Posts tagged ‘bailout’
One of our contacts in the forex industry forwarded me a note with a link to the comment letters on the Commodity Futures Trading Commission rule proposal limiting leverage for retail forex traders to 10-1. There are nearly 5,000 comments and from the couple of dozen I saw, people are hopping mad.
The Washington Post reported today that commercial banks and investment institutions are shifting their political donations towards Republicans. Apparently Democrats were garnering two-thirds of those donations as recently as the beginning of 2009 and now that is shifting to an even split despite the Democratic majority.
This can sarcastically be placed under “shocking news” of the day category but there is something even more cynical at play in this world of no shame.
The credit crisis and various financial scandals of recent years have changed the landscape for U.S. regulators. In was strong regulation and out was warm and fuzzy talk of public/private cooperation. In also was supposed to be interagency cooperation.
While one of the five key objectives of the Obama Administration’s audacious regulatory overhaul proposal was to Establish comprehensive supervision of financial markets and it set as a goal harmonizing regulatory regimes to prevent regulatory arbitrage and gaps in coverage, that hasn’t necessarily been followed through on.
Case in point is the Financial Industry Regulatory Authority’s (Finra) proposed Rule 2380. In its original form the rule would have limited the leverage broker/dealers could offer their customer in forex trading to 1.5-1. That is the customer would have to put up about $67,000 for a standard $100,000 forex position.
Blogger Felix Salmon tossed out the subject of whether a PhD in Financial Journalism should be created, apparently in light of the poor job done by the media in covering the credit crisis. Actually he notes that an ex Lehman Bros. executive is trying to create such an education track and Salmon threw it out for public discussion and it has been bandied about by media based chat rooms.
Continue reading ‘More curiosity, less arrogance is what is needed’ »
The Nation recently published an interesting article on the financial crisis of 2008 citing the head of the obscure regulatory body the Office of the Comptroller of the Currency (OCC), John Dugan, as one of the prime architects of our current economic woes.
I’ve read several lists citing people to blame for last year’s financial turmoil and Mr. Dugan, if cited, certainly wouldn’t be on the list of usual suspects.
As I wrap up some loose ends going into the long holiday weekend, I noticed that we have not commented here yet on last week’s partisan jousting over who is to blame for the financial mess we find ourselves in.
Republican Rep. Kevin Brady of Texas blamed Treasury Secretary Timothy Geithner for a major role in creating the problem when he was the president of the New York Federal Reserve Bank. Mr. Geithner shot back, ”What I can’t take responsibility is for the legacy of crises you’ve bequeathed this country.”
The CME Group’s Global Financial Leadership Conference held in Naples, Florida this week included several impressive speakers who analyzed markets and the economy in lieu of the credit crisis and efforts undertaken to deal with it.
While many issues were discussed and many points of view presented, there was an unmistakable common theme. That theme is that our current deficit spending and debt levels are unsustainable.
Today is the anniversary of the financial meltdown kicked off by the Lehman Brothers bankruptcy and there has been a lot of second guessing of the actions taken by the Federal Reserve and Treasury Department following it.
We have pointed out here often that Sept. 15 was not the start of the credit crisis, but just an acceleration of it and the point when people took notice and leaders could no longer diminish its seriousness.
While reading over Federal Reserve Board Chairman Ben Bernanke’s comments from the symposium in Jackson Hole, Wyoming last Friday a few things stick out. First, he follows a disturbing trend we have noted here for some time that dates the credit crisis to September 2008 instead of much earlier; next, he supports the popular notion that a slower rate of decline equals growth and throughout he is quite loose with details surrounding certain events. Most disturbing is he takes credit for avoiding a disaster but fails to take responsibility for anything. Bernanke pats himself and others on the back for averting a disaster that 1) he was at least partially responsible for creating and 2) he assured us was not going to happen. Both Bernanke and former Treasury Secretary Hank Paulson were on record as saying the worst of the credit crisis was behind us while it was staring us in the face.
Transparency is one of the basic tenets of capital markets. Publicly-traded companies have a legal obligation to disclose material facts about the value of their company. Unless the Federal Reserve and Treasury Department muzzle them, that is. The Wall Street Journal reported today that Bank of America chief executive Ken Lewis was prompted by Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson not to discuss the financial woes of Merrill Lynch as Bank of America negotiated its government-backed purchase of Merrill. Continue reading ‘Muzzled’ »
