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US Banks Off the Hook Until 2022
It was billed by Barack Obama as the toughest crackdown on Wall Street since the great depression. But top US banks could be given until 2022 to comply with the so-called Volcker rule, which is supposed to restrict financial institutions' riskier trading activities.
Paul Volcker, left, with Barack Obama in 2008. (Photograph: Jim Watson/AFP/Getty Images) A
string of delays and extension periods written into a final version of
Congress's financial regulation reform bill means that firms such as
Citigroup and Goldman Sachs could exploit loopholes until 2022 before
withdrawing from "illiquid" funds such as private equity. The long
gestation period is an example of the degree of compromise inserted into
the package following months of lobbying on Capitol Hill by powerful
banks.
"You can't just say 'stop', you can't just say 'unwind,'" said Lawrence Kaplan, a lawyer at Paul, Hastings, Janofsky & Walker in Washington, who said the delay was a dose of political reality. "These things have contracts and detailed legal frameworks. You can't undo them without doing considerable harm."
The Volcker rule, championed by formed Federal Reserve boss Paul Volcker, stops banks from engaging in "proprietary trading" whereby they trade with their own capital, rather than clients' money. It also severely restricts their investments in high-risk hedge funds and private equity ventures.
Language in the act, according to Bloomberg News, allows for a six-month study and a further nine months of rule-making. The measure is supposed to become effective 12 months after the final rule is laid, then banks have two years to conform. But if they need to, they can apply for a three-year extension. On top of that, a five-year moratorium is available for "illiquid" funds that are hard to unwind.
Complicated caveats in the bill are subject to interpretation. A spokesman for Jeff Merkley, a Democrat who proposed various changes to the rule, told Bloomberg that the maximum delay was supposed to be nine years.
Other measures in Obama's reforms include the creation of a consumer protection agency, the introduction of a vote by shareholders' on boardroom pay and new powers for authorities to seize troubled financial institutions.
For Wall Street, the Volcker rule and curbs on derivatives trading are the most contentious changes. In a research note, analyst Jason Goldberg of Barclays Capital said JP Morgan, Bank of America and Citigroup would be most affected by a ban on proprietary trading. Taken together with the rest of the regulatory reform bill, Goldberg estimated that Obama's crackdown could cut earnings at 26 leading banks by 14% in 2013, eliminating nearly $18bn of profit.
49 Comments so far
Show AllLMMFAO! Now THAT'S crackin' down. I wonder if there's a clause in the legislation that lets them tickle CEOs with a feather after 2022? Lousy, corrupt bastards. Why haven't we gotten rid of them yet, people?
NONE OF THE ABOVE for President in 2012
We need to replace the ENTIRE CONGRESS in 2012 along with Obama!!!
That's what the Tea Baggers intend to do, so you better get organized or we'll all be Bible thumping Nazis after that.
What a fucking joke all of this has become. I agree, None of the Above for President in 2012!
Now that record low interest rates are no longer propping the stock market up, this Obamabankster bill will create token processes that do nothing to prevent future meltdowns while adding administrative costs that banks will cover by further lowering interest rates on savings accounts and CDs, thereby diverting more money into the stock market to prop it up at our expense.
Don't forget raising rates on their customers on everything from monthly from fees for writing a check to fees for giving them their money to play with.
That's already been done. On a $28K money market account, I received only $3.00 in interest this past month! PATHETIC!!!!
Lawyer Lawrence Kaplan sez: "These things have contracts and detailed legal frameworks. You can't undo them without doing considerable harm."
***
Good thing he represents banksters. He'd get laughed out of the room if he tried to apply that argument to, say, unions.
Yes Gorbbels,
that is too bad, BUT, I bet the social security citizens will be able to use those very words to keep their retirement monies!
Wasn't there a contract with America once for...something. What was that? Oh wait, do I have that wrong?
Maybe it was taking a contract out ON America.
Or International War Crimes Laws
The video on the link below - "The money masters, part 2", 1:45 h - says it all, and very factually:
http://video.google.com/videoplay?docid=-7336845760512239683&ei=riopTNiTGIWc-AbcutD-Cw&q=the+money+masters#
Thanks for the link. I was aware of what the bastards bankers did in 1913, but I wasn't aware of what happened before 1913. I do know that from the beginning there were whose who were pecking away at the constitution before the ink was dry. Over forty years ago I was speaking my concern for these matters and I was told over and over again, "love it or leave it". When it comes right down to it it is US who is to blame. We close our eyes and our minds to it untwhat?
be careful what you wish for, we have the illusion of freedom and elected officials, dont give the greedy elite a reason for a total dictatorship.
So what is your solution, keep quiet and hope for change? We voted for change and we get slavery from a "black" president.
