It looks like the House and Senate struck a final deal on the financial overhaul sometime after 5am this morning. Blanche Lincoln’s derivatives language remained almost intact, and the car dealers beat the Pentagon and will not be subject to the new Consumer Financial Protection Bureau’s scrutiny. The Volcker Rule survived, albeit with a limited 3% carveout.
The rule, named for Paul A. Volcker, the former Federal Reserve chairman who proposed the measure this year, restricts the ability of banks whose deposits are federally insured from trading for their own benefit. That measure had been fiercely opposed by banks and large Wall Street firms, who viewed it as a major incursion on some of their most profitable activities…
Banks managed to wrangle limited exceptions to the rule that would allow them to continue some investing and trading activity. The agreement limits banks’ investments in hedge funds or private equity funds to no more than 3 percent of a fund’s capital; those investments could also total no more than 3 percent of a bank’s tangible equity.
Overall, the bill is stronger than most, including Wall Street, expected. And I think it will pass. Pretty impressive stuff.
VERY impressive. HuffPo though makes it out to be the worst thing imagined. They are so off the tracks in not understanding that Wall Street, like money, is a necessary evil. You can’t get rid of it and you can’t regulate it to the point of stopping commerce. Transparency and this type of regulation is what is needed.
In the comments of this Front Pager on Kos
http://www.dailykos.com/story/2010/6/25/877568/-Inside-the-conference:-why-the-formality
someone complimented Obama on all this major legislation moving forward and someone else commented that the hallmark of good snark is if you couldn’t tell if it was. Whatever. Where did the word “snark” come from and what can we replace it with? God, I hate that word. It sounds and looks so crass.
Nothing Obama does is ‘good enough’ for the ‘truest’ progressives (whatever that means).
No doubt.
I’m not worried about the bill as much as I am about the GOP filibuster of the final bill in the Senate.
If you look broadly at our situation, it’s not so loopy to question whether Wall Street is necessary. Maybe transparency and regulation can turn it into a functional plus for the people of this country, maybe not. As it stands, it’s become quite clear that the vast majority of what Wall Street does offers no benefits to the working people whose money it manipulates. The “mortgage derivatives” trading system it invented benefited the parasitic ambitions of its bosses and traders with no use for the Rest of Us at all.
Which is not to take away from the bill’s accomplishments. It does appear to be an impressive achievement if one believes the financial and economic system is not irreparable. I only wish HuffPo DID represent the radical voices who believe the system’s only salvation is a deep root canal. Unfortunately they tend more to helpless, idea-free whining and a belief that Obama and a Dem Congress can be expected to lead a revolution.
“HuffPo though makes it out to be the worst thing imagined.”
I really don’t understand the utility of constantly carping that everything is crap, nor do I think there can be any satisfaction for a certain slice of the left.
If one believes that everything is crap, is it not one’s duty to point that out?
It does remove one incentive to check the site frequently — one can safely predict what their take will be on anything.
Perhaps that’s why they run so many photos….
Checked the HP headline: “WALL STREET
SURVIVES INTACT”.
They are insane.
Obama Derangement Syndrome
that is a great term
The devil is in the details, as usual. So don’t jump to conclusions one way or the other.
Here are some of the details to look for.
What proportion (or amount) if any of FDIC-insured deposits does it allow to be invested in the banks account in derivatives?
What are the actual effects on bank fees?
What limitations does it place on who can be the parties in hedging transactions? Does it prohibit third-party hedges and swaps (so-called naked hedges and naked swaps)?
How significant are the carve-outs for specific industries and institutions?
How does it protect investments in retirement accounts, including 401(k) accounts?
How the failures of large institutions be processed so as to avoid taxpayer bailouts?
Amidst the cheering and moaning, these issues are more important than that the conference committee has a bill. Because these are the issues most likely to affect ordinary taxpayers and small individual investors.
http://openleft.com/diary/19246/personal-reflections-on-the-wall-street-reform-deal
Chris Bowers has a good one on this. I bolded the parts I think are key.
As if “feeling pure” is the purpose of political engagement.
Yes, an odd choice of words.
