IMHO, anyone that thinks that what's happening with the FinReg bill right now on Capitol Hill is not
regulatory capture writ large is kidding themselves.
When it comes to the supposedly-just-reconciled FinReg legislation on Capitol Hill, now being referred to as "Dodd-Frank," the truth is much of what we thought was being legislated is quietly being eviscerated as we blog. Then again, what should one expect when Wall Street "owns the place." (That's Senators Dick Durbin, Bernie Sanders and House Agriculture Committee Chair Collin Peterson who've all commented in this regard in the past year, or so.)
The Volcker Rule(s) is being thrown under the bus. (Remember? This was the legislation our own party's leadership on The Hill was leaning upon as they made excuses for comprehensively diluting derivatives reform, telling us that the "strengthened" Volcker Rules would accomplish the same thing? Apparently, not so much!) As
Naked Capitalism's Yves Smith has pointed out today, regarding this story: "
Volcker Rule May Give Goldman, Citigroup Until 2022 to Comply."
This "accommodation" makes clear what a farce the rule is.
And, here's the travesty that Yves is referencing...
Volcker Rule May Give Goldman, Citigroup Until 2022 to Comply
Bloomberg Media
By Bradley Keoun - Jun 29, 2010
Goldman Sachs Group Inc. and Citigroup Inc. are among U.S. banks that may have as long as a dozen years to cut stakes in in-house hedge funds and private- equity units under a regulatory revamp agreed to last week.
Rules curbing banks' investments in their own funds would take effect 15 months to two years after a law is passed, according to the bill. Banks would have two years to comply, with the potential for three one-year extensions after that. They could seek another five years for "illiquid" funds such as private equity or real estate, said Lawrence Kaplan, an attorney at Paul, Hastings, Janofsky & Walker LLP in Washington.
Giving banks until 2022 to fully implement the so-called Volcker rule is an accommodation for Wall Street in what President Barack Obama called the toughest financial reforms since the 1930s. The Glass-Steagall Act of 1933 forced commercial banks such as what is now JPMorgan Chase & Co. to shed their investment-banking units in less than two years...
# # #
And, yes, as the NY Times "explained" it yesterday, this "process" (i.e.: regulatory capture writ large) is occurring with regard to the final language in Dodd-Frank as it relates to virtually every aspect of the bill: "On Finance Bill, Lobbying Shifts to Regulations."
On Finance Bill, Lobbying Shifts to Regulations
New York Times
By BINYAMIN APPELBAUM
June 28, 2010
WASHINGTON -- Well before Congress reached agreement on the details of its financial overhaul legislation, industry lobbyists and consumer advocates started preparing for the next battle: influencing the creation of several hundred new rules and regulations.
The bill, completed early Friday and expected to come up for a final vote this week, is basically a 2,000-page missive to federal agencies, instructing regulators to address subjects ranging from derivatives trading to document retention. But it is notably short on specifics, giving regulators significant power to determine its impact -- and giving partisans on both sides a second chance to influence the outcome.
The much-debated prohibition on banks investing their own money, for example, leaves it up to regulators to set the exact boundaries. Lobbyists for Goldman Sachs, Citigroup and other large banks already are pressing to exclude some kinds of lucrative trading from that definition.
--SNIP--
Historically, industry groups have dominated these information wars, plying regulators with exhaustive studies and detailed analyses of the options at hand. Trade groups have more money and more people, and they often produce and control the relevant information about their business and customers.
As the article notes: "...Congress had fixed in place no more than 25 percent of the details of that vast expansion."
# # #
Here's Dylan Ratigan from his piece on Alternt on Saturday: "Wall Street 'Reform' in a Nutshell: The Politicians Lied, Media Applauded, and We Americans Will Suffer."
Wall Street 'Reform' in a Nutshell: The Politicians Lied, Media Applauded, and We Americans Will Suffer
AlterNet / By Dylan Ratigan
June 26, 2010
The same Washington spinsters who have driven our country into the ground seemed to be out in full force on Friday, claiming that their latest policy "victory" is the most "sweeping change" of our financial regulatory since the Great Depression.
Actually, it is nothing more than window dressing.
The real sweeping change of our financial system took place over the past 20 years. The irresponsible repeal of Glass-Steagall in 1999. The Commodities and Futures Modernization Act of 2000 by Larry Summers and Bob Rubin -- the one that legalized the most destructive financial instruments of all, derivatives. The leverage exemption at the SEC in 2004, asked for (in person) and received by Hank Paulson and friends.
Of course, there are small victories here -- there is better investor protection and, most importantly, an awakened citizenry.
Ratigan continues on to talk about what's not fixed: regulators and ratings agencies, too-big-to-fail banks, the banking industry's ability to "gamble with our deposits," Wall Street's ongoing ability to "mark-to-make-believe" assets that are worth far less than their balance sheets claim, taxpayer liability if/when the TBTFs crash and burn again, an unlimited meal ticket for Wall Street from the Federal Reserve, Fannie Mae and Freddie Mac.
# # #
Then again, when even the Wall Street Journal Online tells us how thick the bullsh*t's getting, the truth is the captured spin has fallen off the cliff. SEE: "The three biggest lies about the economy," by Brett Arends, MarketWatch, June 29th, 2010.
And, of course, there's the shadow banking system (hedge and private equity funds, etc.), which is all but untouched (despite bloviations to the contrary) by this "reform," too: Richard Smith: Did We Wind Up With Any Reform of the Shadow Banking System? Richard Smith, Naked Capitalism, June 29th, 2010.
Seriously, does anyone with an I.Q. higher than the temperature on a cold winter's day really think that this entire "reform" effort is little more than the equivalent of professional theater for the gullible masses? If so, I've got a bridge to sell you over the East River. It's a real steal of a deal. Honest!