If that don't beat all?
I never have have post Barry Greene
GO..DOG..GO !!!!!
So. Another nothingburger, and no redress in my lifetime even if this didn't become mouse food by 2022.
I thought this was a good statement of the problem: "These things have contracts and detailed legal frameworks. You can't undo them without doing considerable harm." And as a dauntingly complex sort of Gordian Knot it suggests an equally elegant solution. Bring all the parties together, line them up against a wall and shoot them. The John Wayne Theory of Economics. End of problem.
I just wish the images of the President were a bit more respectful and flattering.
The President of The United States is a trader to the people and I can not give him anymore respect than that.
Well, the good news is that by 2022, the USan Empire should be old history.
This is a great bill for Wall Street and the big banks and we should be glad that our president passed it for the people. This bill should give Wall Street and the big banks enough time to rape the country and put the little people where they belong, in the third world order. This will give the big people enough time to get out of Dodge and off to their islands and gated communities in South America with all the gold.
Then the American arm forces will have the job of keeping the peace in America by killing all those who don't like their dollar an hour jobs and a dictator for president. End of Story.
The end of US.
I like your fix, but the law is on the side of the banks. That means the US armed forces are on the side of the banks. You make it seem so easy to go against the law. Please tell me the important part of the fix, how do you propose to do this?
How does one propose to do anything in the big system these days?
Ideas are important to share.
There is a movie called "The Secret of Oz" made by "The Money Masters" an organization that adores Nobel Laureate Milton Friedman. Although I don't agree with Friedman's economic free market bull, this movie does put a very interesting historical context to the Wizard of Oz. According to the movie, the yellow brick road is the gold standard. It benefits the gold mining companies. US currency is nickel and tin etc. for the reason that it is plentiful.
Banks can create money from loans backed by valuable physical assets. I think this is OK and is a distributor of wealth and has allowed the flow of funds to non-mining industries including high tech, bio tech and green tech.
What's not good is for banks to create money from unsecured loans (e.g. credit cards) or under-secured loans (e.g. widespread high-default mortgages that drive foreclosures up and home values down nationwide!).
What's also not good is for the government to have to pay interest on it's debt and then threaten austerity measures. It should be able to create money like the Federal Reserve can and like banks can.
Better make sure Ron Paul is the contender against Obama in the next election. That will make these issues debated in the national arena. Ron Paul is the only real threat to banks and the Military Industrial Complex.
It's better for the gov't to create sovereign fiat currency (Lincoln Greenbacks) backed by valuable assets (teams of scientists, engineers, tool & die techs, machinists, miners/processors/material fabricators, assemblers, farmers, etc...) working on valuable science driver & infrastructure projects (eg. FDR's CCC/WPA projects, bridges, dams, levees, locks/canals/waterways, railways, mav-lev intercontinental railways, "manhattan project" for green powerplants, water de-salting plants, electric/hydrogen vehicles, "terra-forming" projects to turn desert wastes into green grasslands/forests, etc...). No debt/interest payments to bankster class (oh yeah; glass-steagall to cancel our phony indebtedness to them),no debtor peonage to these unlawful owner/rulers of the world. tens of millions of new,productive,well-paying jobs to be created. Happy ending. There is nothing impossible about it (but first, the confrontation with the bankster obstacles & their minions).
The main point I wanted to make is that WE are the wealth, the money, the valuable assets, the national treasure; We The People.We don't even need wallstreet banksters. We just need a worthy, inspiring, vision of a comprehensive, multi-generational project to pursue. That is all. As FDR said; nothing to fear but fear itself (you can hear the banksters whispering "be very afraid").
The Obama presidency and administration is a total joke. What a piece of work he has turned out to be. Change?? What change?
It's certainly NOT the "change" you can believe in!!!!
It has not gone as I had hoped either. But let's be honest - the GOP has done a REMARKABLE job of totally logjamming anything and everything Obama has tried to do.
It's 4 am where I am and, having looked at the headlines on CD today, I realize it's all over but the moaning. As TS Eliot, a brilliant poet and otherwise nasty sanctimonious upper-class sexually-frustrated banker once wrote: 'This is the way the world ends ... not with a bang but a whimper.'
All CD commentators agree on what needs to be done but also, I suspect, that it isn't going to happen, because the three branches of our government will not suddenly become our true representatives and saviours, and because there is no mass of ordinary citizens to mount the barricades. If only we had the courage of the French or the Greeks!
What we can do is take our money out of the banks and set up local scrip systems along with and beside our credit unions. This would gradually eliminate all the foreign junk from our shops and our lives and force us to live more simply and more cooperatvely. If we're going to have a third-world economy, let's create a fair and healthy one, not have their version of feudal slavery forced on us.
