Wall Street's Latest Manufactured Outrage 10JUN11

MORE proof wall street and the banking / financial industry can not be trusted. The propaganda campaign they are launching is not for the benefit, and offers no help or protection for the American home buyer. It DOES make mortgage lenders accept responsibility and risk for the loans they make, and so reduces the chance of another financial meltdown because of the shameless greed of wall street and the banking / financial industry. This from Mother Jones....

The Fed and other regulators have proposed a set of rules that would put new limits on home mortgages: Borrowers would have to put 20 percent down and would have to show that their mortgage payments would amount to no more than 28 percent of their gross monthly income. The Washington Post makes this sound like doomsday:

Nearly three out of every five U.S. borrowers who bought homes last year would not have met the proposed restriction on total debt, according to an analysis by mortgage research firm CoreLogic....If the rules were in effect now, Todd Pearson of Ashburn predicts he'd be shut out of the market. Pearson wants to sell his house and buy another in Chevy Chase. He says he has no debts other than his mortgage. But he figures his mortgage payment alone would exceed the threshold proposed by the new rules.

You have to admit, these rules do sound pretty tough. In fact, they'd pretty much shut down the entire mortgage industry. So what's going on?
Answer: Lots of financial industry whining. As it turns out, regulators aren't saying that mortgage originators can't make any kind of loan they want. 20 percent down, 10 percent down, 5 percent down, whatever. Go to town. What they are saying is that if mortgage loans are bundled up into securities and resold, they want the issuer of the security to retain 5 percent of the total offering. That's part of Dodd-Frank, and it's designed to give issuers an incentive to make sure their mortgage securities aren't full of toxic waste. If they have to keep a piece of the action on their own books, they'll want to make sure their securities are safe and sound.
However, there's an exception: If your mortgages all conform to the new rules, you don't have to retain that 5 percent chunk. That's all that's happening. You can make any kind of loan you want, but if it's anything other than super safe, you have to keep a piece of it on your books.
The financial industry is in an uproar over this, claiming that it would shut millions of people out of the housing market. That's nonsense. Neither Todd Pearson nor anyone else is being denied a loan on whatever terms they can get one. All that's happening is that when their mortgages get bundled up and resold, the ABS issuer has to keep a 5 percent stake. The mortgage industry is on a rampage over this, claiming that it will dramatically raise the cost of mortgages, but that's nonsense too. Being forced to keep a 5 percent stake probably will have an impact on ABS issuers—that's the whole intent, after all—but the financial impact is almost certainly pretty minuscule. Tom Lawler at Calculated Risk roughly estimates it at perhaps 20 basis points at most on a nonconforming loan. In other words, the rate on nonconforming mortgages might go up 0.2 percentage points. At most. Something on the order of 0.1 percentage points or less is probably closer to reality.
This is yet another case of the financial industry biting the hand that's trying to help it out. The truth is that it would probably be a good idea to require ABS issuers to retain a 5 percent stake in every mortgage bundle they sell. But Dodd-Frank threw them a bone in the form of an exemption for loans that were transparently high quality and virtually certain not to default. And the result? Endless whining, a massive lobbying effort, and glossy four-color demagoguery about hardworking middle-class families being shut out of the mortgage market. Welcome to Wall Street.

Front page image: A GS/Fotopedia

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WHAT THE HECK HAS OBAMA DONE SO FAR?

CLICK THIS LINK OR THE HEADER FOR SOME WAY COOL INFO......

 

http://whattheheckhasobamadonesofar.com/?q=39

TUESDAY TALK WITH ELIZABETH WARREN 12OKT10

Elizabeth Warren Makes Another White House Visit 9SEP10

WE can only hope this is a good sign, and that Pres. Obama is going to stand up to the greedy bankers and financial institutions and appont Elizabeth Warren for the good of the people and the nation.
 
