Obama, Advisers Push Back on Bank Lobbying Against Regulation

[UpInArms]

Source: Bloomberg

The Obama administration is fighting back against banking industry efforts to weaken the president’s plan to revamp financial regulations.

White House officials say they are frustrated that major financial firms are fighting President Barack Obama on the regulatory overhaul after taxpayer bailouts helped firms restore profits and near-record compensation for executives.

Their anger is directed even at companies such as New York’s JPMorgan Chase & Co. and Goldman Sachs Group Inc. that have paid back their government assistance and reported a surge in third-quarter earnings this week.

“We are disappointed by the lobbying of anyone in the financial industry against regulatory reform, considering the obvious need for change on that front,” Valerie Jarrett, a senior adviser to Obama, said Oct. 16.

The issue, according to administration officials, is the industry is generally on sound footing because of government help, and lobbying against Obama’s regulatory plans goes against the nation’s long-term interest.

In interviews, speeches and statements, they are highlighting what they say is a disconnect between Wall Street and the rest of the country: while some big banks report compensation plans and profits at pre-crisis levels, the unemployment rate rose to 9.8 percent last month and home foreclosures jumped 29.2 percent from a year earlier.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=axfGxtoHF9gI

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reinstate Glass-Steagall

The argument for preserving Glass-Steagall (as written in 1987):

1. Conflicts of interest characterize the granting of credit — lending — and the use of credit — investing — by the same entity, which led to abuses that originally produced the Act.

2. Depository institutions possess enormous financial power, by virtue of their control of other people’s money; its extent must be limited to ensure soundness and competition in the market for funds, whether loans or investments.

3. Securities activities can be risky, leading to enormous losses. Such losses could threaten the integrity of deposits. In turn, the Government insures deposits and could be required to pay large sums if depository institutions were to collapse as the result of securities losses.

4. Depository institutions are supposed to be managed to limit risk. Their managers thus may not be conditioned to operate prudently in more speculative securities businesses. An example is the crash of real estate investment trusts sponsored by bank holding companies (in the 1970s and 1980s).

Financial events following the repeal

The repeal enabled commercial lenders such as Citigroup, which was in 1999 the largest U.S. bank by assets, to underwrite and trade instruments such as mortgage-backed securities and collateralized debt obligations and establish so-called structured investment vehicles, or SIVs, that bought those securities.<15> Elizabeth Warren,<16> co-author of All Your Worth: The Ultimate Lifetime Money Plan (Free Press, 2005) (ISBN 0-7432-6987-X) and one of the five outside experts who constitute the Congressional Oversight Panel of the Troubled Asset Relief Program, has said that the repeal of this act contributed to the Global financial crisis of 2008–2009,<17> <18> although some believe that the increased flexibility allowed by the repeal of Glass-Steagall mitigated or prevented the failure of some American banks.<19>

The year before the repeal, sub-prime loans were just five percent of all mortgage lending. By the time the credit crisis peaked in 2008, they were approaching 30 percent. This correlation is not necessarily an indication of causation, however, as there are several other significant events that have impacted the sub-prime market during that time. These include the adoption of mark-to-market accounting, implementation of the Basel Accords, the rise of adjustable rate mortgages etc. <20>

[xchrom]

1. the rich and powerful in this country

never want to be held responsble for their actions.

everyone else -- yes -- but not them.

investigate and prosecute these institutions and their CEOs and CFOs and their boards of directors -- expose them and support for regulation will flow like water.

[Ruby the Liberal]

2. I would like to see Elizabeth Warren as Sec of Treasury

She is one smart, gutsy lady.

[bpcmxr]

4. Amen to that! n/t

[placton]

3. remember this push back

when Obama pushes nothing: he is a speechmaker and little more

[pattmarty]

17. That is spot on what I have started thinking in the last couple of months..............

...............He gives a great speech and is a magnetic personality, but is weak in policy making. What really has he done so far? Maybe just as important is what hasn't he done? Afghanistan, Iraq, healthcare, DADT, the banking crisis, and he passed a better CHIP bill and the Dorothy Ledbetter law both to huge fanfare, like he single handedly won WWII. I admit, I feel hugely let down and disappointed. We end up with a black Clinton. If this is as good as it gets, I'm moving.

[No Elephants]

29. Triangulation is seen by the right wing of the Party as the way for Democrats to win elections

The RNC, the DNC, Congress and the media closed ranks to eviscerate third parties after Perot made such a strong showing in 1992. And that both blended with, and reinforced, Clinton's "third way," i.e., triangulation. The Republicans, however, play to their base, for the most part.

So, we have both Democrats and Republicans playing to right of center.