I am now going to take my miserable, frustrated, angry, nearly hopeless body back to bed. I wish I believed in a 'god' so that I - like Obama - could end with 'god bless America'. We need someone's blessing!
You don't have to believe in God for there to be a God. Your, "nearly hopeless body," tells me that you have hope. My seemingly pessimistic blogs also have a hidden hope, for I believe in God and I believe in miracles. I also believe it will take a Divine Intervention to straighten out this mess that our government let the banks do to America and the world. So. from my crazy American ass, I say, God Bless America.
Alan Baker Schultz:
A healthy attitude is indeed something to strive for and I can only envy you for this...I need to change mine soon before my demons get the best of me...
You are not alone. More people than you know think like you. The problem is that we're not organized like the right wing.
12 years out eh? Very clever, very clever. By then, the banks will have become the "government".
The banks will get what they deserve as the depression progresses. Greed will lead them down a path of personal and institutional ruin. Bank on it.
I'm banking on it and tomorrow I am going to a small bank to borrow money for roofing, paint, and wood to fix my house for the up and coming party. The party celebrating the Divine Intervention that is going to save America's ass from herself.
Good for you! I like your post. Keep up the good fight, my friend.
The one thing I've never been able to logically understand is why the "Masters of the Universe" feel that they can continue to pillage and rob the rest of us forever.
How many of those 'savy investors' who just lost hundreds of millions of dollars in this most recent financial collapse (while their banksters got bailed out) are going to jump on the latest financial creations from these same banksters? You would do better burying your cash in your back yard.
Without a job and no credit how many of us are going to rush out and buy any of those new consumer gadgets? And if no body's buying, how are you going to break even on your factory, let alone meet the expected profits, and thus stock dividends for the banksters.
And when we can't agree to give our unemployed fellow citizens some money to feed themselves and their families, but say that we have to give these same citizens guns, and the right to bear them anywhere, how do we think these same citizens are going to use those guns?
The government can't continue to economically support a lifestyle that can't support itself. And the banksters, investors, lobbyists and politicians all have to realize this and help build a system that is viable. Otherwise, the revolution is here (and it's not that envisioned by the Tea Party racists or the Christian Fundamentaists).
I disagree. Bank executives will make out just fine on the backs of their employees.
They must think we're idiots, as any of them dare say this: "You can't just say 'stop', you can't just say 'unwind,'" said Lawrence Kaplan, a lawyer at Paul, Hastings, Janofsky & Walker in Washington, who said the delay was a dose of political reality. "These things have contracts and detailed legal frameworks. You can't undo them without doing considerable harm."
We know that, but that sure doesn't justify pushing it out to 2022, 12 whole years away, either!
The ones that agreed to that ought to be ... never mind. I don't want to get my blood pressure up.
By 2022 at least a thousand bankers should've already served 12 years of a lengthy sentence.
There's NO REFORM whatsoever without criminal liability.
This bill is an absolute guarantee that the bank robbing will continue indefinitely and no one will ever be held accountable.
"You can't just say 'stop', you can't just say 'unwind,'"
And you can't just pull out of Afghanistan.
Be patient. This is how empires end.
Pick up Naders book, "only the super-rich can save us".
You will be pleasantly surprised.
"You can't just say 'stop', you can't just say 'unwind,'" said Lawrence Kaplan, a lawyer at Paul, Hastings, Janofsky & Walker in Washington... "These things have contracts and detailed legal frameworks. You can't undo them without doing considerable harm."
Considerable harm to whom? To the people whose pensions and savings have been devastated by the actions of the banks? Or to the banks that caused the problems in the first place?
Who cares about the banks? They SHOULD be subject to considerable harm.
"These things have contracts and detailed legal frameworks. You can't undo them without doing considerable harm."
Too bad Alan Greenspin and his cohorts didn't listen to Brooksley Born when she wanted to regulate these time-bombs.
Too-Big-To-Fail, while being supported by taxpayer dollars is living proof that capitalism is dead. In a capitalistic society, failure and fraud don't get rewarded with taxpayers' money!
A continuation of unbridled speculation encouraged by the government will destroy us completely.
Can everyone put off their taxes til' 2022? That way all of us can start off on the same foot; aren't they supposed to be "people" too? With all of us getting screwed wouuld it do any good to hire a lawyer to fight these guys in court, payed by a dollar here, a dollar there from all of us? Tony
The bill whose effects are put off has become a regular feature of the 0 presidency, and may become a regular ploy for political hypocrites in general.
In this way a law may be passed in name without ever having to take effect.
Obama has finally shown himself as a corporatist. As a progressive populist, I find him unsupportable.I am appalled!
Lesson learned: if you want something really fucked up, just let Congress have a go at it.