WASHINGTON — Elizabeth Warren, a popular but polarizing consumer advocate, met with President Barack Obama at the White House Tuesday, adding to speculation she could be named to head a new consumer protection agency.
Warren also met with senior administration officials last month. However, White House spokeswoman Amy Brundage said other candidates are still being considered and that no decision has been made on who will lead the agency, which was created under terms of the financial overhaul bill Obama signed into law earlier this year.
The agency will have vast powers to enforce regulations covering mortgages, credit cards and other financial products. Consumer advocates and labor groups want Obama to nominate Warren to lead the agency, but she has little support within the financial community and her nomination could set the stage for a divisive Senate confirmation hearing.
Warren now heads the Congressional Oversight Panel, which has been a watchdog over the Treasury Department's bank bailout fund.
Others mentioned as contenders to lead the consumer agency are Michael Barr, an assistant treasury secretary who was a key architect of the administration's financial regulatory plans, and Eugene Kimmelman, a deputy assistant attorney general in the Justice Department's antitrust division.

• Barack Obama

Elizabeth Warren slipped quietly into Washington on Tuesday to talk with President Obama about the possibility of leading the new Bureau of Consumer Financial Protection, according to people familiar ...

Elizabeth Warren slipped quietly into Washington on Tuesday to talk with President Obama about the possibility of leading the new Bureau of Consumer Financial Protection, according to people familiar ...

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Elizabeth Warren or Bust! from MOJO 18AUG10

THE government may be on vacation but the fight is still on to make sure Elizabeth Warren is the first head of the Consumer Financial Protection Bureau....this is from Mother Jones, strengthening the case for her appointment and approval. There are many post on this blog about Elizabeth Warren, do a search to find them to learn more about her work and why she needs to head this agency.

Elizabeth Warren or Bust!

I've been out of Washington for a little while—escaping the heat and the disheartening politics. I've even managed to go for more than a week without tweeting (with a few lapses). But it's hard to escape people who want to talk about what's happening back within the Beltway. What's edifying is discovering what folks outside Washington focus on.

Those of us who follow politics and policy for a living often have numerous matters on our to-watch lists. People outside the politerati usually have a truncated list, and often imbue a particular issue or controversy with special significance. A highly unscientific survey—based on comments made to me by highly-educated, self-identified, vacationing liberals who feel let down by President Barack Obama—shows that a top priority for Obama's base these days is Elizabeth Warren.

Can DC's top bailout cop beat the finance lobby—and Larry Summers?

— By David Corn

November/December 2009 Issue

BY HER OWN reckoning, Elizabeth Warren had two transformative experiences on the way to becoming official Washington's most unconventional expert on the financial industry. Let's start with the second. It was 2003, and Warren, an earnest-sounding and ever enthusiastic Harvard law professor who specializes in bankruptcy, was on the set of Dr. Phil. She had written a book with her daughter called The Two-Income Trap: Why Middle-Class Mothers & Fathers Are Going Broke, and she'd expected to sit next to the host and explain its key points. Instead, Dr. Phil was interviewing a stressed-out couple with serious medical and financial troubles. After they mentioned they had obtained a second mortgage to pay off their credit card debt, the lights went up on Warren, and Dr. Phil asked her if this had been a smart step. No, she declared, because now they could lose their home if they defaulted.
As soon as her turn was over, Warren found herself thinking, "You've been doing this work for 20 years now, and it is unlikely that any of it has had as direct an impact as these 45 seconds." She had reached millions, some of whom might actually pay attention to her advice. "So here you are, Miss Fancy-Pants Professor at Harvard. What do you plan to do now? Is it all about writing more academic articles, or is it about making a difference for the families you study? I made a decision right then: It was for the families, not the self-aggrandizement of scholarship."