[Iowa]

22. Well said. I agree.

[sendero]

28. Exactly..

... he makes Bush's all hat no cattle seem tame. He's always yapping it up but where are the results?

WE SHOULD ALREADY HAVE THIS LEGISLATION, IT IS NOT FUCKING COMPLICATED IF HE WANTED IT DONE IT WOULD BE FUCKING DONE ALREADY.

[Beetwasher]

5. Fighting The Banks Right Into The '10 Elections

Me likey.

[No Elephants]

30. Running against the Banks might be a good campaign strategy, now that Bush is gone.

[Overseas]

6. I do hope they reinstate Glass-Steagall.

And I'd like to see some kind of usury laws to limit credit card rates and rates on payday loans.

[defendandprotect]

9. Agree completely . . . We need to restore the Glass-Steagall separation . . .

also agree re credit card usury laws --

How much are they paying you at your bank to borrow your capital?

Pretty much NOTHING!!

Barney Frank was doing something on payday loans the other day -- don't know
to what extent. IMO, they should be wiped out.

ALSO, student loans used to have a 6 year usury limit -- now infinite!!!

There's an interesting article at Common Dreams by Ralph Nader on the Frank Hearings...

[nvme]

19. Do not Look to Barney Frank to be a vociferous advocate

He is already watering some of the provisions to the consumer protection agency being proposed.
http://www.businessweek.com/blogs/money_politics/archives/2009/09/barney_frank_pr.html
That doesn't mean he wont push. It just means he needs pressure. LOts of kick him in the nuts pressure.
Glass Steagall would be a step in the right directions but not nearly enough. The credit derivatives markets need to be brought to the light of day and reserve requirements should be increased while we are at it. Any banks that have taken tarp have to cease being investment banks or cease being community banks

[defendandprotect]

21. Right . . . that's why I was pointing to the Ralph Nader article ... HERE ...

http://www.commondreams.org/view/2009/10/16-6


Someone did something on "derivatives" the other day, but I haven't caught up with
exactly what as yet --

[No Elephants]

31. Banks paying us to use our money? LOL, they charge us for the privilege of having an account. One

bank in my neighborhood charges if you dare use a teller, rather than the ATM.

I haven't read the article to which you refer, but I've been wondering lately just when Barney Frank turned into a Purple Snake. He even thinks it's fine for Congress to wait until after the midterms to address DADT! Guess he's counting on gaining seats in the Senate in 2010.

Dream on, Barney.

[pattmarty]

18. Bernie Sanders has introduced a bill limiting usury on credit cards to 15% tops.......

............If Al Franken is half as good as Bernie Sanders, he will be a great Senator. I like Barney Franks, but as far as Finance he is in the pocket of big banks. I believe Glass-Steagall is buh by. We'll never see something of that scope again, it's Dodge City on Wall st from now on I'm afraid. The only change to come out of this in my opinion will be cosmetic.

[Joe Chi Minh]

23. 15% is still a lot. A credit card chief got in big trouble in the UK for laughing at

the idea that he would use a credit card. The people who can least afford them get in hock to them.

[pattmarty]

26. I totally agree with you. Thing is that 15% is a hell of a lot less than...............

.........30 or 35%. Sander's bill won't see the light of day anyway. This is the country we live in today unfortunately.

[Joe Chi Minh]

27. I know. I really couldn't believe it. Even in the US, red in tooth and claw. Bare-faced

loan-sharking, authorised by government.

[No Elephants]

34. Legitimized and enabled by government, too.

[No Elephants]

32. Sadly, you're probably right. IMO, it's all about throwing minnows to the barking seals on the

left while letting the right walk away with the country.

The rank and file on the left now seem to fighting for only choice and human rights, while the rank and file on the right fight against them. Meanwhile, Congress and corporations steal clean air, clean water, the U.S. Treasury, etc. from the country for private gain, including the gain of our millionaires in Congress.

And that just may be what the bigwigs in both the Republicrat and the Demlican Parties intend.

[No Elephants]

33. Unless you and I fund a citizens lobby, we are highly unlikely to get anything like

reinstatement of Glass-Steagall or meaningful usury laws or antitrust laws/regulations with teeth.

[BumRushDaShow]

7. K&R

Reinstitute Glass-Steagall and repeal McCarron-Ferguson. Eliminate the "one stop shopping" nonsense where banks can become insurers barely regulated by overburdened and under-funded state insurance regulators bought and paid for by industry.... and insurers can become brokerages, selling stocks and underwriting them at the same time... and brokerages can become "bank holding companies" in order to hide behind weak banking laws. And then force them ALL to abide by anti-trust regulation. Together these 2 actions will hit the culprits at the root.

[defendandprotect]

8. Capitalism should be re-regulated up to the hilt -- and especially banking -- !!!

How many more times do we want our Treasury fleeced by capitalism?

