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The devil's in the details. The WH is hitting the right note, finally. About a year late by my reckoning. I guess it would have cramped Geithner's style last winter and spring, if Obama made too much noise early on in the process.
Obama to Propose New Limits on Banks
WASHINGTON—President Barack Obama on Thursday is expected to propose new limits on the size and risk taken by the country's biggest banks, marking the administration's latest assault on Wall Street in what could mark a return, at least in spirit, to some of the curbs on finance put in place during the Great Depression, according to congressional sources and administration officials.
The proposal represents a sharply different philosophical shift from the view of banking over the past decade, which saw widespread consolidation among large financial ins utions to create huge banking ans. If Congress approves the proposal, the White House plan could permanently impose government constraints on the size and nature of banking.
Mr. Obama's proposal is expected to include new scale restrictions on the size of the country's largest financial ins utions. The goal would be to deter banks from becoming so large they put the broader economy at risk and to also prevent banks from becoming so large they distort normal compe ive forces. It couldn't be learned what precise limits the White House will endorse, or whether Mr. Obama will spell out the exact limits on Thursday.
Mr. Obama is also expected to endorse, for the first time publicly, measures pushed by former Federal Reserve Chairman Paul Volcker, which would place restrictions on the proprietary trading done by commercial banks, essentially limiting the way banks bet with their own capital. Administration officials say they want to place "firewalls" between different divisions of financial companies to ensure banks don't indirectly subsidize "speculative" trading through other subsidiaries that hold federally insured deposits.
The proposal could have the biggest effect on Bank of America Corp., Wells Fargo & Co., and J.P. Morgan Chase & Co., which control a large amount of U.S. deposits, as well as Goldman Sachs, Morgan Stanley and Citigroup Inc., which have a large presence on Wall Street.
If the proposal took effect it would reshape Wall Street. Big banks would be forced to break off their investing banking units—which trade and underwrite securities and make their own bets on markets—from traditional businesses, which make loans and take deposits.
The investing banking units have grown dramatically in recent years, were far more profitable than the banking operations and were at the heart of the financial crisis. Bank of America, for example, could be forced to sell off its recently acquired Merrill Lynch brokerage business.
In addition, the limits on size could force breakups. The banking industry has undergone a major consolidation during the financial crisis, leaving the top four banks with an unprecedent market share in businesses such as deposit taking, credit cards and mortgages.
The rules could also keep banks out of the business of running hedge funds, investing in real estate or private equity, all businesses that have become important, profitable parts of these banks. The collapse of two highly leveraged hedge funds began the process that led to the collapse of Bear Stearns.
The changes could benefit American businesses by creating more compe ion on Wall Street, but potentially hurt them by limiting lending.
Messrs. Obama and Volcker are scheduled to meet tomorrow in advance of the White House announcement.
The White House's proposal, one aide said, wouldn't resurrect the exact limits put in place by the Depression-era Glass Steagall Act, which essentially walled off commercial banks from investment banks and was repealed in 1999. Instead, the White House proposal would seek to return the "spirit of Glass Steagall," meant to limit large banks from becoming too big and complex that create enormous risk.
The devil's in the details. The WH is hitting the right note, finally. About a year late by my reckoning. I guess it would have cramped Geithner's style last winter and spring, if Obama made too much noise early on in the process.
Last edited by Winehole23; 01-20-2010 at 11:37 PM.
Socialization of private financial risk is bad. We did it once, recently. We should try to avoid doing it again.
The USG needs to start managing the problem, now that private (TBTF) financial risk is officially backstopped by the US taxpayer. Whatever the government could do in advance to minimze the future risk to taxpayers, as well as to recoup at least the interest on the $14T total pledged so far to bailout efforts, would be to the good. JMO.
Last edited by Winehole23; 01-21-2010 at 02:36 AM. Reason: at least the interest
As I see it the next $4T has already been teed up, so they can start paying for that too.
Lookee here:
http://news.yahoo.com/s/ap/20100120/..._debt_limit_11
Bet they'd like to sweep this under the rug.
This is way overdue. Personally I'd still like to see Obama go Sherman Act on the TBTF's, but that's not going to happen.
No doubt. It's more ammunition for the republicans come November.
Sounds real good. Next sentence, please!Mr. Obama's proposal is expected to include new scale restrictions on the size of the country's largest financial ins utions. The goal would be to deter banks from becoming so large they put the broader economy at risk and to also prevent banks from becoming so large they distort normal compe ive forces.
