The Good, The Bad & The Ugly – Week of April 29, 2013

The Good

  • A leaked proposal from the European Commission on new regulations for money market funds calls for many of the same measures – a 3% buffer, eliminating amortized accounting, etc. – that we recommended in our letter to the Financial Stability Oversight Council. Steve Johnson of the Financial Times, April 28, 2013 (subscription req’d).

The Bad

  • Meanwhile, the path to money market fund reform in the US is looking dicier by the day. Not only is the SEC under Mary Jo White being more secretive about its process (one report from the WS Journal quotes figures saying that the Fed and Treasury have been excluded from rulemaking), but some signs indicate that the agency is already conceding to industry by narrowing its focus to prime funds. We’ll be watching closely. Andrew Ackerman of the Wall Street Journal, May 2 and May 3, 2013.
  • We included the Brown Vitter bill addressing Too Big to Fail in “The Good” last week. While it’s not perfect, it’s a step in the right direction. But predictably, the biggest banks and their proxies have come out against the bill with guns blazing. Jesse Eisinger in Dealbook/NY Times (May 1, 2013) gives an overview of the debate, while Matt Taibbi of Rolling Stone (May 1, 2013) dissects a particularly shameful piece of advocacy by Standard & Poor’s.

 The Ugly

  • Adam Davidson writes a long piece in the NY Times (May 2, 2013) on Larry Summers and Glenn Hubbard, in which he inadvertently sums up the depressing state of US economic policy by stating that “the space between their views roughly defines the American center.” When Mr. Deregulation defines the far left of the acceptable policy space, we’re in trouble.

Occupy the SEC Commemorates May Day with a Letter to the House Financial Services Committee on Swaps Reform

Activists around the world converge on the first of May (“May Day”) every year to advocate for social justice issues such as economic and labor rights, immigration reform and civil liberties.

Today, May 1, 2013, Occupy the SEC partakes in this activist tradition by petitioning members of the House Financial Services Committee to promote the interests of the general public in considering changes to the Dodd-Frank Act of 2010 specific to swaps regulation.

The recent burgeoning of highly toxic and largely unregulated swap contracts led to the Global Recession of 2008, which was the worst financial crisis since the Great Depression of the 1930’s.  Congress passed Title VII of the Dodd-Frank Act of 2010 to reform the swaps market.  To this date, Title VII has yet to be completely finalized by the relevant regulatory agencies.

Nevertheless, the House Financial Services Committee, buckling under deregulatory pressure that has been brought to bear by the financial services lobby, is considering a slew of bills that would gut various components of Title VII’s swaps oversight.

Occupy the SEC has analyzed these bills and today issued a letter to the House Financial Services Committee with its recommendations.  In general, OSEC recommends that the House forebear from passing premature amendments or modifications to the Dodd-Frank as the law has yet to be fully implemented or enforced.

OSEC’s letter is available at: http://www.occupythesec.org/files/OSEC_Title_VII_Bills.pdf

The Good, The Bad & The Ugly – Week of April 22, 2013

Good

  • The bankruptcy trustee for the holding company of failed commodities broker MF Global has filed a lawsuit against Jon Corzine, its former CEO, along with other executives. Tiffany Kary, Bill Milford at Bloomberg, April 23, 2013.

Bad

  • In a perfect illustration of the fragility of our current market structure, equities plunged by 1% on Monday after hackers broadcast a tweet about a bomb at the White House using the AP’s account. Prices recovered when the hoax was revealed. Edmund Lee at Bloomberg, April 24, 2013.

Ugly

  • Martin Smith, who produced that devastating Frontline segment on the failure to regulate banks, has delivered an equally compelling indictment of the retirement industry in the U.S. Frontline, The Retirement Gamble, April 23, 2013.
  • The incoming enforcement chief at the SEC was a key player in last year’s bank-exonerating National Mortgage Settlement, and has argued in a law journal that prosecution in the most complex cases may be too expensive to be effective. Hard to imagine a less inspiring figure in that role.  Pam Martens at Wall Street on Parade, April 23, 2013.

