On Wall Street, Time to Mend Fences With Obama

[groovedaddy]

(Man, am I glad Elizabeth Warren will be in the U.S. Senate to oversee THIS process! - gd)
Del Frisco’s, an expensive steakhouse with floor-to-ceiling windows overlooking the Boston harbor, was a festive scene on Tuesday evening. The hedge fund billionaires Steven A. Cohen, Paul Singer and Daniel Loeb were among the titans of finance there dining among the gray velvet banquettes before heading several blocks away to what they hoped would be a victory party for their presidential candidate, Mitt Romney.

The next morning was a cold, sobering one for these executives.

Few industries have made such a one-sided bet as Wall Street did in opposing President Obama and supporting his Republican rival. The top five sources of contributions to Mr. Romney, a former top private equity executive, were big banks like Goldman Sachs and JPMorgan Chase, according to the Center for Responsive Politics. Wealthy financiers — led by hedge fund investors — were the biggest group of givers to the main “super PAC” backing Mr. Romney, providing almost $33 million, and gave generously to outside groups in races around the country.

On Wednesday, Mr. Loeb, who had supported Mr. Obama in 2008, was sanguine. “You win some, you lose some,” he said in an interview. “We can all disagree. I have friends and we have spirited discussions. Sure, I am not getting invited to the White House anytime soon, but as citizens of the country we are all friendly.”

http://dealbook.nytimes.com/2012/11/07/on-wall-street-time-to-mend-fences-with-obama/?nl=todaysheadlines&emc=edit_th_20121108

[Larkspur]

1. Wall Street too lives in a bubble and it got popped Tuesday night

Thank Goddess for Senator-elect Liz Warren!!!

[BlueStreak]

2. There are several things that are needed

Dodd-Frank was a lot weaker than the national need, but there is still a lot of work to do to get that law fully rolled out.

Beyond that, I see four things that need attention. Some might be impossible with a GOP House, but some might actually get bipartisan support:

1) Prosecute the biggest criminals from 2008. Eric Holder must go. We need an AG that will do this -- and a President with the stones to carry this through. Do this. We don't have to prosecute 500 of them. But if 10 of them go to jail, that will have a real deterrent effect on the others.

2) Break up the "too big to fail" institutions. This is a tough one because companies like Goldman-Sachs are so implanted into government. But this might actually be a case where we have common cause with the Tea Party. Every Tea Partier I know rails on about the Wall Street bailout. Well, here is one very tangible step we can take.

3) Bring back the Glass-Steagall rule. Again, we night have common cause with the most conservative. It is actually a very libertarian idea. It says that Wall Streeters can play casino games, but they just cannot do it with other people's deposits.

4) A micro-transaction tax. The fact is that the individual is almost completely absent from the market the past 15 years. Trading is dominated by huge firms and huge funds. And they all have powerful computer systems that skim profits out of the system by doing thousands of arbitrage transactions ever second. This fundamentally hurts the public. It is skimming profits that should be going to the shareholders -- to the people who have their retirement in pension funds and 401Ks. And it makes the market very unruly. A micro-transaction tax would help restore this to a market where the individual investor has a chance to participate. And something like that might pass as part of a package where we are looking to raise some revenues without actually raising tax rates. At the same time, there need to be new rules governing these automated trades. For example, a buy or sell order should be good for at least 5 seconds. As it is, right now orders are made and withdrawn many times each second -- making it a war between computer systems rather than a market where individuals can participate.

[DreamGypsy]

3. Here's some information on Financial (micro) Transaction Tax proposals

From the Center for Media and Democracy: http://www.sourcewatch.org/index.php?title=Financial_transaction_tax

[BlueStreak]

4. I'm talking about something a little different

I'm talking about a small tax on the bids, not the actual sales. There is a problems that the market has turned into dueling computers. Offers are made and retracted many times each second and this is an unfair advantage over people who don't have connections that will allow them to deal at the millisecond level. If there were a small tax on each bid transaction, this would restore it to a more human-level market that is fairer to an individual investor.

It would not have to be a large tax. Something like 1/1000th of a penny per share would do it. It would be an insignificant cost for any real transactions, but would really add up for those companies that are doing millions of robotic bids every day.

But a micro-transaction fee such as you described would solve most of the problem, and might have a better chance of getting political support.