Oh...well. If Team Obama can only be judged by their healthcare "reform", then its safe to assume this will be another abortion of common sense.It couldn't be learned what precise limits the White House will endorse, or whether Mr. Obama will spell out the exact limits on Thursday.
TBTF's need to be illegalized, period. I am sure Team Obama will put some size restricition on banks/financial ins utions, but the ceiling will be so incredibly high, it might as well never been named.
Which, politically speaking, is the entire point. I wish I could say Obama is showing a en for political gamesmanship, but sadly, he is pulling his strategy right out of a junior college PoliSci class.
How about if you are an exec of a TBTF (is that defined in the law yet?) then X%* of your personal wealth must be invested in it? One of the trends that has led to the debacle, imo, is that the major Wall Street firms are no longer GPs, but C corps. What exposure do these people truly have if they run their company into the ground?
If you expect a government backstop, well, expect some limitations.
*being a significant percentage.
that. No backstop.
lol
Sure. Barring that, some limitations would be prudent.
Sure. Agree 100%.
We're in violent ing agreement.
I ing hate that we are the backstop.
It's in our best interest. We the People just don't get it.
Narrow-based taxes are one of the most serious symptoms of a political community decaying into totalitarianism - the majority ganging up on a minority.
Alas, it's a consequence of the totalitarian statism modus operandi:
1 - Implement statist measures to solve an imaginary problem or a problem caused by initial state actions.
2 -When it fails and/or a new problem arises due to those measures, attribute the failure to the fact that the statist solution was too modest. Clamour for more statist "solutions".
3 - For each injustice caused by the implementation of the statist solution clamour for the implementation of another statist solution (that will fatally cause new problems).
4 - Repeat ad aeternum until liberties and wealths are decimated.
Sooooo, for or against companies becoming so big that their failure results in the nation's failure (apparently, anyway)?
Its nice that you have a philosophy on the wonderful endowments the corporate world allows us plebs to enjoy upon their labor, but clue me in...
Does our national solvency take a back-seat to private business?
As an aside...
I dont put people on ignore, I never have, especially someone as smart as you. But listening to you speak boils me to the bone. You are a pro-corporate, -the-people, Michael Douglas in Wall Street clone. Maybe just a wanna-be clone, but even that infuriates me to no end.
I have hard time understanding your reasoning behind your stances, but I think thats your point. You have one stance...Loyalty to Money.
Yes, the guy who defends that failed companies should just fail and not benefit from the taxpayer money is the pro-corporate one. That makes a lot of sense.
Yawn. The greatest threat to our liberty is being called on to pay for huge financial services firms that up and expect us to bail them out. Funny how that injustice is never considered.
Why isn't it considered? I can't think of a more evident example of a statist policy than subsidies.
Didn't a whole lot of Republicans vote for TARP too.....a whole lot of Republicans that will be up for re-election soon? I wonder if Marcus will lobby against every member who voted for TARP as orgasmically as he's lobbied for Pimp Brown..
Here is the vote for the $700 billion dollar bail-out bill
All Senators
Rolecall votesAkaka, Daniel (D) NAY Honolulu, HI
