This is appearing in tomorrow's Wall Street Journal: "
Democrats Soften Financial Bill."
If it's accurate, Main Street has just been grossly sold-out by D.C. on most substantive economic regulatory reform.
If it's true, it's beyond "real bad." It's a freakin' travesty; a virtual total capitulation to the status quo that's going to make what's happening with health care reform look like a day at the beach.
No exchanges (read no transparency of any significance,
at all) when it comes to derivatives trading? (How do you think we got into this mess?)
Total inability for states to regulate the too-big-to-fail banks, in terms of allowing--or not allowing--them to sell services, etc., in a given state?
With regard to mortgages, say bye-bye to the Real Estate Settlements and Procedures Act (R.E.S.P.A.), at least as far as it's concerned when it comes realtors, homebuilders, etc., who'll be enabled to "navigate" consumers to favored vendors for everything from closing services to title searches, and so on.
This makes redlining EASIER!
I work with these financial services firms every damn day. Given a pinhead-sized loophole, that's all these folks need to contort the best interests of the public. What I'm reading in this article is telling me that there are potential loopholes looming in final legislation through which one could drive a Mack Truck!
We're talkin': worse than before 2007!
And, I've only read this article one time, and then quickly, at that.
Am I over-reacting? Am I asleep? Is this a nightmare? Is it bad reporting?
See the following: "Democrats Soften Financial Bill."
Democrats Soften Financial Bill
Damian Paletta and Kara Scannell
September 24, 2009
WASHINGTON -- Congressional Democrats and the White House are softening some elements of the Obama administration's proposal to overhaul financial-market supervision as they begin a push to win broader support for the bill.
So far, Democrats and the White House haven't budged on the main tenets of the effort, which include tougher regulation of the country's largest financial companies and the creation of a new agency to protect consumers. But the changes are nonetheless significant and could eliminate some of the more polarizing aspects of the plan.
--SNIP--
He also said he would limit the types of companies that could face scrutiny by a proposed Consumer Financial Protection Agency by excluding real-estate brokers, accountants, retailers and others that aren't banks or financial-services companies. Rep. Frank said he felt that in some areas the White House had "overdrafted" the bill.
--SNIP--
Meanwhile, Sen. Jack Reed (D., R.I.) introduced a bill to regulate derivatives that doesn't go as far as the White House's proposal, which would have required that complex financial products be traded on exchanges or electronic markets. His bill would require banks to process standard contracts only through a central clearinghouse. The White House has said trading contracts on exchanges would improve the transparency of a complicated market...
Trust me on this; if this story's accurate, I'm not even scratching the surface on the level of "bad" that this means for Main Street. I really, really, really hope it's inaccurate.
# # #
UPDATE #1:
If you're interested in learning more about the implications of these "reforms," as they're being spelled out for us now, here's some suggested background reading...
...DERIVATIVES:
The derivatives regulatory mess, courtesy of Satyajit Das, Tuesday: "Guest Post: Satyajit Das on Dr. Jekyll and Mr. Hyde Finance"
With plenty more to say on the matter, here's the NYT's Gretchen Morgenson from 9/13/09: "But Who Is Watching Regulators?"
...TOO-BIG-TO-FAIL FRONT-RUNNERS, LIKE GOLDMAN SACHS:
And from Nobel Prize-winner, Joe Stiglitz: "Nobel winner Joseph Stiglitz predicts recession's end: not now, but 2012"
...FINANCIAL REFORM: IT'S JUST NOT HAPPENING (YET?):
From Edward Harrison, publisher of Credit Writedowns, and frequent guest host of Naked Capitalism: "Financial Reform: Not happening but the need is clear."
...THE REAL REGULATORY PROBLEM (NOT AS OBVIOUS AS EVERYONE MAY THINK):
From Yves Smith, the publisher of Naked Capitalism, on the over-arching problem in D.C. as far as regulation's concerned: "The Real Regulatory Revolving Door"
...AND MY DIARY ON REGULATORY REFORM FROM 9/14/09:
"Keep Doing What We're Doing...Keep Getting What We've Got"
# # #
UPDATE #2:
VOLCKER SET TO RAIL ON GOLDMAN'S BUSINESS MODEL, CRITICIZE BERNANKE, PRAISE GLASS-STEAGALL IN HOUSE TESTIMONY THURSDAY MORNING
h/t to both Calculated Risk and Zero Hedge for bringing us former Fed Chair Paul Volcker's prepared testimony, to be delivered Thursday morning at 9AM to the House Financial Services Committee. Scathing remarks regarding Goldman's business practices, and a tacit call for sanity and a return to Glass-Steagall are among the highlights of his prepared text. Here's the link to that: "Prepared Statements of Paul Volcker 9/24/09."