lead to tears.
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post #4 of 31
3/30/10 at 3:23pm
This will undoubtedly be branded as an attack on capitalism and just another brick in the communist empire Obama is building. The Tea Baggers will paint it as an attack on the American dream of working hard and getting rich, with the Democrats at the end of that dream waiting with their hands out. Nevermind that the average person is going to work hard and stay entrenched in the middle class while corporate executives simply keep getting richer and trying to feed us the line that trickle-down works.
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post #5 of 31
3/30/10 at 3:42pm
Thread Starter 
Quote:
Originally Posted by Alan "Nordling" Cerny View Post
The Tea Party will go the direction that they're told to go in by their patron pundits, don't worry about that.
I generally agree, but there does actually seem to be a core of Tea Partiers out there who are at least a little obstinate--these are the actual founders of the movement, from back when they were called "Ron Paul supporters". If Paul was to come out in favour of financial reform, that might actually lead to an honest-to-God schism.
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post #6 of 31
3/30/10 at 5:00pm
Quote:
Originally Posted by The Prankster View Post
If Paul was to come out in favour of financial reform, that might actually lead to an honest-to-God schism.
Paul is all about financial reform, although it's pretty much the exact opposite of what is being proposed right now.
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post #7 of 31
3/30/10 at 5:03pm
Thread Starter 
One aspect of the bill Obama just signed is this, which I haven't heard a lot of people discussing, but which seems like a potentially big deal, and linked to the upcoming finance reform. Liberal critics of the heath care bill seem to be pretty happy with this particular provision.
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post #8 of 31
3/30/10 at 5:05pm
Thread Starter 
Quote:
Originally Posted by The Closer View Post
Paul is all about financial reform, although it's pretty much the exact opposite of what is being proposed right now.
That seems in character for him, but the way messages get muddied by and for the Teabaggers, simply saying "Paul supports reform" might have an impact. Was he a fan of Gramm-Leach-Bailey?
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post #9 of 31
3/30/10 at 5:18pm
Normally I'd be skeptical about anything getting through, but after all that's happened, I'm not betting against Obama. The guy's playing on a whole other level. He may lose the small battles, but on the big stuff, he usually wins.
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post #10 of 31
3/30/10 at 5:21pm
Quote:
Originally Posted by The Prankster View Post
That seems in character for him, but the way messages get muddied by and for the Teabaggers, simply saying "Paul supports reform" might have an impact. Was he a fan of Gramm-Leach-Bailey?
Most definitely not.

Paul's main argument, aside from ending the Federal Reserve, is the elimination of the fractional reserve system of banking. The belief is that it doesnt really matter how large a financial institution is if they are unable to leverage any amount of deposits. In theory, no Fed and no fractional reserve = no artificial expansion of the money supply which in turn helps us to avoid all those nasty boom and bust cycles we've experienced.
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post #11 of 31
3/30/10 at 5:22pm
Quote:
Originally Posted by Warren Peace View Post
Normally I'd be skeptical about anything getting through, but after all that's happened, I'm not betting against Obama. The guy's playing on a whole other level. He may lose the small battles, but on the big stuff, he usually wins.
He sort of wins by completely capitulating and then framing it like he won the fight. At this point in his presidency, he's the policy equivalent of the guy who gets the shit kicked out of him, goes to the hospital and says, "Oh you should see the other guy."
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post #12 of 31
3/30/10 at 5:33pm
Quote:
Originally Posted by The Closer View Post
Most definitely not.

Paul's main argument, aside from ending the Federal Reserve, is the elimination of the fractional reserve system of banking. The belief is that it doesnt really matter how large a financial institution is if they are unable to leverage any amount of deposits. In theory, no Fed and no fractional reserve = no artificial expansion of the money supply which in turn helps us to avoid all those nasty boom and bust cycles we've experienced.
Weren't boom and busts far more frequent in the 19th century, before both the Federal Reserve and the institutionalization of the fractional reserve system?
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post #13 of 31
3/30/10 at 5:38pm
Quote:
Originally Posted by Girma View Post
Weren't boom and busts far more frequent in the 19th century, before both the Federal Reserve and the fractional reserve system?
I'm not sure, but whether there were or not I don't see the point in comparing anything about this to what it was prior to 1913.*

*Although, I dont believe the Fed started actively expanding and contracting credit until the 1930's, but still...
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post #14 of 31
3/30/10 at 5:55pm
Well, I mean, if the fundamental argument is that booms and busts would be less frequent with the abolition of them both, how does one explain the deceleration we've experienced in said cycle since their implementation?