And citizens cheated and destroyed by corrupt and deceitful banking practices?

In fact, evidently a great number of citizens who got these "liar loans" were eligible

for normal 30 year mortgages -- but still had high fees and high risk ARMS pushed on them!

[Overseas]

12. Yes please. And speaking of predatory lending

Don't you love the semantic shifts used to disguise what goes on?

The term "predatory loans" was gentrified into "subprime loans."

"There were thousands of foreclosures last month" sounds so much nicer than there having been thousands of evictions. I'm glad Michael Moore's latest movie gave the clinical term foreclosure a much more human face. Showed those who fell for the sophisticated home equity loan bonanza marketing being evicted from their family homes.

I just learned the term "recision" this year. Friends who have had insurance on the job for years may not know the term either. It's a new way to describe denying payment to sick people who try to use the insurance they've been paying for for years.

[No Elephants]

35. "Rescission" is another misnomer/euphemism. Rescission is only by mutual consent. When

your insurer unilaterally cancels your coverage, it's only because the LAW allows the insurer to BREACH its contract with you.

Calling that "rescission" obscures the facts that your government has enabled the insurer who wants to leave you to die. Not the Republicrats. Not the Demlicans. BOTH of them.

"rescission

Definition


The cancellation or annulment of a transaction or contract by mutual consent or by law."

http://www.investorwords.com/4199/rescission.html#

So, when you talk about one party's "right" to unilaterally terminate a health insurance contract over, the accurate label would be "potentially deadly breach of contract, enabled and approved by Congress."

[RedCloud]

10. What can you expect from a group of predatory ingrates?

[and-justice-for-all]

11. Stop listening to the banks and just do what needs to be done...

the same with health care; don't listen to the private sector, we as a Government must do what is in our best interest and if that industry can not adapt...well tough shit.

[No Elephants]

36. What do you mean "we?" "We" ceased being the government years ago. It's been K Street since then,

not us.

We were silent too long, distracted by wedge issues too long. (Not to say wedge issues are not important. For me, human rights is the MOST important. But, we've been played.)

[debbierlus]

13. Oh give me a break. You do that BEFORE you give them the trillions, not after

He could have broken the system, instead he was part of transfering wealth from the American people to the corrupt Wall Street Leeches.

As long as Tim Geithner & Bernacke are his economic policy heads, it is bullshit.

[No Elephants]

37. Good point. "Now, finish your dinner, so I can send you to bed without your dinner."

[nightrain]

14. sad for us that the Obama Administration gave them candy first, now

wants to take it away. Backward approach.

[Trillo]

15. "Freedom from monopolies in commerce"

Some claim only 10 of Jefferson's 12 rights were included in the Bill of Rights. The title is said to be Jefferson's 11th Amendment.

http://www.informationclearinghouse.info/article17103.htm

http://www.ipdemocracy.com/archives/001663jeffersons_11th_amendment_net_neutrality.php

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=104x5168523

Glass Steagal would probably help, but Don't want to shake the boat too hard! (Corporate personhood must not be touched. corporate money given to politicians, very important)

[Hutzpa]

16. This is the attitude they have shown

in the past whereas everything new is bad and that things should remain
as it is, what I trying to show here is the same tired argument made
over and over again and again, nothing has changed.

[tazkcmo]

20. Aaaah, the WH feels fwustwated! :(

Then grow some what ever you need to grow (A backbone? Some sharp teeth?) and call the MFers out or something! I'm so sick of Dem's looking like such panty waists all the time. You got the WH, both houses AND most of We The People's support. What freakin' else do you need? Grrrrrrrr!!!!!

[KansDem]

24. (Re-)Regulation of the banks *should* have been done *before* the bailouts...

Make re-regulation a requirement before dispersing any taxpayer money...

It would have been easier and faster to get this job done.

[No Elephants]

38. Why were they ever de-regulated in the first place?

Hint. Look at that guy on the cards in your Monopoly game with the monocle, the formal morning suit and the bags of money.

[Zorra]

25. Banksters need to be put under a powerful microscope and watched 24/7,

with strict guidelines regulating their conduct. If they violate the rules, long term prison sentences are called for. These unscrupulous scumbags ripped us all off and probably irreparably damaged our country in the process.

They are criminals that are endlessly engaging in nefarious schemes through which they can steal other people's money.

If they are not strictly monitored and regulated, they'll screw us even worse next time around - so we need to make sure there will never be a next time.

[No Elephants]

39. How do you propose "we" make sure there will never be a next time?" Please see Reply 36.

"We" are not going to get anything done in D.C. unless and until "we" radically change our own behaviors.

[No Elephants]

40. "Wake up, America."