Six years later, Warren is applying that people-first philosophy by simultaneously running the Congressional Oversight Panel, which monitors the $700 billion TARP bailout program on behalf of the taxpayers, and pushing for a new agency to protect consumers from predatory lenders. Now, as Congress seriously considers her proposal (and lobbyists maneuver to kill it), the question is: Can a middle-class populist in Ivy League garb change the world—or at least Big Finance?
Warren, 60, grew up in Oklahoma in what she terms "modest circumstances." Her father was a maintenance man; her mother worked for Sears. After graduating early from high school, she headed to college on a debate scholarship. Eventually she landed at Rutgers' law school, where she admits starting out somewhat clueless: When a fellow student asked if she would try out for the law review, she didn't know if he meant a magazine or a theatrical show. "All I knew was, if the smart kids were doing it, count me in."
She graduated in 1976, with no job lined up and nine months pregnant with her second child. Soon she'd started her own practice, handling wills, real estate closings, and the like. Later she taught nights at Rutgers, and then found a position at the University of Houston's law school—one of the first women ever hired there, she says, and the first who was not married to a faculty member. She began teaching bankruptcy law. "Bankruptcy," she says, "is about economic death and rebirth, a story of failure but survival, how people come back, how businesses come back. It's an American story."
It was around this time that Warren had her other epiphany. Conventional wisdom held that bankruptcy law was too friendly to debtors, and she shared that view. So she teamed up with two other academics to conduct research that, she thought, "would expose those crafty debtors exploiting loopholes in the law." To her surprise, the study—one of the largest of its kind—demonstrated that most bankruptcies were filed by struggling workers dealing with the loss of a job, a medical problem, or a family breakup. "It changed my vision not only of the bankruptcy system, but of the American economy," she says. "It put me face-to-face with hundreds of thousands of people who worked hard and played by the rules, but a pink slip, a bad diagnosis, or a spouse who ran off had left them in economic shambles." From that point on, Warren focused on how financial policy and law affected folks at the kitchen-table level, and by 2005 she was testifying on the Hill against legislation sought by credit card companies and the financial sector—and eventually passed by Congress—that made it tougher to file for bankruptcy.
Her passionate advocacy for family-friendly economic policies caught the eye of Sen. Harry Reid (D-Nev.), who'd disagreed with her on the bankruptcy bill. "He was struck by her articulate views on pro-consumer issues," a spokesman says, and so, last November, Reid appointed Warren to the TARP panel.
Shuttling between Cambridge and the panel's offices in DC—tucked away in a corner of the Government Printing Office—Warren broke the mold of the typical government commission. Instead of endlessly studying the issue before producing a bland, predictable doorstop of a report, the panel would publish a to-the-point, easy-to-comprehend assessment of a different slice of TARP each month. One of the reports revealed that the Treasury Department had paid $78 billion more than market value for the assets it purchased from banks. Another said that despite the hundreds of billions of dollars spent on the bailouts, the financial system is still polluted by toxic assets that could trigger another meltdown. And the September report found that taxpayers might not recover up to $23 billion in TARP funds doled out to Chrysler and GM. Warren herself has done her part to publicize her panel's work, delivering testimony to Congress and appearing widely in the media (on The Daily Show, Jon Stewart inquired whether she had "powers to crush" companies that had gotten sweetheart deals from TARP), often bluntly taking Treasury to task for failing to make its programs transparent. At one point she told lawmakers that "Congress and the American public have no clear answer" from Treasury regarding its overall TARP strategy.