Alexander, Lamar (R) NAY Nashville, TN
Barrasso, John (R) YEA Casper, WY
Baucus, Max (D) NAY Helena, MT
Bayh, Evan (D) YEA Indianapolis, IN
Begich, Mark (D) NAY Anchorage, AK
Bennett, Robert (R) YEA Salt Lake City, UT
, () NAY ,
Bingaman, Jeff (D) NAY Silver City, NM
Bond, Christopher (R) YEA Mexico, MO
Boxer, Barbara (D) NAY Greenbrae, CA
Brown, Sherrod (D) NV Avon, OH
Brownback, Sam (R) YEA Topeka, KS
Bunning, Jim (R) NV Southgate, KY
Burr, Richard (R) YEA Greensboro, NC
Burris, Roland (D) NAY Chicago, IL
Byrd, Robert (D) NAY Sophia, WV
Cantwell, Maria (D) YEA Mountlake Terrace, WA
Cardin, Benjamin (D) NAY Baltimore, MD
Carper, Thomas (D) NAY Wilmington, DE
Casey Jr., Robert (D) NAY Scranton, PA
Chambliss, Saxby (R) YEA Moultrie, GA
, () NAY ,
Coburn, Tom (R) YEA Muskogee, OK
Cochran, Thad (R) YEA Jackson, MS
Collins, Susan (R) YEA Bangor, ME
Conrad, Kent (D) NAY Bismarck, ND
Corker, Bob (R) YEA Chattanooga, TN
Cornyn, John (R) YEA San Antonio, TX
Crapo, Michael (R) YEA Idaho Falls, ID
DeMint, Jim (R) YEA Greenville, SC
Dodd, Christopher (D) NAY East Haddam, CT
Dorgan, Byron (D) YEA Bismarck, ND
Durbin , Richard (D) NAY Springfield, IL
Ensign, John (R) YEA Las Vegas, NV
Enzi, Michael (R) YEA Gillette, WY
Feingold, Russell (D) YEA Middleton, WI
Feinstein, Dianne (D) NAY San Francisco, CA
Graham, Lindsey (R) YEA Seneca, SC
Grassley, Charles (R) YEA New Hartford, IA
Gregg, Judd (R) NAY Rye, NH
Hagan, Kay (D) NAY Salisbury, NC
Harkin, Tom (D) NAY ming, IA
Hatch, Orrin (R) PRS Salt Lake City, UT
Hutchison, Kay Bailey (R) YEA Dallas, TX
Inhofe, James (R) YEA Tulsa, OK
Inouye, Daniel (D) NAY Honolulu, HI
Isakson, Johnny (R) YEA Marietta, GA
Johanns, Mike (R) YEA Omaha, NE
Johnson, Tim (D) NAY Vermillion, SD
Kennedy, Edward (D) NV Hyannis Port, MA
Kerry, John (D) NAY Boston, MA
Klobuchar, Amy (D) NAY Minneapolis, MN
Kohl, Herb (D) NAY Milwaukee, WI
Kyl, Jon (R) NAY Phoenix, AZ
Landrieu, Mary (D) NAY Baton Rouge, LA
Lautenberg, Frank (D) NAY Clifside Park, NJ
Leahy, Patrick (D) NAY Middlesex, VT
Levin, Carl (D) NAY Detroit, MI
Lieberman, Joseph (D) NAY New Haven, CT
Lincoln, Blanche (D) YEA Hughes, AR
Lugar, Richard (R) NAY Indianapolis, IN
Martinez, Mel (R) YEA Orlando, FL
McCain, John (R) YEA Phoenix, AZ
McCaskill, Claire (D) NAY Kirkwood, MO
McConnell, Mitch (R) YEA Louisville, KY
Menendez, Robert (D) NAY Hoboken, NJ
Merkley, Jeff (D) NAY Portland, OR
Mikulski, Barbara (D) NAY Baltimore, MD
Murkowski, Lisa (R) YEA Anchorage, AK
Murray, Patty (D) NAY Seattle, WA
Nelson, Bill (D) NAY Tallahassee, FL
Nelson, Ben (D) YEA Omaha, NE
Pryor, Mark (D) NAY Little Rock, AR
Reed, Jack (D) NAY Cranston, RI
Reid, Harry (D) NAY Searchlight, NV
Risch, Jim (R) YEA Boise, ID
Roberts, Pat (R) YEA Dodge City, KS
Rockefeller, John (D) NAY Charleston, WV
, () NAY ,
Sanders, Bernie (I) YEA Shrewsbury, VT
Schumer, Charles (D) NAY Brooklyn, NY
Sessions, Jeff (R) YEA Mobile, AL
Shaheen, Jeanne (D) YEA Madbury, NH
Shelby, Richard (R) YEA Tuscaloosa, AL
Snowe, Olympia (R) NAY Falmouth, ME
Specter, Arlen (R) YEA Philadelphia, PA
Stabenow, Debbie (D) NAY Lansing, MI
Tester, Jon (D) PRS Big Sandy, MT
Thune, John (R) YEA Sioux Falls, SD
Udall, Mark (D) NAY Eldorado Springs, CO
Udall, Tom (D) NAY Santa Fe, NM
Vitter, David (R) YEA Matairie, LA
Voinovich, George (R) NAY Cleveland, OH
Warner, Mark (D) NAY Alexandria, VA
Webb, Jim (D) NAY Falls Church, VA
Whitehouse, Sheldon (D) NAY Providence, RI
Wicker, Roger (R) YEA Tupelo, MS
Wyden, Ron (D) YEA Portland, OR
Maybe when Dano criticizes a Democrat and finds a 9/11 Nutter conspiracy he doesn't cream himself over.
Weak. Hypocrite.
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