Okay, so the Democrats are looking to eliminate Blanche Lincoln’s measure “to force financial firms to spin off their derivative-trading desks into separate entities.” But they don’t want the voters in Arkansas to know that when they go to polls on Tuesday. Do they wait until Wednesday to kill the provision or do they strip it out in the conference with the House? How will they screw us? Well, I’d advise them to screw us do it in conference because it looks like the Arkansas senate race is headed for a run-off.
There is nothing uglier than watching Democrats suck up to big business.
Blanche Lincoln’s amendment is terrible, BooMan. It should be eliminated, now, ASAP.
Oh, I see what you’re saying now that I clicked the TPM link. Yeah, that’s messed up. Screw Blanche Lincoln. Her amendment was far more harmful, just more populism gone wild. That disgusts me even more because Blanche Lincoln is the last person who should be shielded. F*** her.
I hope Halter can overtake her in time.
Why is it terrible? I never got excited about it because I know it was all kabuki and would never pass no matter if it was worthwhile.
Section 106 and Section 120. Especially Section 106, which is the Section talked about in the link that BooMan provided.
Thankfully Sheila Bair, the WH, the Fed and anyone with any financial sense opposed it. Of course, in FireDogLake-world, when all of those groups opposed it that just means it was good legislation, eh? š
It wasn’t all terrible, and it could have been fixed. But Section 106 needed to be stripped.
There’s nothing of substance the I can find in that link. Supposedly Volker is against the amendment, so that gives it some weight. I can’t find anything on it from the economic writers I tend to trust.
This is Section 106.
Robert Reich supports the provision, although his writing about it was somewhat incoherent. He somehow thought that it would “bring derivatives out in the open,” but I don’t know what he’s talking about. From what I’ve read of his writing, he doesn’t even understand what the provision is even about, he just supports it for the sake of “being tough.” It’s almost like he didn’t even read through the entire proposal or something.
Here’s what he wrote:
This statement tells me that he thinks that pushing the vast majority of swaps away from banking regulators would be “bringing derivatives into the open.” The whole point is that Section 106 doesn’t distinguish between prop trading and market-making. It bans banks from doing both.
I also heard over at Bloomberg (linked below) that Stiglitz was the brainchild behind it, but I have a hard time believing that. If he was, that’s unfortunate, and disappointing. Although during this entire bailout mess he was using a lot of over the top rhetoric, some of which I sympathized with.
Here’s a good article explaining it:
http://www.bloomberg.com/apps/news?pid=20601070&sid=axZn8sEY6vQA
I think it’ a good idea. Banks and Brokerage houses should be separate again. Saying it’s just their own money isn’t enough. If they lose enough of “their own money”, the government will have to bail them out again. That’s how we got here in the first place. If you’re a bank, you take deposits and make loans. THAT’S IT!!
You want to play the market? Go into another business.
I’m confused. If financial firms spin off their derivative-trading desks into separate firms, that would mean that Citibank, Bank of America, which evolved from commercial banks…would not longer be engaged in derivatives trading. And neither would JPMorganChase, etc., which evolved from investment banks. The easiest way to accomplish this would be for Citibank to spin off its brokerage functions, BankofAmerica to spin off Merrill Lynch, JP Morgan to keep investment banking and spin off Chase as a commercial bank. Then JP Morgan could be a market maker. Would it also be a prop trader? Is this the issue? It doesn’t fix the JPMorgan and Goldman Sachs dual role in the market? Although it promotes itself as doing that?
The Bloomberg article wasn’t helpful, just the banks poormouthing about how it would send derivative trading overseas without explaining how. And the extortion talk of yanking $250 billion out of the market.
For what amounts to a “Chinese wall” between banking and trading?
If you have problems with it, I must be missing something.
Of course it really does not address the real explosive to the market — naked and third party hedges and swaps.
Also, what exactly are they defining as a “derivative”? Is a mutual fund or a 401(k) a derivative?
Heh, that didn’t take long:
http://news.firedoglake.com/2010/05/13/why-a-lincoln-halter-runoff-is-good-for-derivatives-reform/
It’s funny you linked to FDL. I don’t know that FDL fully supports the Lincoln amendment. And they see through the kabuki, too. Shows you how worried they are about Lincoln’s chances.
I’m not sure if they do or not, but Open Left and FDL both have called it “strong.” There are some things to support, but Section 106 is worth killing the entire thing outright, and seeing as it deals with swaps, I suspect FDL supports that section.
I hope Lincoln loses, so badly. She’s NOT going to win in the GE, and that’s enough reason to not support her alone; her corporative support completely aside.
See TarheelDem above. I am not sure either of what Section 106 hopes to accomplish, exactly. Goldman Sachs shouldn’t be treated like a deposit taking bank. They should reinstate Glass-Steagall.
Jane Hamsher might support that section, but I would be more interested in Masaccio’s analysis of the provision.
Like I said above, I’m puzzled by your objection without additional detail.
I would not put it past Blanche Lincoln to put a poison pill in finance reform that looks like being tough on the banks. But I see no evidence from the Bloomberg article that the banks are playing a “don’t throw me in that briarpatch” tactic.
I didn’t even bother to look at it. Because I figured it would be watered down, even if it was good in the beginning. And given that Lincoln is a corporate tool, I always thought there was nefariousness behind it.