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Economy
In reply to the discussion: STOCK MARKET WATCH -- Thursday, 27 June 2013 [View all]Demeter
(85,373 posts)22. Gensler Staring Down Administration and Banks on Derivatives Reform NAKED CAPITALISM
http://www.nakedcapitalism.com/2013/06/gensler-staring-down-administration-and-banks-on-derivatives-reform.html
Yves here. Readers may recall that Gary Gensler, the head of the Commodities Futures Trading Commission, is being pushed out by Obama. His planned replacement is so appallingly lightweight (oh, and formerly in a very junior role at Goldman) as to assure that all shell be able to do is take dictation from financial firm lobbyists.
But Gensler may be having a last laugh before he leaves office. The proximate reason for his ouster was that he was refusing to accede to the demands of banks and foreign regulators over implementation of Dodd Frank rules on swaps. As we wrote earlier this month:
Shahien Nasiripour at the Huffington Post describes how Gensler is being ousted for his position on swaps regulation, which was coming to a head in international meetings starting June 20, with a July 12 deadline looming. The industry was pushing for the usual race to the bottom approach, since the Dodd Frank provisions are more stringent than overseas requirments (the spin, of course, was that Gensler was acting unilaterally, as opposed to implementing what Congress mandated). Gensler faces varying degrees of resistance from three of his four fellow commissioners. International regulators were apparently also unhappy with Genslers tough stand, to the point where they were complaining to Treasury Secretary Jack Lew.
And bear in mind that the reason the banks are howling like stuck pigs is that the businesses in question are are significant profit sources. The International Financial Review gives an idea of the implications if Gensler hangs tough:
George Bailey, via e-mail, describes how Gensler is in a position to prevail in this important but largely unnoticed regulatory battle....SEE LINK FOR THE REST
Yves here. Readers may recall that Gary Gensler, the head of the Commodities Futures Trading Commission, is being pushed out by Obama. His planned replacement is so appallingly lightweight (oh, and formerly in a very junior role at Goldman) as to assure that all shell be able to do is take dictation from financial firm lobbyists.
But Gensler may be having a last laugh before he leaves office. The proximate reason for his ouster was that he was refusing to accede to the demands of banks and foreign regulators over implementation of Dodd Frank rules on swaps. As we wrote earlier this month:
Shahien Nasiripour at the Huffington Post describes how Gensler is being ousted for his position on swaps regulation, which was coming to a head in international meetings starting June 20, with a July 12 deadline looming. The industry was pushing for the usual race to the bottom approach, since the Dodd Frank provisions are more stringent than overseas requirments (the spin, of course, was that Gensler was acting unilaterally, as opposed to implementing what Congress mandated). Gensler faces varying degrees of resistance from three of his four fellow commissioners. International regulators were apparently also unhappy with Genslers tough stand, to the point where they were complaining to Treasury Secretary Jack Lew.
And bear in mind that the reason the banks are howling like stuck pigs is that the businesses in question are are significant profit sources. The International Financial Review gives an idea of the implications if Gensler hangs tough:
Figures from the US Treasury show that US financial institutions reported derivatives trading revenues of US$4.4bn in the fourth quarter of 2012, a 73% increase on the previous year.
These revenues were dominated by JP Morgan, Bank of America Merrill Lynch, Citigroup and Goldman Sachs. And analysts estimate that US banks route around 50% of their derivatives trades overseas, which would mean a sea change for their operations, not to mention their bottom lines, if the exemption was allowed to die.
US banks simply arent ready to lose this exemption. It will cost them a considerable amount, the first lawyer said. Even just the logistical challenge of reorganising their trading business will be enormous, and they are likely to lose clients because of it.
These revenues were dominated by JP Morgan, Bank of America Merrill Lynch, Citigroup and Goldman Sachs. And analysts estimate that US banks route around 50% of their derivatives trades overseas, which would mean a sea change for their operations, not to mention their bottom lines, if the exemption was allowed to die.
US banks simply arent ready to lose this exemption. It will cost them a considerable amount, the first lawyer said. Even just the logistical challenge of reorganising their trading business will be enormous, and they are likely to lose clients because of it.
George Bailey, via e-mail, describes how Gensler is in a position to prevail in this important but largely unnoticed regulatory battle....SEE LINK FOR THE REST
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