Monday, July 19, 2010

Bank Reform: The Wall Street Casino is Still Open

...  And taxpayers continue to foot the bill

They watered down the Volker Rule and came up with some really creepy language that could be right out of a Glenn Beck Parody...

May a Council of Regulators Infest Your Bank Vault!
when banks grow “too big to fail,” a 10-person “council of regulators,” with the Treasury secretary at the helm, can opt to crack down on them (Daily Beast - Wall Street Outsmarts Congress)

Let the Gambling Continue!
The big fight centered around the Volcker Rule, named for Obama’s lanky Wall Street adviser, former Fed Chairman Paul Volcker, who pushed for a complete ban on proprietary, or “prop,” trading

This is the money a bank gambles for its own gain, often using customers’ deposits as the seed bet, borrowing wantonly above that to keep things extra interesting.
The basic math encourages crazy risk: Hit it big, and bankers get a monster bonus; crap out, and the taxpayers sit on the hook for a bailout.

Yes, Our Scott Brown...
A strict Volcker Rule would have fixed that, and Wall Street shuddered accordingly. But after new Republican Senator Scott Brown extracted a watered-down version—banks will be allowed to risk 3 percent of their capital via prop trading and own up to 3 percent of hedge funds and private equity funds—Wall Street did what it’s best at: creating complicated solutions to exploit loopholes.

So Let The (Taxpayer Funded) Games Continue!
First, most banks are already content to bet tens of billions, given the leverage available, while sitting under the 3 percent threshold. For them, it’s business as usual.

Similarly, even once banks rub up against the 3 percent, they’ve already concocted another evasive maneuver: Keep the game, change the name. Specifically, Dodd-Frank allows banks to take the other side of a bet that a customer wants to make. “You could say, ‘Hey, I’m doing this for my clients,’” one sales trader explained to me. Voila! Prop trading, under a new guise.
Pay for Play Government 
All Congress had to do was remove the safety nets and tell the gamblers disguised as bankers that if they fail they are on their own.  Instead, the shell game continues, as Wall Street money flows into the pockets of Democrat politicians.

This is a bipartisan raping of the US taxpayer
More insidious, is it a congressional bribery scheme:   They craft complex laws no one understands, then extract money from those harmed by the law in exchange for advantageous carve-outs and exemptions.

The right points to government malfeasance, the left points to crony capitalists.  If everyone could see that both are true, the taxpayer-funded big government-big business orgy would be over.


Ray said...

Better with every post.. ;)

"Wall Street did what it’s best at: creating complicated solutions to exploit loopholes."

Learned from DC>

Trestin said...

The most frustrating thing. When the collapse is complete most of them will be living like kings in other counties

Lisa said...

It's "them" and "us"

Will we ever have representative government or is that just a pipe dream?

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