Like the public option discussion in health care, the derivatives discussion has overshadowed more important regulation including the new Consumer Financial Protection Agency, changes to the horrible Moody’s rating agency and other rating agencies, caps on credit card fees and mortgage regulation; all those having real life day to day practical implications for the average consumer – moreso than derivatives detail.
Perhaps because I’ve been in the financial industry for 30 years but one of the most impressive speeches Obama gave was prior to the 2008 summer Wall Street crash. It was overlooked as it came right after his Philadelphia race speech (or right before?). Regardless, it was impressive as he totally nailed what was wrong with the industry and layed out in clear detail how he would like to have it changed. One of the key details was to have regulators regulate “what an institution does, not what it is named”. In other words, if a bank acts like a trading company then they need to be regulated like a trading company not as a bank.
Here it is again if you want to take a listen. It is fascinating to me that most everything he suggested is now in this reform package.
http://video.nytimes.com/video/2008/03/27/us/politics/1194817102838/obama-s-speech-on-the-economy.ht
ml
It’s all good but if you want to skip to his proposals skip to minute #20.
“The difference in culpability between those who attempted to stop it, and those who egged it one[sic], is a difference of degree, not of type.”
WTF? Those who die defending the city, after having done their utmost and given their all, are culpable? — just not AS culpable as those who actually opened the gates and let the enemy in? What have you been smoking?
They are not culpable at all, unless perhaps there were things they KNEW they could have done to bring victory, that, for some reason, they deliberately did not do.
One, a political battle is different than an actual battle. Besides even if your analogy worked, he’d be right. If people defending the city die and it falls, the city still falls because they didn’t successfully defend the city. They are still responsible for the loss.
But the larger point remains. We are American citizens. Whether we like it or not everything this country has done has been in our name. From torture to invasion to the destruction of the atmosphere. I protested the invasion of Iraq and struggled against it happen but I’m just as guilty as anyone for what was done there in my name whether I agreed with it or not. That’s the price of being an American citizen.
MNPundit, thanks for your post, and kudos to Chris Bowers as well.
A basic lesson all organizers learn is the importance of claiming your victories and telling (and retelling) those stories.
Why? Because one way your opponents will try to defeat you is by claiming that your victory (and all your hard work) didn’t really happen or didn’t really matter.
“We were going to fund that project anyway.”
“This new law won’t really change anything, except create more bureaucracy.”
And, one of my favorites, “We could have settled this long ago if you people hadn’t made such a fuss.”
What those statements have in common is they are all designed to deflate, demobilize and dispirit ordinary citizens from uniting and participating in public life.
The New Deal financial regulatory structure took several laws and several years to construct (and even then it wasn’t everything liberals wanted). We remember the New Deal precisely because liberals and Democrats fought persistently and consistently for a decade to constrain the evils of unchecked conservatism.
Which Republican Senators do you think will vote for it? Which Democratic Senators will vote against it?
Does it satisfy the New York delegation?
Will the votes be an significant enough margin to send a message to Wall Street?
Will Republicans who vote against it have cover in their fall campaigns?
They are saying they flipped Brown.
Grassley, Brown, Snowe, and maybe Collins.
I’ll believe it when I see the roll call. All of those have been playing games with the legislation. Snowe has been notorious for moving the goalposts.
And what Dems do we lose?
None.
The Healthcare Reform bill vote gives me confidence that this one will hold.
I agree. Odd how this all shook out and that it appears perhaps that Lincoln’s derivatives legislation was not just for show for her primary. The fact that her portion of the bill is largely intact assures her vote on the final legislation one would think/hope.
And the Dem loss in MA hasn’t been as disastrous as I anticipated it would be for them. That is as much a surprise to me as anything.
I hope very soon the Democrats can put together a clear and concise and strong message for November based on all of these wins for the American public who, for the most part, are unaware of all the good consumer legislation that has been passed.
I’ll comment once I finally see the bill’s final language, so it’s hard to tell where I stand right now. Generally, though, this bill looks pretty solid. Section 716 was fixed slightly, so that’s good; it’s not as good as it could get, but it’s better than before. God I hate Lincoln.