"She's done a great job calling attention to the Treasury's failing in ensuring that the taxpayers get a fair deal," says Dean Baker, codirector of the Center for Economic and Policy Research. "That really is extraordinary in DC." Nobel Prize-winning economist Joseph Stiglitz remarks, "What she is doing is making a lot of people very uncomfortable."
Indeed. In April, Thomas Cooley, a Forbes columnist, blasted Warren for politicizing the oversight panel to advance an anti-bank agenda, and one of the five-person panel's two Republican members, Jeb Hensarling, has criticized her for focusing the commission's work "on issues not central to our mandate." He also pushed for releasing the transcripts of the panel's private meetings, a move that Warren resisted because, a spokesman says, the members need to have "candid discussions" about their ongoing investigations.
Beyond monitoring how the government is mopping up after the financial crisis, Warren is pushing a proposal that could help prevent the next one: creating a Financial Product Safety Commission to protect consumers from abusive lenders. Mortgages and credit cards, she wrote in a 2007 journal article about the proposal, "should be subject to the same routine safety screening that now governs the sale of every toaster, washing machine, and child's car seat."
Straightforward as that sounds, it would represent a fundamental shift. "Regulating financial products based on fairness, simplicity, and appropriate risk is an entirely new paradigm," notes Reid Cramer, director of the New America Foundation's asset building program. In the wake of the financial meltdown, the idea has gained traction in Washington, thanks in part to Warren's plainspoken advocacy. "Almost unique among people with deep financial insight, Professor Warren speaks a language that ordinary people can easily comprehend," says Laurence Tribe, a colleague at Harvard Law. For example, when testifying before a congressional committee in June, Warren summed up the shift in banking this way: "Today's business model is about making money through tricks and traps."
Warren's proposal, of course, terrifies the finance industry, and with the White House vowing to push for it and Congress expected to start hammering out legislation, lobbyists have been preparing for battle. The American Bankers Association has proclaimed its opposition. Bill Himpler, executive vice president of the American Financial Services Association, says Warren's commission would "take us essentially back to the 1970s, where we had double-digit interest rates...and one-third the consumer credit available that we have now." Earlier this year, the Republicans on the Congressional Oversight Panel, Hensarling and former Sen. John Sununu, dissented from a panel report that called for the new watchdog, arguing that it "could well undermine the health of banks." In June, financial policy analyst Jaret Seiberg said that the industry's worst nightmare is that should Congress create such an agency, Warren would run it.
Does she want the position? "I have a job I love," she says. And while Warren would be a natural choice, she may not be a shoo-in. One senior Obama economic adviser told me that Lawrence Summers, the national economic adviser, "has a thing about her"—meaning he's not a fan. (The White House did not respond to a request for comment from Summers.) For her part, Warren says that she and Summers are friends, and a source familiar with their relationship characterizes them as sparring partners. "They're like two tennis players at Wimbledon: energetic, uncompromising. But they're adversaries, not enemies. When they put down the tennis rackets, they can still go out for a drink."
But a Warren colleague at Harvard (who admires her) notes that Summers—who as Harvard president speculated that women may not have the same innate math and science ability as men—might share the sentiments of fellow Harvard economists who dismiss Warren as insufficiently theoretical. "They think she shouldn't be talking about bankruptcy except as someone in the economics department would—that is, with formulas and theorems, not about how it affects real people." In Washington, though, that skill—explaining how grand financial concepts affect real-world families—may prove Warren's greatest asset. As she once put it on The Rachel Maddow Show, her rule for financial products is very basic: "If you can't explain it so the person on the other side can understand it, then you shouldn't sell it to them."

