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Archive for the ‘Financial Regulation’ Category

 
Attorney General Eric Holder was at the White House event with Biden and pledged to crack down on American businesses that discriminate against employees based on sex, race or country of origin. (CNSNews.com/Penny Starr)

SEATTLE — A Seattle bar owner is so angry at Chase Bank that he’s offering a free steak to anyone who can prove he or she has closed his or her account at Chase this week.

Stephen Mollmann, who owns Twilight Exit in the city’s Central Area, told KIRO 7 Eyewitness News he’s fed up with Chase because he said the bank has dragged its feet over his application to refinance his home mortgage. His offer was reported on CapitolHillSeattle.com.

“I can use the Twilight Exit as my soapbox and my weapon,” Mollmann said. “I can just load it full of steak.”

He said the bank is stalling “or hoping I just go away and keep paying my mortgage” because “I’m a cash cow to them.”

A Chase representative said the bank is trying to work through Mollmann’s application, but Mollmann said he’s hoping new banking regulations passed by Congress on Thursday will speed that along.

Tighter rules for big banks and financial institutions are among the key provisions of the new law, along with stricter regulations for real estate and mortgage transactions.

“It’s a win-win for consumers,” said Bruce McClary, with Clearpoint in Seattle — a nationwide, nonprofit consumer counseling service.

McClary said the Consumer Protection Agency that will be established under the new law will help rein in fraudulent banking practices of the past few years.

“I think the big benefit is where the teeth come in and the enforcement mechanism that’s put in place based on this legislation,” McClary said.

The new agency will promote consumer financial education. It will help protect seniors from lending abuse. It will require clear, understandable language on all financial documents.

And it will eventually offer a free, 800 number for consumers to call for help.

McClary said consumers should start seeing the new rules of the legislation later this summer, but that the 800 number may not come along until sometime next year. SEATTLE — A Seattle bar owner is so angry at Chase Bank that he’s offering a free steak to anyone who can prove he or she has closed his or her account at Chase this week.

Stephen Mollmann, who owns Twilight Exit in the city’s Central Area, told KIRO 7 Eyewitness News he’s fed up with Chase because he said the bank has dragged its feet over his application to refinance his home mortgage. His offer was reported on CapitolHillSeattle.com.

“I can use the Twilight Exit as my soapbox and my weapon,” Mollmann said. “I can just load it full of steak.”

He said the bank is stalling “or hoping I just go away and keep paying my mortgage” because “I’m a cash cow to them.”

A Chase representative said the bank is trying to work through Mollmann’s application, but Mollmann said he’s hoping new banking regulations passed by Congress on Thursday will speed that along.

Tighter rules for big banks and financial institutions are among the key provisions of the new law, along with stricter regulations for real estate and mortgage transactions.

“It’s a win-win for consumers,” said Bruce McClary, with Clearpoint in Seattle — a nationwide, nonprofit consumer counseling service.

McClary said the Consumer Protection Agency that will be established under the new law will help rein in fraudulent banking practices of the past few years.

“I think the big benefit is where the teeth come in and the enforcement mechanism that’s put in place based on this legislation,” McClary said.

The new agency will promote consumer financial education. It will help protect seniors from lending abuse. It will require clear, understandable language on all financial documents.

And it will eventually offer a free, 800 number for consumers to call for help.

McClary said consumers should start seeing the new rules of the legislation later this summer, but that the 800 number may not come along until sometime next year.

KIROTV – Seattle, WA

Note:  Sadly hoping that the financial regulation bill just passed will help him with this is futile.  It’s actually going to help the big banks avoid having to do further mortgage modifications.

Side Note: Interesting that the two morons that caused the Fannie and Freddie Mortgage Crash are the two that authored this bill….