The Good, The Bad & The Ugly – Week of April 15, 2013

Good

  • Not a sure thing but the recently released budget proposes to increase funding for the SEC by 27% to $1.674 Billion and the CFTC by 50% to $315 Million. Joe Mont at Compliance Week April 11, 2013
  • Analysts have begun to predict that large bank shareholders may join the majority of Americans along with a long list of political and academic figures in calling for the breakup of the big banks. Not a moment too soon. Washington Blog at The Big Picture, April 18, 2013

Bad

  • A partial repeal of the STOCK act will allow top congressional staffers and administration employees to not disclose their investment information online. Telling that this was rushed through in nearly record time, while the Volcker Rule remains unfinished.  Steven T. Denis at Roll Call News April 15, 2013

Ugly

  • Noam Scheiber’s “where are they now?” article clearly showing that the revolving door is spinning better than ever for Obama’s veterans. Noam Scheiber at The New Republic, April 15, 2013
  • Yves Smith has the ugly details on the latest outrages coming out of the Independent Foreclosure Review process. Yves Smith at Naked Capitalism, April 18, 2013

The Good, The Bad & The Ugly – Week of 4/8/13

We have one “maybe” this week – according to Bloomberg, incoming SEC Chair Mary Jo White is considering hiring a senior high frequency trading (HFT) executive named Chris Concannon to boost the agency’s oversight of HFT and market structure. That sounds good on the surface, but Concannon’s comments quoted in the article sound dangerously easy-going. Better Markets is also concerned. We’ll be watching.

Good

  • It looks as if states are fighting back against the corrupt MERS (which cheated local counties about of billions), with the next key battleground being Rhode Island. Washington’s Blog at The Big Picture April 11, 2013

Bad

  • Old tricks like “capital relief trades” are being used by banks to reduce capital levels. Not a good sign since capital levels were one of the key problems which caused the 2008 crisis. Yves Smith at Naked Capitalism April 12, 2013.

Ugly

  • The FED reveals its thinking by claiming bank knowledge of mortgage abuse should be looked at as a “trade secret”. Basically, the Fed’s policy is that bank profit is worth more that public knowledge and the law. Yves Smith at Naked Capitalism April 11, 2013.
  • Hedge fund manager Daniel Loeb tries to woo pensions to invest in his expensive funds while his organization Students First advocates for abolishing pensions for public employees. Matt Taibbi at Rolling Stone April 11, 2013.

The Good, The Bad, & The Ugly – Week of 4/1/2013

Good

Matt Taibbi feels a growing sentiment in Congress to break up the big banks recently. We can only hope he’s right. Also, one poll shows that 50 percent of people support breaking up TBTF banks while only 23 percent oppose. Matt Taibbi at Rolling Stone April 3, 2013.

Bad

CFTC “approves a rule that exempts inter-affiliate trades from requirements that swaps be guaranteed at clearinghouses that protect buyers and sellers against defaults.” Silla Brush at Bloomberg April 2, 2013

After the do-nothing OCC does basically nothing in response to “reprehensible” foreclosure abuses by Wells Fargo, Yves Smith writes that “It’s time to admit that the OCC is beyond repair. It should be abolished and its responsibilities folded into the FDIC, the CFPB and the FED. One hopelessly corrupt regulator is one too many.” Yves Smith at Naked Capitalism April 1, 2013.

Ugly

Oh please. Mary Schapiro says “there’s no revolving door here” as she cashes out and takes a job with Promontory Financial Group.  John Light at Bill Moyers Blog April 2, 2013

Wait…what?? The US pushing sub-prime mortgages again?!? Leith van Onselen at Macrobusiness April 4, 2013.