David Corn is Mother Jones' Washington bureau chief. For more of his stories, click here. He's also on Twitter.

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Drill, Gamble, Loot, Starve: The Chamber of Commerce, the GOP, and the Politics of Plunder 15JUL10

MEET YOUR republican CONGRESS
The United States Chamber of Commerce has released an "open letter" to the President, Congress, and the American people which contains its blueprint for our political future. It lays out the current Republican playbook in stark terms, and it reads like the battle plan for those alien spaceships from Independence Day: Drain the resources, take everything from the population, strip the land to a husk... and then presumably sail away in mile-long spaceships toward the next targeted planet.
What we're seeing is the Politics of Plunder, revealed in all its nakedness. There will be another example of this corporate-driven mindset this week, possibly even today, when all but a handful of Republican Senators vote against a moderate set of curbs on Wall Street excesses. The Democratic Party may disappoint its supporters from time to time, but it seems that Republicans never do -- once you accept the fact that its real "supporters" are the mega-businesses represented by the Chamber of Commerce. Some of the delegates who chanted "drill, baby, drill" at the GOP Convention are staring out their windows at oil-soaked beaches, while others have gone broke in an economy ruined by Wall Street gambling. That won't stop the Politics of Plunder. (Come to think of it, "drill, baby, drill" would have been a perfect motto for those spaceships.)
To be clear, the Chamber of Commerce isn't the political lobbying arm of "business," as it sometimes claims. It specifically serves the interests of massive businesses, which are often at odds with the needs of small and medium enterprises. Any CEO of a smaller company who's pressured by one of the Chamber's sales representatives to join, as I was in my business life, is being asked to subsidize policies that will benefit the Chamber's mega-donors -- often at her or his own expense. The Chamber's letter serves those mega-interests well, and we can expect most Republicans to follow it in lockstep, no doubt with cheering crowds pumped up for the same old chants and a few new ones.
"Drill, baby, drill." The lessons of BP are lost on this crowd -- or, to be more accurate, they don't matter. The Chamber's letter says that "there are numerous oil, gas, and shale leases on our lands and off our shores that are currently inactive. Some estimates show that they could generate as much as $1.7 trillion worth of royalties over the next 10 years. (Note: We heard that using 10-year timelines to create impressive-sounding numbers was "cheating" when the Administration did it.) Tapping these reserves would create direct federal revenues and hundreds of thousands of jobs."
The devastation of our Southern coastlines has not dimmed the Chamber/GOP crowd's thirst for drilling in costly, inaccessible, and dangerous areas. This letter, purportedly about "jobs," ignores the many jobs that have been lost because of the spill, and the thousands of small businesses devastated by the loss of fishing and tourism. It doesn't matter: The Politics of Plunder demands revenue for the largest businesses -- most of which would be generated by foreign sales of these resources, and very little of which would be returned to the US economy.
"Gamble, baby, gamble." Millions of American jobs were lost because of Wall Street's reckless, runaway gambling binge. The Chamber/Republican response is to whine about the Dodd/Frank bill, which is nothing more than a simple first step on the road toward comprehensive financial reform. "The soon-to-be-finalized financial regulatory reform legislation creates over 350 regulatory rulemakings, 47 studies, and 74 reports," the letter reads, "dwarfing anything in Sarbanes-Oxley."