Without spending a single dime, the Obama administration did more yesterday to create jobs for the U.S. economy than it has throughout its entire existence. With the single stroke of a pen, President Barack Obama signed the Dodd-Frank financial regulation bill that set in motion 243 new formal rule-makings by 11 different federal agencies. Each of the 243 rule-makings will employ hundreds of banking lobbyists as they try to shape what the final actual laws will look like. And when the rules are finally written, thousands of lawyers will bill millions of hours as the richest incumbent financial firms that caused the last crisis figure out how to game the new system. Yesterday, the Washington law firm Jones Day snapped up the Securities and Exchange Commission head enforcement division lawyer, and J.P. Morgan Chase, one of the biggest U.S. banks by assets, assigned more than 100 teams to examine the legislation. University of Massachusetts political science professor Thomas Ferguson tells The Christian Science Monitor:

By delegating so much to the regulators, Congress is inviting everyone interested in the outcome to make more campaign contributions, as they intervene in the regulatory process to influence the regulators. Nothing is settled. It’s a gold mine for members of Congress.

So if the richest big banks, lawyers, lobbyists and Congress were the big winners yesterday, who are the losers? Small banks, entrepreneurs and you.

Smaller community banks do not have the same resources that the Goldman Sachs of the world do to hire armies of lawyers and lobbyists to shape and comply with new regulations. The cost of compliance will eat up a much larger share of small bank revenue. Jim MacPhee, CEO of Kalamazoo County State Bank in Michigan and chairman of the Independent Community Bankers of America (ICBA), told USA Today: “We weren’t part of the subprime (mortgage) meltdown. Why throw more regulations at us?”

Entrepreneurs take a double hit in the Dodd-Frank bill. First, by forcing banks to raise more capital it will now be more difficult for them to make new loans for small businesses. But more important is the regulatory threat for new products. Across the world mobile device and telecommunications firms are beginning to compete against credit card companies and banks to reshape how consumers buy products and manage their finances. Will the Dodd-Frank Consumer Financial Protection Bureau even allow these services to come to market? Will cell phone firms have to be regulated exactly like financial firms? Nobody knows the answer to these questions. Here is what we do know: it will be the banks and telco firms with the best lawyers and lobbyists – not the best entrepreneurs – that come out on top in this battle.

Then there is what the Dodd-Frank does not do: it does nothing to stop future government bailouts. Instead, it makes the TARP bailout system permanent. The bill’s “orderly liquidation” process empowers regulators to seize any firm they deem a threat to our financial system and liquidate them. These powers are subject to insufficient judicial review and do nothing to ensure that the firms’ creditors won’t receive 100% of their irresponsibly lent money back in future taxpayer funded bailouts. And speaking of taxpayer-funded bailouts, the bill does nothing to address Fannie Mae and Freddie Mac, whose activities were instrumental to the financial crisis.

Back in 1994, Jonathan Rauch wrote in his book Government’s End: “Economic thinkers have recognized for generations that every person has two ways to become wealthier. One is to produce more, the other is to capture more of what others produce. … Washington looks increasingly like a public-works jobs program for lawyers and lobbyists, a profit center for professionals who are in business for themselves.” The Dodd-Frank bill is the perfect extension of Washington as “a public-works jobs program for lawyers and lobbyists.” Instead of encouraging the U.S. economy to invest in engineers, technology and new products, it requires firms to invest in lawyers and lobbyists just to stay alive. It will do nothing to help create new wealth or new net jobs in the economy, but will transfer more wealth to lobbying and law firms in Washington, D.C.

The Heritage Blog

Please let him know how you feel about this legislation but before you do, make sure you read the articles about the legislation posted below.

BERNIE SANDERS’ POLL

ASSOCIATED PRESS Senate banking committee member Bob Corker says the new consumer agency has “absolutely nothing – zero – to do with the financial crisis.”

By Patrice Hill

The financial reform bill expected to clear Congress this week is chock-full of provisions that have little to do with the financial crisis but cater to the long-standing agendas of labor unions and other Democratic interest groups.

Principal among them is a measure to make it easier for unions, environmental groups and other activist organizations that hold shares to put their representatives on the boards of directors of every corporation in the United States.

The so-called “proxy access” provision, which activist groups say they will use to try to improve oversight of corporate financial practices, has provoked a backlash from the Business Roundtable, U.S. Chamber of Commerce and other major non-Wall Street business groups.

“This legislation includes provisions totally unrelated to the financial crisis which may disrupt Americas fragile economic recovery” and lead to increasing political battles in the boardrooms, said John J. Castellani, president of the roundtable.