No surprise here. Directors pay at big banks continue to soar. Suzanne Craig at Dealbook/New York Times March 31, 2013

The Good, The Bad & The Ugly – Week of 3/25/13

Good

Bad

Ugly

  • Through Elizabeth Warren and Elijah Cummings’ investigation into the Independent Foreclosure Review and the FED/OCC stonewalling we find out that the money made by “independent” foreclosure reviewers (i.e. Premontory) is at least 5 to 1 what the average homeowner will receive. But David Dayen counts it as more like 20 to 1. Ugly. David Dayen at Naked Capitalism March 26, 2013

The Good, The Bad, & The Ugly – Week of 3/18/2013

Good

  • SAC Capital will pay record fine of $616 Million for insider trading with more possible charges to come. Could very well filed under bad since, they don’t have to admit wrongdoing. Peter Lattman at The New York Times March 15, 2013

Bad

  • Regulators agree with four biggest banks that they need not conduct shareholder votes on over whether or not they are too big. David Henry at Reuters March 22, 2013

Ugly

  • Wow. Less than a week after Carl Levin delivers a scathing report on the “London Whale” derivative trades, the House Agriculture Committee holds a mark-up session on new bills that would gut the few Dodd-Frank regulations regarding derivatives. (And, yes, the Agriculture Committee has the jurisdiction) David Dayen at Salon March 20, 2013.

The Good, The Bad & The Ugly – Week of 3/11/13

The Good

 

  • Potential good. Carl Levin’s Permanent Subcommittee on Investigations will be holding a hearing at 9:30 am today titled “J.P. Morgan Chase “Whale” Trades: A Case History of Derivatives Risks and Abuse.” We can only hope he brings the fire again (like his famous “shitty deal” grill of Dan Sparks) and highlight the banks’ continued excesses and criminality to the public. Matt Taibbi will be live-blogging too. Matt Taibbi at Rolling Stone March 14, 2013

The Bad

  • Through a FOIA request, the LA Times learns that the FDIC has been covering up for banks by not publishing the fact they engaged in really bad behavior through a “no press release” clause in their settlements. E. Scott Reckard at The Los Angeles Times March 11, 2013
  • Jim Himes, former Goldman executive and now financial chair of the DCCC, introduces a bill to weaken Dodd-Frank, specifically the Prohibition Against federal Government Bailouts of Swaps Entities, which bars federal assistance from being provided to any swaps entity. Chelsea Kiene at the Huffington Post March 8, 2013

The Ugly

  • Mary Jo White sails through the confirmation hearing as nearly all congressmen (except Sherrod Brown) throw her softballs, not to mention a particularly slobbering introduction from Charles Schumer about her love of motorcycles. Pam Martens at Wall Street on Parade March 14, 2013

 

The Good, The Bad, & The Ugly – Week of 3/4/2013

The Good

Elizabeth Warren grills banking regulators (Fed, Treasury, OCC) for HSBC wrist slaps. At what point does the government actually bring criminal charges? Mark Gongloff at Huff Post March 7. 2013

Senate Permanent Subcommittee on Investigations report said to implicate JP Morgan executives in London Whale losses. Committee could ask executives to testify. Ben Protess and Jessica Silver-Green March 4, 2013

The Bad

Goldman Sachs, sidestepping Volcker rule, finds a way to invest in private equity (with our money). Jessica Toonkel and Lauren Tara LaCapra at Reuters March 4, 2013.

The Ugly

Eric Holder states openly what we already know to be the DOJ’s position, the patently absurd claim that the big banks are too big to prosecute because prosecuting them would cause grave economic harm. Robert Borosage at Alternet March 7, 2013

The chilling war on whistleblowers continues. Just days after Michael Winston’s appearance in the highly critical “Untouchables” PBS documentary, the Appeals Court of California overturns his $3.8 million wrongful termination suit, which was one of only a few glimmers of justice post-2008. Matt Taibbi at Rolling Stone March 4, 2013