Then again, given how far reaching Ron Paul's position is, it's hard to coherently argue one way or the other.
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post #15 of 31
3/30/10 at 6:04pm
Interesting take on the politics of Financial Reform from TPM.

The passage of HCR actually makes FR more likely. Dems are less likely to wanna be a buzzkill right when everyone's enjoying the boost in good vibes. Conversely, Repubs are less likely to support a filibuster over a bill that will likely pass and is very popular with people of all demos.

My personal cynicism is that Congress isn't above making huge mistakes, no matter how easy they are to nail correctly, but a little optimism never killed anyone. Especially since voting against this bill feels like a terrible idea.
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post #16 of 31
3/30/10 at 11:37pm
Quote:
Originally Posted by Cuchulain View Post
He sort of wins by completely capitulating and then framing it like he won the fight. At this point in his presidency, he's the policy equivalent of the guy who gets the shit kicked out of him, goes to the hospital and says, "Oh you should see the other guy."
So wait, Health Care Reform didn't pass this week? Insurance companies can still deny coverage for people with pre-existing conditions? 30 Million uninsured Americans are still uninsured? Are these rhetorical questions?
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post #17 of 31
3/31/10 at 10:07am
Quote:
Originally Posted by Cylon Baby View Post
So wait, Health Care Reform didn't pass this week? Insurance companies can still deny coverage for people with pre-existing conditions? 30 Million uninsured Americans are still uninsured? Are these rhetorical questions?
Yeah, I don't know Chuchulain...the bill definitely doesn't completely get us out of being roughly ass-fucked by the insurance companies. But it makes it more difficult for them to do it without telling us we look pretty and wearing a condom.

To paraphrase someone I read last week, the government is now responsible for making sure people have health care. It's not a question any more of whether or not we're going to do it, it's how well it's being done. We can fight about that for the next thousand years for all I care. Cutting people off of insurance because they get sick is wrong. Kids going without health care is wrong. End of fucking story. The bill addresses those two things and that's a good enough start for me.
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post #18 of 31
3/31/10 at 10:16am
Quote:
Originally Posted by Girma View Post
Well, I mean, if the fundamental argument is that booms and busts would be less frequent with the abolition of them both, how does one explain the deceleration we've experienced in said cycle since their implementation?

Then again, given how far reaching Ron Paul's position is, it's hard to coherently argue one way or the other.
Yeah, Ron Paul's ideas for financial reform are like Pat Robertson's ideas education reform. Back assward and ill-informed.

Current economic thinking believes the ability for the central bank to increase the monetary supply in response to downturns is the best weapon against natural contractions of our economy. However, what we're seeing now are asset bubbles being created to artificially inflate the economy. That's a problem. Ron Paul's solution does nothing to address that problem and ties the hands of the Federal Government to quickly address economic challenges. Paulites will say good, because all government ever is bad. And they'll say this on the Internet, which should be ironic but these people miss that sort of thing.
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post #19 of 31
3/31/10 at 11:31am
Quote:
Originally Posted by Devildoubt View Post
Yeah, Ron Paul's ideas for financial reform are like Pat Robertson's ideas education reform. Back assward and ill-informed.

Current economic thinking believes the ability for the central bank to increase the monetary supply in response to downturns is the best weapon against natural contractions of our economy. However, what we're seeing now are asset bubbles being created to artificially inflate the economy. That's a problem. Ron Paul's solution does nothing to address that problem and ties the hands of the Federal Government to quickly address economic challenges. Paulites will say good, because all government ever is bad. And they'll say this on the Internet, which should be ironic but these people miss that sort of thing.
I think it's important you understand the concept of the Business Cycle before suggesting that Paul's solution does nothing to address the problem. By understanding it, you'll see that he believes the artificial expansion and contraction of the money supply creates the problem.

Here's an old post of mine (with photos!) that sort of explains it.

In short, Paul suggests that without the manipulation of interest rates and the money supply, we will still have booms and busts...but they will be significantly less dramatic compared to what we've experienced over the past few decades.

