Posts Tagged ‘financial reform’

February13

A contrarian’s view of the recent mortgage foreclosure settlement

By: Micah Hauptman

Flickr by respres

Esteemed Levy Institute scholar L. Randall Wray offers his take on the foreclosure settlement. Wray’s incisive commentary really gets at the bigger “too big to fail” problem. This involves the government’s continued coddling of the big banks for fear that any significant punishment will destabilize them and lead to another financial crisis. It is worth noting that the settlement allows for criminal prosecutions relating to foreclosure fraud. The question remains whether prosecutors will choose to investigate alleged abuses fully and bring charges where appropriate…

State AGs Cave to Banksters

Author: L. Randall Wray

Yves Smith at Naked Capitalism has long been skeptical of the negotiations by the State Attorneys General and the banksters over the foreclosure frauds (see here http://www.nakedcapitalism.com/2012/02/settlement-breakdown-by-state-plus-other-official-propaganda.html). And while I had held out some hope that California and New York would either refuse to join, or would insist on good terms, today’s announcement of the settlement makes it clear that the banksters had their way. I expect that the US Attorney General, Eric Holder and HUD Secretary Shaun Donovan played important roles in making sure the bank frauds would only get little slaps on the wrist.

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Posted in: Consumer Protection, Financial Reform0 comments

February9

The Coming Storm in Europe

By: Micah Hauptman

Dark and ominous clouds are rumbling over Europe and a financial storm could strike at any time. Esteemed Levy Institute scholar Marshall Auerback recently offered his analysis of the latest developments in the European financial crisis on the Business News Network. In the interview, he discussed the ongoing threat of sovereign defaults and European leaders’ efforts to take shelter from the resulting fallout that could occur from those defaults.

Flickr by Navin75

Currently, European countries are negotiating a proposed deal that would require bondholders of Greek debt to take a 70 percent haircut. “Haircut” is jargon for the percentage of money that creditors will lose. If Greece owes you $100, a 70 percent haircut means you’ll be paid only $30. While Auerback agreed that a 70 percent loss is better than being completely wiped out by a total default, he discussed several potential complications that could end up stymying a deal. If no deal results, Greece will suffer a hard default and possibly set off a string of other countries’ defaults. This scenario would be catastrophic.

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Posted in: Financial Reform0 comments

December12

The week ahead: High pay scrutinized, Internet anonymity defended and more

By: Angela Bradbery

One of the hot topics these days is income inequality and the out-of-sight paychecks that CEOs get, even if the company goes downhill on their watch.

That’s why a Public Citizen is helping organize a conference today about executive compensation and how it should be changed. The conference is hosted by Americans for Financial Reform, a coalition where Public Citizen leads leads the executive compensation task force. The point is to examine how the Dodd-Frank Wall Street reform law was intended to reduce the excessive earnings of senior executives and reduce the risks these pose to the economy. Proposed implementing rules meant to bar compensation schemes that incentivize excessive risk-taking are weak and have been delayed. Speakers include Richard Trumka, president of the AFL-CIO; Robert J. Jackson Jr., a former senior adviser to the Treasury Department on executive compensation and corporate governance; a number of professors and others.

Also today, one of our senior attorneys, Paul Alan Levy, is making an oral argument before the Indiana Court of Appeals in Indianapolis. The case is Miller v. Junior Achievement, and Levy is arguing as amicus curiae. The suit arose from an attempt by the former CEO of Junior Achievement and his wife to unmask online critics who commented about the company’s financial situation. Levy will argue that the Millers have not met the test needed to unmask the identity of the anonymous posters.

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Posted in: Campaign Finance, Congress, Financial Reform, Internet Free Speech, Litigation, This Week0 comments

December8

Post-Cordray vote reminder: Obama can make a recess appointment

By: Angela Bradbery

As predicted, the Senate GOP today blocked the confirmation of Richard Cordray to head the new Consumer Financial Protection Bureau.

Republican lawmakers just don’t seem to understand how angry people are about how powerful Big Banks have run roughshod over them. You would think that lawmakers would be rushing to confirm Cordray so that the bureau could start to fully function – meaning that it could help stop the predatory practices of major institutions. Instead, the GOP would rather kill the new bureau altogether.

Here’s what Robert Weissman, president of Public Citizen, said after the vote:

In blocking confirmation of Richard Cordray – universally considered qualified for the job – to head the Consumer Financial Protection Bureau, the Republican caucus in the Senate today sent a clear message: They stand with Wall Street donors rather than American consumers. Now In blocking confirmation of Richard Cordray – universally considered qualified for the job – to head the Consumer Financial Protection Bureau, the Republican caucus in the Senate today sent a clear message: They stand with Wall Street donors rather than American consumers. Now it is time for President Barack Obama to end the needlessly drawn out process of installing a leader for the CFPB by making Cordray head of the agency through a recess appointment.

Perhaps you have heard that the Republicans can block a recess appointment simply by staying in session. Not so, says David Arkush, director of Public Citizen’s Congress Watch in this Huffington Post piece. He analyzed the Constitution and concluded that:

If the Senate wants to adjourn and the House won’t permit it, the President can adjourn both houses of Congress.

Mr. President? Ball’s in your court.

Posted in: Congress, Consumer Protection, Financial Reform0 comments

November26

Maybe banks should operate like casinos

By: Bartlett Naylor

"Bart Naylor" "Financial policy"Wall Street’s attention on Washington currently centers on the Volcker Rule, a brief but ballistic section of the Dodd-Frank Wall Street Reform act often characterized as ending casino-like practices by taxpayer-backed banks. The law forbids proprietary trading, or speculating for the bank’s own benefit. Heads, the bank wins for its shareholders and its highly paid traders; tails, the taxpayers pay off the losses.

But to denigrate American banks by likening them to casinos may be inaccurate and unfair—to the casinos.
Casino’s churn out money from slots geared to take in more quarters than they pay out. Even in the high stakes tables, a casino enforces limits, guarding against the possibility that one gambler could break the house. Bets themselves are capped. At a ‘high rolling” black jack table, such as at Caesar’s Palace, gamblers can place bets of no more than $50,000, the so-called table limit. Further, spotters watch from above for sharks using illegal counting techniques at black jack. In fact, the most significant “risk” factors about which Caesars warns shareholders are competition from the rival casino down the street, the economy, and its pension plan. As Jim Ensign, the former Nevada senator once said, “In Las Vegas, most people know that the odds are stacked against them. On Wall Street they manipulate the odds while you’re playing the game.”And finally,

Las Vegas casinos have never begged Americans for a bailout because some MIT geniuses figured out how to game the black jack table.

In contrast to casinos, American banks and their Washington regulators didn’t properly prepare for the the risks that savaged the financial sector and the global economy three years ago. Former Federal Reserve Chairman Alan Greenspan claimed no government agency—not even the industry—could detect the major risk of such major problems as a bubble. “History tells us they cannot identify the timing of a crisis, or anticipate exactly where it will be located or how large the losses and spillovers will be,” he testified before Congress. Whether or not that’s true, it seems clear neither the agencies nor the collective industry prepared.

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