The use of these kinds of numbers is a common rhetorical trick for the megabusiness/GOP crowd. Somehow we're expected to believe that the leaders of major corporations are overwhelmed by the complexity of "350 regulatory rulemakings" -- as if they don't have people who handle that sort of thing. Remember, we're talking about Wall Street here: banks and hedge funds, here not Norman Rockwell small-town grocers who will be overwhelmed by paperwork. The real purpose of this complaint is to provide cover for all those "no" votes we will see this week - each of which is a vote to continue the enrichment of wealthy financiers at the expense of the American economy.
"Loot, baby, loot." The GOP and its Democratic Blue Dog sympathizers don't want to vote for unemployment benefits or stimulus programs because, we're told, they're so concerned about the deficit. But when it comes to preserving tax cuts for the wealthy it's "deficits be damned." Sen. Jon Kyl's recent comments on the subject expose the inconsistency.
Here, too, the Chamber slavishly serves the mega-wealthy at the expense of other businesses and the American people. "(J)ust six months from now," their letter reads, "Americans will be hit with the largest tax increase in history in precisely those areas that would have the greatest negative impact on investment and jobs -- individual tax rates, dividends and capital gains taxes, the death tax, and the alternative minimum tax." It's economic nonsense to say that these are the areas that most impact investment and jobs. What's more, these taxes on the wealthy have been artificially low in recent years, adding to the deficit while doing very little to stimulate the economy.
The Chamber's use of the ideological phrase "death tax" to describe the estate tax masks the fact that they're talking about a 2009 law that allows wealthy heirs to inherit up to $10 million while paying no taxes at all, while people who work for their money pay at the usual rates. (If you want to amuse yourself, do a Google search of right-wing "tax justice" websites that rail against lifting this exemption and try to find one that mentions the actual numbers involved. They don't want you to know who's actually getting this tax break. It should be called the "Poodles for Paris Hilton Act.")
"Starve, baby, starve." The letter says that "The Chamber looks forward to the report due later this year from the National Commission on Fiscal Responsibility and Reform." (Yeah, you bet it does.) "However, we already know that mandatory spending, especially in entitlements, is the primary culprit." Now that its clients have devastated the economy, robbing people of jobs and much of their savings, the Chamber is targeting an "aging population" in order to slash Social Security and other entitlement programs. Social Security is solvent for many more years and minor adjustments would make it completely viable indefinitely. But the mega-wealthy Chamber/GOP agenda demands that Social Security payroll taxes be redirected toward other government programs so they can fund further tax cuts for the rich.
Voters care more about helping the unemployed and getting Americans back to work than they do about cutting the deficit. Budget-slashing is a Washington fixation only, fueled by the think tanks and lobbyists that the Chamber/GOP crowd funds and promotes. But Chamber-driven Republicans hope that the public won't understand what they're doing, counting on "fatigue" and confusion to provide a smokescreen for the Politics of Plunder.
Those shadows over the nation's cities aren't spaceships. They're the very real threats that continue to loom over us: Continued unemployment. A damaged environment in risk of even greater devastation. Generations of older Americans who might be left without financial security. Republicans and the Chamber of Commerce want to use our economic crisis as a "shock doctrine" moment to pass measures that will continue a massive transfer of wealth to the upper one percent, while mortgaging the country's future to the economic interests that have already served it so poorly.
As the vote on financial reform will once again illustrate, this is not a movie.
_______________________________________________________________
Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America's Future. This post was produced as part of the Curbing Wall Street project. Richard also blogs at A Night Light.
He can be reached at "rjeskow@ourfuture.org."
Website: Eskow and Associates