And before everyone gets in a tizzy and starts calling me a Holocaust denier or something for arguing in favor of the free market, be sure to read a few of my posts that followed during my eternal discussion with yt.
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post #20 of 31
3/31/10 at 12:48pm
Quote:
Originally Posted by The Closer View Post
I think it's important you understand the concept of the Business Cycle before suggesting that Paul's solution does nothing to address the problem. By understanding it, you'll see that he believes the artificial expansion and contraction of the money supply creates the problem.
I know about the business cycle and I know Paul's underpinnings of his philosophy. I don't think his solution solves anything and, in fact, ties the hands of the US to deal with the normal contractions in the business cycle.
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post #21 of 31
3/31/10 at 1:49pm
Quote:
Originally Posted by Cylon Baby View Post
So wait, Health Care Reform didn't pass this week? Insurance companies can still deny coverage for people with pre-existing conditions? 30 Million uninsured Americans are still uninsured? Are these rhetorical questions?
Here's my point: insurance and pharmaceutical industry lobbyists wrote the bill. It's a HUGE victory for them. Sure, they no longer get to deny people with pre-existing conditions care but look at all the things they get in return:

1) No restructuring of Medicare Part D.
2) No reimportation of drugs from countries with actually good health care systems.
3) No tampering with insurance industry anti-trust exemptions.
4) No public option or Medicare buy-in.
5) 30 million more customers added to their clientele.

There is literally nothing in the bill that controls costs, nor curbs the insurance companies ability to jack up premiums--which they have already made very, very, very clear that they will do the minute this bill goes into effect--nor anything that gives the public a choice of not getting raped by an insurance or pharmaceutical company.

Now, how does Obama phrase this? "The fight is over, the insurance companies lost." Fuck you, Mr. President.
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post #22 of 31
3/31/10 at 2:01pm
Quote:
Originally Posted by Devildoubt View Post
I know about the business cycle and I know Paul's underpinnings of his philosophy. I don't think his solution solves anything and, in fact, ties the hands of the US to deal with the normal contractions in the business cycle.
I'll go you one further: I think anybody who still thinks that market anarchism has any merit in the real world after living through the last 30 years in a post-Reaganomics America is a fucking moron.
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post #23 of 31
3/31/10 at 3:00pm
Quote:
Originally Posted by Cuchulain View Post
I'll go you one further: I think anybody who still thinks that market anarchism has any merit in the real world after living through the last 30 years in a post-Reaganomics America is a fucking moron.
I agree, but I don't think Paul is a capitalist anarchist. He just wants to ratchet back our financial regulations back to the 19th Century, a century famed for equality of opportunity and widespread prosperity.
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post #24 of 31
4/19/10 at 8:49pm
We should probably bump this given all the chest thumping over the weekend.

Bill Moyers has a really good interview up on his website with Simon Johnson and James Kwak. It's a full hour, and they go a little deeper than they have been when promoting their new book (Thirteen Bankers). It's a fascinating listen, especially coming off of that barn burner TAL/Pro Publica piece.

It should be interesting to see how the politics of this unfold. I could see the Republicans jeopardizing their potential midterm gains over this issue, and those Tea Party nutbags will start to look a little less sympathetic to folks like my dad when they start towing that socialism line again.

To the man on the street, I'm sure a bit of socialism in this arena looks mighty appealing.
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post #25 of 31
4/19/10 at 9:23pm
Quote:
Originally Posted by D.S. Randlett View Post
We should probably bump this given all the chest thumping over the weekend.

Bill Moyers has a really good interview up on his website with Simon Johnson and James Kwak. It's a full hour, and they go a little deeper than they have been when promoting their new book (Thirteen Bankers). It's a fascinating listen, especially coming off of that barn burner TAL/Pro Publica piece.

It should be interesting to see how the politics of this unfold. I could see the Republicans jeopardizing their potential midterm gains over this issue, and those Tea Party nutbags will start to look a little less sympathetic to folks like my dad when they start towing that socialism line again.

To the man on the street, I'm sure a bit of socialism in this arena looks mighty appealing.
Considering the banking reform is being spearheaded by Chris Dodd, the poster boy for banking corruption, it's hard to imagine the GOP getting in trouble for not supporting this.

The pieces I've read tend to indicate this is a huge blow job to the financial industry and folks like Goldman Sachs. Which kinda makes it wierd the GOP hasn't come out and said "We support this 100%"
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post #26 of 31
4/19/10 at 11:14pm
Quote:
Originally Posted by Cuchulain View Post
Here's my point: insurance and pharmaceutical industry lobbyists wrote the bill. It's a HUGE victory for them. Sure, they no longer get to deny people with pre-existing conditions care but look at all the things they get in return:

1) No restructuring of Medicare Part D.
2) No reimportation of drugs from countries with actually good health care systems.
3) No tampering with insurance industry anti-trust exemptions.
4) No public option or Medicare buy-in.
5) 30 million more customers added to their clientele.

