One potential upside of the AP and IRS scandals gripping DC, is that austerity measures like cuts to Social Security and Medicare will be become even more politically toxic and would further illuminate the Democrats true agenda to the broader public. Greg Sargent at the Washington Post May 17, 2013

Bad

As roundtable talks commence, the SEC continually drags its feet to implement rules that would change the issuer-pays credit rating agencies model that was so integral to the financial crisis. David Dayen at Naked Capitalism May 17, 2013

Ugly
Report from watchdog group Citizens for Responsibility in Washington shows that between the 2008 and 2012 election cycles, high-frequency trading firms have increased their political donations by 673 percent. Sarah N. Lynch at Reuters May 13, 2013

• In spite of his earlier statements of concern over the novelty of using the Financial Institutions Reform Recovery Enforcement Act (FIRREA) to pursue claims of fraud against banks for securitization, Judge Rakoff gave prosecutors the green light on Wednesday to use the tactic in a fraud suit against Bank of America. Max Stendahl at Law360 (sub req’d), May 9, 2013.

• California AG Kamala Harris has filed suit against JPMorgan for a comprehensive list of shady credit practices, doing the work that federal regulators should be doing but aren’t. Yves Smith at Naked Capitalism, May 10, 2013.

Bad

• And the revolving door keeps spinning – this week, the SEC announced that Bruce Karpati, the head of the enforcement division’s asset management unit, is moving to Prudential. He is far from alone – both Goldman Sachs and Morgan Stanley have recently hired well-connected DC staffers to run corporate communications. Ben White at Politico, May 8, 2013.

• The SEC has reportedly circulated its proposed rules for money market funds internally, and while there are no confirmed details, reports to date have confirmed last week’s rumors that the rules will fall far short of what we think is necessary. Sarah Lynch at Reuters, May 7, 2013. For a sense of what’s at stake, check out this article by Rex Nutting at MarketWatch, March 29, 2013.

Ugly

• The House Financial Services Committee put forward the nine “agricultural” bills designed to neuter key provisions of Title VII of Dodd-Frank, bringing them a necessary step closer to a vote. Despite a widely publicized letter from Treasury Secretary Lew calling on Democrats to push back against the bills, most Dems on the committee voted with Republicans. Silla Brush at Bloomberg, May 7, 2013.

• The horror show of the foreclosure settlement continues, with outsourced vendor Rust Consulting not only bouncing checks to recipients (who by definition are already coping with error-prone foreclosure) but now sending checks in the wrong amount, to the wrong address, etc. And apparently with no accountability. Ben Protess and Jessica Silver-Greenberg at Dealbook, May 8, 2013, and Yves Smith at Naked Capitalism, May 9, 2013.

• JPMorgan is under fire from multiple regulators for what David Dayen has rightly called a “litany of illegal activities” in the past. Jessica Silver-Greenberg and Ben Protess of New York Times, May 2, 2013 as well as Yves Smith and David Dayen at Naked Capitalism, May 3, 2013.

• 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.

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 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.

• Senators Brown and Vitter have proposed significant capital requirements for large banks. Could this be a step toward ending TBTF? Danielle Douglas at the Washington Post, April 24, 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

• Austerity takes it toll in England, where the number of people seeking emergency food assistance has risen by 270% in the past year. Charlie Cooper, Ed Frankl at The Independent, April 23, 2013

• 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.

• 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

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.

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 ]]> http://occupythesec.nycga.net/2013/04/05/the-good-the-bad-the-ugly-week-of-412013/feed/ 1 http://occupythesec.nycga.net/2013/03/29/the-good-the-bad-the-ugly-week-of-32513/ http://occupythesec.nycga.net/2013/03/29/the-good-the-bad-the-ugly-week-of-32513/#comments Fri, 29 Mar 2013 04:35:16 +0000 occupythesec http://occupythesec.nycga.net/?p=475 Continue reading →]]> Good

• JPMorgan and Jamie Dimon’s reputations continue to falter as prosecutors examine whether the bank failed to alert authorities with suspicions about Bernie Madoff. Jessica Silver-Greenberg and Ben Protess at The New York Times March 26, 2013.
• The Federal Reserve brings anti-money laundering charges against Citigroup and its subsidiary Banamex USA. Jessica SIlver-Greenberg at The New York Times March 28, 2013.

Bad

• Lanny Breuer takes another trip through the revolving door. At least he’s on the other side….for now. Ben Protess at The New York Times March 28, 2013
• 15 banks file a motion to reverse Judge Dennis Cote’s ruling to limit the amount of discovery they can collect in an important mortgage securities case. Jessica Silver-Greenberg at The New York Times March 27, 2013

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

• 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.