Question for the Tea Party: Why the Free Ride for Republicans Protecting Bankers? 11&12JUL10

WHY are the republicans and tea-baggers giving the wall street bankers a free ride? For republican politicians it is greed, pure and simple. And for the tea-baggers it is bind stupidity, and they will learn to late they are being used by the wealthy and then will be tossed aside like filthy, bloody rags when the gop doesn't need them anymore. See my earlier post for sen jon kyl's defense of the rich over the middle class and the working class and the poor and unemployed.

Jon Kyl: Extend Bush Tax Cuts For Wealthy Even If They Add To Deficit 12JUL10

 
The financial reform bill that passed both houses of Congress was far less than we needed. But it was a start -- enough of a start that the bankers have spent tens of millions trying to kill it. And now, with the House-Senate conference version of the bill coming back to Senate for final approval, the reform is in jeopardy yet again.
On May 29, the bill passed the Senate, 59-39, just enough to block a filibuster. Four Republicans voted in support and two progressive Democrats voted no to protest its weaknesses. But the banking lobby has used the Congressional recess to work the four Senate Republicans.
And, sure enough, three of the four Republican supporters have gone wobbly. Olympia Snowe of Maine voted for the Senate bill, but is now making equivocal noises about whether she'll support the conference bill (which is weaker in some respects than the Senate's version.) Likewise Chuck Grassley of Iowa.
The always wily Scott Brown of Massachusetts threatened to withhold his vote until the House and Senate leaders agreed to scrap a $19 billion tax on large banks. He voted for the senate bill, but now Brown is warning that he may vote against the final bill anyway. Apparently there is no honor among thieves. The financial industry was the largest donor to Brown's Senate campaign.
Among Republicans, only Susan Collins of Maine is standing firm in her support. The fewer Republicans who are still officially committed to the bill, the easier it is for the banking lobby and the GOP leadership to intimidate or seduce others.
Among the Democrats, Wisconsin's Russ Feingold, suddenly in a tight re-election race against a self-financed Tea Party millionaire, has vowed to vote against the bill because it's not tough enough. It's not clear how that will persuade the Tea Party crowd, who don't much like Wall Street either.
In an anti-incumbent year it seems a little perverse to vote down the only piece of legislation that partly leashes banks. (If you think the bill is not a step forward, ask the bankers' lobby why they are working so hard to kill it. C'mon, Russ, if it's good enough for Bernie Sanders, it should be good enough for you.)
Sen. Maria Cantwell of Washington State, even more than Feingold, was a true hero in the fight to get the strongest possible bill. She cast a protest no vote when the bill was before the Senate, but with the bill hanging in the balance, unlike Feingold she will vote for final passage.
Two weeks ago, Democratic head counters thought they had maybe one vote to spare. But Robert Byrd's death June 28th deprived supporters of that extra margin.
Passage may depend on the vagaries of West Virginia politics. West Virginia Governor Joe Manchin has delayed making an interim appointment for Byrd's seat, pending a final decision on whether the vote to fill the seat is to be held as a special election in 2010 or in 2012 when Byrd's term expires. Manchin wants to run for the seat, but has ruled out appointing himself to fill the vacancy. The White House has been urging Manchin to stop dithering and name Byrd's interim replacement as soon as possible.
At this writing, Democratic Senate Leader Harry Reid has put off calling up the conference bill for a vote pending a better head count. That's how razor thin the margin is.
But with every passing day, the risk increases that Wall Street and the Republicans will kill more than a year's legislative work. A defeat of this bill would mean that all of the carefully negotiated compromises are up for grabs. With Democrats expected to lose seats in November, anything that managed to pass would be even weaker.
This nail-biting finale is like the end-game of the health reform bill all over again, but with one key difference. In that fight, President Obama belatedly got personally engaged, working the phones and twisting arms, LBJ-style -- far from his usual hands-off approach. This time, there are no arms to twist. The undecided votes are all Republicans, with whom Obama has no leverage. And with Russ Feingold in the posture of distancing himself from Washington, D.C., the White House has little influence with him either.
But Obama could be taking his case to the country. In the past few days, Obama has sounded more like a partisan and has gotten off some good one-liners, but has mentioned the stakes of financial reform only in passing. That's a pity, especially with Republicans using the October 2008 vote in favor of the bank bailout (TARP) to whack Democratic incumbents.
This reform bill may be a day late and a dollar short. But starting the process of reining in the banks is the antidote to the bailout and to future bailouts -- both politically and in terms of better policy. And it's Republicans and Wall Streeters who are trying to kill it. That's not so hard to explain. The president should be using his bully pulpit to shame the banking lobby and its Republican toadies, and to associate himself and the Democrats with stronger housecleaning.
If the final bill does manage to squeak through, this is only the beginning of reform. Several key provisions, such as the Volcker Rule separating commercial banking from trading and investment banking and the rules on derivatives, were seriously weakened by amendments. Others, such as the rules on capital requirements, too-big-to-fail, and consumer protection, leave a lot to agency discretion. So the same agencies that are far too close to the bankers, the ones that let this disaster happen, will be in charge of the details of reform.
As the bill has been weakened, bank stocks have been going up. The lead front page story in Sunday's New York Times reported that Wall Street is hiring again. The sector that crashed the economy, and that needs to be drastically reined in, is back in metastatic growth mode. And evidently the bankers have confidence that their chums at the Treasury and the Fed are not going to rain on their parade, reform bill or no.
So we need this bill, but only as a first step. Even more importantly, we need a citizens' campaign to monitor how it is carried out and where the holes are.
The bankers' lobby is at work, night and day, to weaken this reform legislatively and in its implementation, orchestrating grassroots lobbying by local banks and coordinating it with campaign contributions. The counterweights on the progressive side are no match.
One of the few effective official watchdogs, the Congressional Oversight Panel chaired by Elizabeth Warren, may be shut down early as the TARP ends. Americans for Financial Reform, which did heroic work as a coalition of more than 200 consumer and labor groups in pressing for the strongest possible legislation, will close up shop at the end of the summer for lack of funding. If anything, AFR needs to be expanded, so that it can continue to be a citizens' watchdog.
Two years and counting into the most severe financial collapse in nearly a century, bankers still rule. Republicans protect bankers from reform, yet amazingly masquerade as the party of populist backlash. If Democrats let the right play this double game, shame on them. It's only possible because too many Democrats are too cozy with the same bankers.
UPDATE: Late Monday, the offices of Republican senators Scott Brown and Olympia Snowe issued statements indicating that they will vote for the financial reform bill, bringing the number of supporters to 60, just enough to break a Republican filibuster

