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Old July 18th, 2013, 05:58 PM   #1
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The Wall Street That Cried Wolf

Nasty, lying bankstas.......

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The Wall Street That Cried Wolf

The headlines have been nothing short of dazzling: "Bank of America profits soar"; "Citigroup's profits surge"; "Bank boom continues: Goldman Sachs profit doubles." In fact, the six biggest Wall Street banks Bank of America, Citigroup, Goldman Sachs, JP Morgan Chase, Wells Fargo and Morgan Stanley all beat their profit expectations in the most recent quarter, according to results announced over the last week. JP Morgan Chase is even on pace to make $25 billion (yes, billion with a b) this year.

If you're thinking that these numbers don't at all square with the ominous warnings of bank executives and lobbyists, who have been saying non-stop that new regulations meant to safeguard the financial system and prevent a repeat of the 2008 financial crisis are going to irreparably harm their ability to do business, you're right. But that hasn't stopped the banks' griping.

The latest iteration of this argument played out after regulators recently announced new rules regarding bank capital the financial cushion banks must keep on hand to guard against a downturn. Failed presidential candidate turned bank lobbyist Tim Pawlenty, for instance, said that the new rules "will make it harder for banks to lend and keep the economic recovery going." JP Morgan Chase CEO Jamie Dimon, who has been scaremongering for years about various regulations, warned that the new rules would put U.S. banks at a competitive disadvantage with foreign lenders.

But this same dynamic has been playing out since the Dodd-Frank financial reform law was signed by President Obama in 2010. Banks and their allies complain about onerous new regulations, while at the same time reaping record profits.

And as the New Yorker's John Cassidy explained, those profits are due to many of the same practices that helped cause the 2008 debacle in the first place: "an emphasis on trading rather than lending, a high degree of leverage, and implicit subsidies from the taxpayer." That would seem to make the case that new regulations, rather than going too far, have not gone far enough.

Perhaps that's why banks haven't been crowing about their new avalanche of profits, and Dimon is even warning about an upcoming profit squeeze. As the Financial Times' U.S. banking editor Tom Braithwaite explains:

In the next 12 months the Fed will hit the banks with a new flurry of measures. Those are coming, they are serious and the banks fear them. There is an outside chance that lawmakers will go even further, such as by restoring the split between investment banking and commercial banking known as Glass-Steagall. There is still plenty to play for in deciding how painful the next round of regulations will be.

[Read the U.S. News Debate: Should Big Banks Be Broken Up?]

But, with every earnings season, warnings of calamity look more and more hollow.

One of the major knocks against Dodd-Frank beyond the obvious one that it left the biggest banks even bigger than they were before the financial crisis is that it left too much discretion to regulators to write new rules. Corporations and trade organizations familiar with how the agency rule-writing process works are almost inevitably going to have the upper hand in such a system. And there are still so many rules left to be written some 60 percent, according to the law firm Davis Polk that Wall Street will have ample opportunity to water the law down to meaninglessness.

But it's hard to keep saying with a straight face that new regulations will spell doom for the industry when the new rules that are in place so far, which were accompanied by similarly dire warnings, have done nothing to even dent Wall Street's bottom line. In fact, the huge pile of profits may be the best thing that could have happened for those trying to bring a modicum of sanity back to Wall Street regulation.
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Old July 18th, 2013, 06:20 PM   #2
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I thought very few regulations have been enacted yet. I still firmly believe that investment banks and savings banks should be like church and state. And there needs to be some cash held as coverage of liabilities. (I forgot what that is called.)
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Old July 18th, 2013, 11:31 PM   #3
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Originally Posted by imaginethat View Post
Nasty, lying bankstas......
Good one!
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Old July 19th, 2013, 12:04 AM   #4
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I do believe Dodd/Frank regulations are onerous. Like ObamaCare, the devil is in the details. And like ObamaCare, only the largest companies will be able use this new mountain of regulations to their advantage. The smaller and medium sized companies will suffer.

Which means you and I suffer right along with them.

I bank at a local credit union, which offers me low interest rates, and zero to low fees on my accounts. This credit union did not play fast and loose with the rules, did not issue derivatives during the housing bubble, and did not receive a bailout of taxpayer dollars from Bush or Obama. Instead, they just kept chugging along abiding by their very conservative guidelines that had served them so well in the past.

Yet they must now pay the price for the companies that did. This small credit union must follow the exact same rules under Dodd/Frank that CitiBank and Bank of America must follow. Dodd/Frank makes no distinction between leviathan bank cartels and mom and pop banks. All banks must now abide by a five foot stack of new regulations, many of which are still undefined in any discernable manner.

My local credit union has two choices. Either close the doors, or hire teams of lawyers, accountants, and lobbyists to deal with this new mountain of regulations. Regardless of which choice they make, I lose. You lose. Everyone loses except the monster banks that are butt buddies with the government.

By the way, both Dodd and Frank have retired and left the scene of the crime.
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Old July 19th, 2013, 05:26 AM   #5
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Nasty, lying bankstas.......



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What about the CEO that draws no salary and is content to continue to build the company and reap the rewards when he cashes in his chips??? This describes most of 'em. Any idea of how many employees they've created real jobs for??? Making slight of them is jealousy, envy and sour grapes.
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Old July 19th, 2013, 05:28 AM   #6
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No it isn't. It is putting the facts before fiction. And the Dodd Frank bill doesn't go far enough.
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Old July 19th, 2013, 05:42 AM   #7
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I thought very few regulations have been enacted yet. I still firmly believe that investment banks and savings banks should be like church and state. And there needs to be some cash held as coverage of liabilities. (I forgot what that is called.)
The word you are looking for is "reserves."
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Old July 19th, 2013, 05:45 AM   #8
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I do believe Dodd/Frank regulations are onerous. Like ObamaCare, the devil is in the details. And like ObamaCare, only the largest companies will be able use this new mountain of regulations to their advantage. The smaller and medium sized companies will suffer.

Which means you and I suffer right along with them.

I bank at a local credit union, which offers me low interest rates, and zero to low fees on my accounts. This credit union did not play fast and loose with the rules, did not issue derivatives during the housing bubble, and did not receive a bailout of taxpayer dollars from Bush or Obama. Instead, they just kept chugging along abiding by their very conservative guidelines that had served them so well in the past.

Yet they must now pay the price for the companies that did. This small credit union must follow the exact same rules under Dodd/Frank that CitiBank and Bank of America must follow. Dodd/Frank makes no distinction between leviathan bank cartels and mom and pop banks. All banks must now abide by a five foot stack of new regulations, many of which are still undefined in any discernable manner.

My local credit union has two choices. Either close the doors, or hire teams of lawyers, accountants, and lobbyists to deal with this new mountain of regulations. Regardless of which choice they make, I lose. You lose. Everyone loses except the monster banks that are butt buddies with the government.

By the way, both Dodd and Frank have retired and left the scene of the crime.
You get it; so many others do not.
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