Well, the reform bill just got a step closer to becoming law. The Senate passed their version of the bill in a 59-39 vote. Now all that remains is to square the Senate version with the bill the House passed in December.
I haven't read the whole bill (I'm waiting to see the final version before tackling it), but I'm not crazy about the Senate version. The Fed gets a whole lot more power, and now they're in the consumer protection business. I find that ironic, considering how they stumble through monetary policy. Now they're supposed to be a good watchdog? I think the NSA is the only agency less transparent than the Fed.
I'm also not convinced about the way they plan to handle failing banks. Keeping the taxpayers from having to fund more bailouts is a good idea, but giving the government carte blanche to seize and liquidate a private bank is a little scary.
Finally, the derivatives legislation is severely lacking, in my opinion. The bill allows way too many loopholes and allows too many OTC derivatives to go unreported. Can anyone give me a good answer as to why there shouldn't be an open derivatives exchange where all derivatives are fully disclosed? It's the off-balance-sheet monkey math that got us into this mess in the first place.
Not sure how the market will react today, but Nouriel Roubini is calling for another 20% correction. We shall see.
Have a great weekend, primates!
i wrote this on another thread, but i think it belongs here (sorry for repetition):
brothers and sisters, let me say this
until america has one regulator (like the uk) or two (like the netherlands) (and also a fed to do monetary policy and systemic risk regulation), america's reform is not done yet.
c'mon, america is the odd one out. everyone else is consolidating their financial regulatory system. dodd's bill has some consolidation aspects, but that's still not enough
america's system is a mess, a clusterfuck if you will. it leaves gaps in some areas, creates dupications in others, allows companies to pit authorities against one another, creates administrative and cost nightmares for fin institutions who have to answer to 51+ insurance regulators, encourages regulatory capture, confusers consumers and, most of all, is damn expensive
america keeps patching shit up when something goes wrong with a new body here, a new committee there. that's how it's been for over a century
and let's not forget the sec and cftc have had pissing contests for decades. it's ridiculous. that certainly wouldn't happen in the uk or australia.
this all should be obvious. but alas, there are lobbyists. dodd's proposal for a single bank regulator didn't get traction. there is, unsurprisingly, no trace of it in his bill. hell, this one certainly wasn't unanimous. what's stupid was that the the aba and icba was complaining about how community/smaller banks/building societies would be overlooked. what crap. it's not about what you want, but what's best for the country.
thus, i don't think we'll see it any time soon. so, america's regulation won't be finished any time soon. paulson's blueprint, while imperfect, is more or less on track. that will be classic literature by the time america's done it's job right, by the looks of it. and dodd will hopefully not be ashes in an urn by that time
and america needs it. it might be a hassle, but it will save america billions in the long run, at a time when america needs all the fucking money it can get in the next 10+ years.
in the wsj, jamie dimon came out praising the idea of a single banking regulator in an op ed. that's good enough for me.
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