Business groups are also rankled that the legislation would impose costly new burdens on airlines, utilities and other non-financial businesses that were victims rather than villains in the crisis, simply because they use financial derivatives to hedge their businesses against risks such as fluctuations in oil prices, interest rates and currencies.

Such hedging practices played no role in the crisis, though they helped many businesses weather the financial turbulence and recession that followed in the aftermath of the Wall Street storm.

Other provisions of the financial legislation, which goes before the full Senate on Thursday for a vote and likely passage, favor Democratic constituencies directly by requiring banks and federal agencies to hire and do more business with them.

The bill would create more than 20 “offices of minority and women inclusion” at the Treasury, Federal Reserve and other government agencies, to ensure they employ more women and minorities and grant more federal contracts to more women- and minority-owned businesses.

The agencies also would apply “fair employment tests” to the banks and other financial institutions they regulate, though their hiring and contracting practices had little or nothing to do with the 2008 financial crisis.

“The interjection of racial and gender preferences into America’s financial sector deserves greater media exposure” before Congress debates and passes the massive 2,400-page bill, said Kevin Mooney, a contributing editor for Americans for Limited Government‘s daily newsletter.

The powerful new consumer protection agency that is the centerpiece of the reform bill also would provide substantial employment opportunities and funding for Democratic and social-activist groups such as the Association of Community Organizers for Reform Now (ACORN), critics say.

Rather than focus on the abuses in the mortgage-lending market that led to the crisis, the new consumer agency would have broad-ranging powers to regulate and punish virtually any company that has a financial relationship with consumers – even those that had nothing to do with the crisis, said Sen. Richard C. Shelby, Alabama Republican.

Mr. Shelby, the ranking member of the Senate Banking, Housing and Urban Affairs Committee, sought to craft a more tailored role for the agency in weeks of negotiation over the Senate bill.

“During our negotiations on the consumer bureaucracy, my Democrat friends were not focused on the mortgage market. Their sights were set on the rest of the economy,” he said. “The new bureaucracy is an enormous reach across virtually every segment of our economy, and a massive expansion of government influence in our daily financial lives.”

Sen. Bob Corker, a Tennessee Republican who also sought to help write a bipartisan Senate bill more narrowly focused on the problems that led to the crisis, said he fears that an activist director of the consumer agency could use agency power to direct loans to favored constituencies, regardless of whether the loans are sound or pose risks to the banking system.

“This may sound a little far-fetched, but you can have the wrong person in this position – there’s no board, there’s really no check and balance – that you can imagine could use this organization to try to create social justice in the financial system,” he said.

Like the corporate boardroom provisions, many of the activities within the reach of the new consumer agency had “absolutely nothing – zero – to do with the financial crisis,” Mr. Corker said. “But this has become a Christmas tree for those kinds of things, because people realize it’s something that’s going to pass.”

The Washington Times

Is it possible to write a 2,300 page piece of legislation that accomplishes next to nothing and is pretty much completely and utterly worthless?  The answer is yes.  Barack Obama has been trumpeting the Dodd-Frank financial reform bill as the “biggest rewrite of Wall Street rules since the Great Depression”, but the truth is that after the Wall Street lobbyists got done carving it up, the bill that was left was so watered down and so toothless that it essentially accomplishes nothing except creating even more government bureaucracy and even more mind-numbing paperwork.  The bill is so riddled with loopholes for the big banks that it is basically the legislative equivalent of Swiss cheese.  The Democrats in the Senate were ecstatic when they announced that they had secured the 60 votes needed to pass this legislation, but when they are asked about what the financial reform bill will do, most of them are left stammering for some kind of cohesive response.  The sad truth is that most of them probably don’t understand the bill and none of them will probably ever read the entire thing.

So will the financial reform bill do any good at all?

Well, yes.

A very, very small amount.

Essentially, it is kind of like going over to the Pacific Ocean and scooping out a couple of cups of water.

That is about how much good this bill is going to do.

But U.S. Senate Majority Leader Harry Reid is making this sound like this is some kind of history-changing legislation….

“We’re cleaning up Wall Street.”

Oh really?

Charles Geisst, professor of finance at Manhattan College recently had the following to say about this absolutely toothless bill….