DON'T LET BIG BANKS GAMBLE AWAY OUR MONEY! 14MAI10

Our Wall Street activism is having an impact. Sen. Jeff Merkley (D-OR) read our petition demanding an end to big bank gambling on the floor of the Senate!



Sens. Jeff Merkley (D-OR) and Carl Levin (D-MI) just introduced a bold new proposal to ban big banks from gambling with our money. It's ridiculous this isn't illegal already, but without public support the laws might not even get changed.
Will you help us show this proposal has grassroots support by signing this petition?

PETITION TO THE SENATE: "The big Wall Street banks gambled away our money on a reckless housing bubble and then insisted we spend more money bailing them out. We need you to support the Merkley-Levin proposal to end this risky gambling and other conflicts of interest."

Senators are getting tons of pressure from the big banks to oppose this proposal. We need to show them ordinary people will get their back. Can you add your name on the right? Then, we'll give you the number to call your senator.

S. 3098:

PROP Trading Act
111th Congress

The titles of bills are written by the bill's sponsor and are a part of the legislation itself. GovTrack does not editorialize bill summaries.
2009-2010
Track S. 3098
This feed includes all major activity on this bill and its amendments, references in the Congressional Record, and relevant upcoming committee meetings.

See S. 3098 on THOMAS for the official source of information on this bill or resolution.
Summaries
Congressional Research Service Summary

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3/10/2010--Introduced.
Protect Our Recovery Through Oversight of Proprietary Trading Act of 2010 or the PROP Trading Act - Amends the Bank Holding Company Act of 1956 to prohibit a banking entity from: (1) engaging in proprietary trading; or (2) having an ownership interest in or sponsoring a hedge fund or a private equity fund.
Subjects any specified nonbank financial company holding such proprietary trading and ownership interests to additional capital requirements and additional quantitative limits. Directs the Board of Governors of the Federal Reserve System (Board) and the Federal Deposit Insurance Corporation (FDIC) to adopt rules jointly to implement this Act. Authorizes the Board and the FDIC to exclude from such prohibitions specified transactions or activities, including: (1) the purchase or sale of obligations of the United States or any federal agency; (2) instruments issued by the Government National Mortgage Association (Ginnie Mae), the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac); and (3) obligations of any state or its political subdivision. Prohibits from the class of excluded activities any transactions that would: (1) result in a material conflict of interest between the banking entity or the nonbank financial company and its clients, customers, or counterparties; (2) result in exposure to high risk assets or high risk trading strategies; (3) threaten the safety and soundness of a banking entity or the nonbank financial company; or (4) threaten the financial stability of the United States. Prohibits any banking entity that serves, directly or indirectly, as the investment manager or investment adviser to a hedge fund or private equity fund from entering into a covered transaction with, or provide custody, securities lending, or other prime brokerage services to, such person. Treats a banking entity that serves as investment manager or investment adviser to a hedge fund or private equity fund as if: (1) it were a member bank subject to the Federal Reserve Act; and (2) the hedge fund or private equity fund were an affiliate thereof. Amends the Securities Act of 1933 to prohibit an underwriter, placement agent, initial purchaser, or sponsor of an asset-backed security, while the security is outstanding and held by unaffiliated investors, from engaging in any transaction that would: (1) give rise to any material conflict of interest with respect to any investor; or (2) undermine the value, risk, or performance of such security
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