There is literally nothing in the bill that controls costs, nor curbs the insurance companies ability to jack up premiums--which they have already made very, very, very clear that they will do the minute this bill goes into effect--nor anything that gives the public a choice of not getting raped by an insurance or pharmaceutical company.

Now, how does Obama phrase this? "The fight is over, the insurance companies lost." Fuck you, Mr. President.
Well, I don't believe it's a Zero Sum game: For "The people" to win doesn't necessarily mean the insurance industry has to lose, does it?

I agree about most of the bullet points you list, but this is a case of "The perfect being enemy of the good".

This Healthcare Bill was the beginning, not the End all and be all. Point is, the costs people decry were there, this bill makes them more obvious, and yes adds to them. It's up to subsequent legislation to control costs.

And yeah, Obama over hypes his success. He's got Mid Terms coming in the Fall and Finance Reform a lot sooner, which leads me to...

Quote:
Originally Posted by Snaieke View Post
Considering the banking reform is being spearheaded by Chris Dodd, the poster boy for banking corruption, it's hard to imagine the GOP getting in trouble for not supporting this.

The pieces I've read tend to indicate this is a huge blow job to the financial industry and folks like Goldman Sachs. Which kinda makes it wierd the GOP hasn't come out and said "We support this 100%"
I think the news that broke over the weekend, with the SEC accusing Goldman Sachs of fraud, is as much political posturing as it is real. It's a way for the White House to give Wall Street a swift kick in the balls so they won't push as hard against impending regulation.
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post #27 of 31
5/3/10 at 3:58pm
From the NYT: Academics say Senate financial bill is misguided.

Quote:
“Until we understand what the causes were, we may be implementing ineffective and even counterproductive reforms,” said Andrew W. Lo, a finance professor at the Massachusetts Institute of Technology. “I understand the need for action. I understand the need for something to be done. But what I expect from political leaders is for them to demonstrate leadership in telling the public that we need to proceed about this in a much more deliberate and rational and thoughtful way.”

Lawrence J. White, a finance professor at New York University, said it made no sense to overhaul financial regulation without addressing the future of federal housing policy. He said he was trying to find the strongest possible words to describe the omission of Fannie Mae and Freddie Mac from the legislation.

“It’s outrageous,” he finally said.
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post #28 of 31
5/3/10 at 4:19pm
The point about leaving federal housing policy unaddressed is so spot on but, unfortunately, won't get touched.

It's total bullshit that the government pretty much forces you to buy a house unless you want to get creamed in taxes. Part of the reason why housing in California is so f'n expensive is because of this policy.
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post #29 of 31
5/24/10 at 6:09pm
Wall Street expresses relief at reform bill.

Quote:
“If you talk to anyone privately, there’s a sigh of relief,” said one veteran investment banker who insisted on anonymity because of the delicacy of the issue. “It’ll crimp the profit pool initially by 15 or 20 percent and increase oversight and compliance costs, but there’s no breakup of any institution or onerous new taxes.”

The reaction of the market to the legislation echoed that view. Stocks of financial institutions performed well on Friday, with shares of JPMorgan Chase and Morgan Stanley each up 5 percent.
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post #30 of 31
5/24/10 at 7:59pm
No enforcement mechanism kind of seals the deal for them. I am disappoint.
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post #31 of 31
6/15/10 at 4:37pm
Ah, Barney....

Quote:
The Senate’s bill, passed last month, would set up a new government panel that would assign ratings responsibilities for new structured debt to ratings agencies on a semi-random basis.

Representative Barney Frank, who heads the House-Senate conference committee, is instead pressing for a one-year study of the issue by the Securities and Exchange Commission.

That would allow credit raters to continue soliciting business directly from the companies, municipalities and other issuers whose offerings they assess. That practice has been criticized for leading to unduly strong ratings by agencies seeking to retain business from issuers.

Frank also aims to exempt smaller hedge funds and other private funds from registering with the SEC. The Senate bill, which is being used as a starting point for negotiations, would require firms that manage more than $100 million in assets to register; House Democrats hope to raise that to $150 million.

The agenda highlighted a surprising dynamic that has emerged over the past year of legislating: House Democrats, usually viewed as more liberal than their Senate counterparts, may in fact be Wall Street’s best bet for softening legislation that is sure to crimp industry profits for years to come.
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