Like health-care reform, this bill is being drawn up to grab headlines but its details betray it as nothing more than a slap on the wrist for Wall Street. It is true that Wall Street can commit grand theft and apparently get off with nothing more than community service.

The truth is that most of us never expected the U.S. government to truly take on Wall Street.  The relationship between the two is just way too cozy for that to happen.

So does the financial reform bill actually accomplish anything?

Yes.

Let’s take a look at the “sweeping changes” contained in the bill….

*Federal regulators will receive more authority to monitor everything from mortgages to complex derivatives.  (Oh goody!  Just what we needed – more federal regulation!  As if federal agencies have ever been very good at regulating the financial industry…) 

*Financial firms will be required to reduce the debt they take on and to hold more capital in reserve.  (This will make financial firms marginally more stable, but the truth is that the big banks are so good at accounting tricks that this will not really make much of a difference.  When a big firm is going to fail a few extra bucks in reserve is NOT going to make a difference.) 

*The U.S. government will be given extensive power to seize collapsing financial firms.  Federal regulators would keep collapsing firms operating long enough to prevent a massive panic and would slowly sell off its pieces.  (This does not eliminate “too big to fail” – instead it enshrines “too big to fail” into law permanently.  The bill institutes ”orderly procedures” for exactly how to proceed when the U.S. government steps in and takes over failing financial firms.  Just what we need – more socialism!)

*The financial reform bill creates a new Bureau of Consumer Financial Protection at the Federal Reserve that is supposed to help prevent abusive lending by mortgage and credit card companies.  (Wait a second – this bill gives the Federal Reserve more power?  Who came up with that grand idea?  Yeah, let’s give the fox more power to guard the hen house.  The truth is that the Federal Reserve is one of the core problems with our economic system as we have written about previously.)  

*Some rather toothless regulations will be placed on the derivatives markets, hedge funds and credit rating agencies.  (A big emphasis on “toothless”.)

So what does this legislation not do?

-It does not eliminate “too big to fail”.  The truth is that the biggest banks and financial institutions have been systematically gobbling up a bigger and bigger share of the market and this legislation does nothing to change that.  Anthony Sanders, a professor of finance in the School of Management at George Mason University, says that this bill essentially does nothing about the “too big to fail” problem….

“As far as I can see the ‘too big to fail’ problem is still in place.”

In fact, this legislation may cause even more consolidation in the financial industry, because small firms are going to have an especially difficult time complying with all of the new rules, regulations and paperwork created by this bill.

-The financial reform bill does nothing about the horrific bubble in the derivatives market.  Originally it was believed that some tough regulations were going to be imposed on derivatives trading, but the Wall Street lobbyists were all over those provisions like rabid dogs. 

So now there is loophole after loophole in the bill and the “derivatives problem” still ominously hangs over Wall Street.  Not that there is any way to fix it. 

Nobody actually knows the true total value of all the derivatives in the world, but estimates place it at somewhere between 600 trillion dollars and 1.5 quadrillion dollars.

When the derivatives bubble pops, and it will, there won’t be enough money in the entire world to fix it.

-The financial reform bill does nothing about mortgage giants Fannie Mae and Freddie Mac.  They remain financial black holes that the U.S. government will be forced to pour hundreds of billions (if not trillions) of dollars into.

-A proposal to conduct yearly comprehensive audits of the Federal Reserve was left out of the financial reform bill.  Instead, a very, very, very limited one-time audit of a few of the transactions that the Federal Reserve conducted during the height of the financial crisis was included. 

What we really need is a true audit of the Fed.  The Federal Reserve has never been the subject of a true, comprehensive audit since it was created in 1913.  Considering the fact that the Federal Reserve issues our currency, controls our banking system, sets our interest rates and is basically the core of the U.S. economy, you would think that the American people should have the right to see what is going on over there.

But Ben Bernanke and the rest of the folks over at the Fed fought against the comprehensive audit proposal with everything that they had.  They seemed extremely alarmed that the American people might actually get to take a look inside their books.

The truth is that unless something is done about the Federal Reserve, no true “financial reform” is really going to take place.

But the U.S. Congress could have done at least some good with this bill.

Instead, they have given us a 2,300 page mess that is pretty much completely and utterly worthless.

The Economic Collapse