It was a beautiful weekend here in New York. The weather was splendid and both the Jets and the Giants pulled off big wins (with Big D going 3-0 on his Friday picks!). However, if you read the news starting late Friday and followed through to Sunday you would have seen a downright terrifying and maddening picture of the state of our banking system, as well who, despite blowing the global economy to kingdom come, still holds all the cards and the power to block any meaningful reform.
First there was this from THE Chairman Paul Volcker Volcker Criticizes Obama Plan to Make Fed Systemic Regulator
Paul Volcker, a former Federal Reserve chairman and now a outside economic adviser to PresidentBarack Obama, criticized the administration’s plan to give the Fed authority to supervise “systemically important” financial firms.
“I don’t know what systemically important institutions are,” Volcker said. “But I’m sure that if you picked them out, people will assume they’re going to be saved, that they’re too big to fail.”
And this regarding non-bank systemic regulation;
“There’s nothing wrong with making money,” Volcker said. “But I don’t want them to make money by taking risks with the support of the taxpayer.”
An industrial company such as General Electric Co. presents another problem, he said.
“It’s certainly not a bank in any traditional sense, but it’s a big financial business,” Volcker said. “Do you want to get into the business of directly or indirectly supporting General Electric?”
The Chairman has been a voice crying out from the wilderness that President Obama placed him in that the Fed, through it's actions of bailing out investment banks and insurance companies, lending billions against dodgy assets and buying hundreds of billions of mortgage backed securities and Treasury notes (quantitative easing) has gone way past the role of a independent central banker. Moreover, financial institutions must not be allowed to behave like Goldman Sachs, running huge leveraged risk under the purvey of a federal banking charter, thus putting taxpayers at enormous risk for non-banking activities. Unfortunately, it is pretty clear that President Obama isn't listening and that is real upsetting. I guess the thought is, why listen to a true financial hero when you have one of the "Great Repealers", Larry Summers in the house. I wonder if Phil Graham is sleeping in the Lincoln bedroom as well?
Then on Saturday we had this from the New York Times The Bill Comes Due, Vexing Housing and Banking Agencies.
A year ago, as the financial system was threatening to collapse, federal regulators offered all sorts of assistance to ward off catastrophe. The strategy worked, at least so far, but the bill is starting to come due.
The Federal Housing Administration, which is supporting the housing market by insuring loans for millions of struggling buyers, said Friday that its cash reserves had fallen below 2 percent for the first time. Raising its insurance premiums would replenish the reserves, but could also hamper the housing recovery. Another unpleasant option: asking for a federal bailout.
The Federal Deposit Insurance Corporation, meanwhile, is running out of money to pay back the depositors of failed banks. Its chairwoman said Friday the agency might for the first time decide to borrow from the Treasury.
Taken together, the two developments indicate “the limits of the government’s ability to make all the bad stuff go away,” said the investment strategist Ed Yardeni.
Hah! No sh*t right? I'm waiting for some jackass to come out and call bank failures a lagging indicator! Hell, we only closed two last week, so the pace of closings is decelerating! Here's my favorite quote;
Those losses are likely to keep rising into the indefinite future, said Lou Barnes, a Boulder, Colo., mortgage banker.
“Government life support is crucial, but the patient has an open artery and each new transfusion of blood is just running out onto the floor,” Mr. Barnes said.
Finally, there was this on Sunday Leading Senator Pushes New Plan to Oversee Banks.
If there was ever any doubt on who still runs everything called finance check this out;
Lawmakers and aides say the bill Mr. Dodd is preparing to make public in the coming weeks would be more ambitious and politically risky than the plan offered by the White House, which considered but then decided against combining the four banking agencies — the Federal Reserve, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation and the Comptroller of the Currency — into one superagency.
The White House backed away from that plan to avoid a phalanx of industry opposition that might slow Congress.
Hmm, wouldn't want to piss off the industry! More;
Senior Democrats in Congress say Mr. Dodd may have to thread a needle as he publicly takes on the financial services industry — whose members have a heavy presence in Connecticut and are some of his biggest campaign contributors — while trying to project an image of independence from it to get re-elected. But as chairman, he may also have to make compromises with industry lobbyists to move the legislation through a chamber in which bankers hold political sway.
Mr. Dodd said he decided to remain chairman after conversations with the senior committee Republican, Senator Richard Shelby of Alabama. He said Mr. Shelby persuaded him that it would be possible to get bipartisan support for stronger financial regulationdespite major disagreements between even the two senators.
The industry has important allies among Democrats and Republicans on the banking committee.
How do you like that? "Important allies"?? "Compromises with industry lobbyists"?? What is the one thing that these "important allies" can do? They don't vote in Congress right? They don't have Executive Branch veto power do they? What is it then? Maybe it's that they won't give millions to sitting congressmen to buy their votes of course! They'll take their money and buy somebody else's vote instead.
Last I checked I had the right to vote. I think you do as well. Don't we matter? What if we said to these clowns, "If you take money, jobs and other goodies from ANY of these various lobbying groups and financial institutions, we will expose you as a hypocritical assclown and make sure you don't get elected again no matter how many millions the bankstahs give you."
We can still make a difference. You don't have to vote for these clowns because they have the money to run more commercials than their opponents. After all, that's all it really is right? Additionally, when you start seeing newspaper stories and pundits screaming against real reform and real regulation, calling it creeping socialism or whatever, check and see who is paying for the commercial or the pundit. Guarantee you it's a bankstah. The same guys who are jacking your credit cards to 50% and playing a con-game with "banking fees" to the tune of $ billions, all the while sucking on the government teat that gets its sustenance from us, the tax payer.
