RSS Feed
Twitter
Facebook
Email
HomeProprietary Trading Did Bring Down Wall Street
Posted by Larry Doyle on February 3rd, 2010 12:37 PM |
The Wall Street lobby in all its glory is fighting tooth and nail to defend its turf from the volley launched by former Fed Chair Paul Volcker. Recall that the newly designated Volcker Rule, if implemented, would disallow proprietary activities from those institutions taking consumer deposits. This implementation would effectively reinstitute the Glass-Steagall Act which was rescinded in 1999.
The proprietary activities most often highlighted by those in the banking community are investment and trading activity within private equity, hedge fund and prop trading desks. The banks are screaming that these activities should not and need not be separated from their overall operations because these activities did not cause our economic crisis. They would be correct on one hand, but how convenient that their definition of proprietary is not truly comprehensive. How so? (more…)
Paul Volcker Tells Wall Street, “Wake Up, Gentlemen”
Posted by Larry Doyle on December 14th, 2009 9:44 AM |
While those on Wall Street and Washington pretend to listen to the needs and concerns of middle America, they have been shown to be ineffective time and time again in developing and implementing sound financial practices and regulations. America is increasingly aware of just how deeply embedded and incestuous the Wall Street-Washington relationship has become. Who within this Wall Street-Washington circle “gets it?” Paul Volcker.
Volcker called out our financial and political operatives a few months back in calling for an effective reinstitution of Glass-Steagall to separate commercial and investment banking activities. I highlighted that call by writing, “Volcker Launches Bombshell on Wall Street and Washington.”
Although Wall Street and Washington may pretend not to hear Volcker’s shots across the bow, they do so at their own peril. Why? America listens and hears Volcker loud and clear. (more…)
Time to Reinstitute Glass-Steagall
Posted by Larry Doyle on December 3rd, 2009 3:16 PM |
A car needs gas to run. An engine needs steam. A factory needs power. The fact is without a steady source of energy nothing can operate. Welcome to the Uncle Sam economy circa 2009.
You may be thinking, wait a second LD . . . the Federal Reserve is flushing the system with liquidity. Money is easy and it is propping the markets. While availability of credit may be tight, the demand for credit is also weak. So what am I talking about?
Thanks to RM for providing the FDIC Third Quarter 2009 Banking Profile (a link to the full document is provided at the end of this commentary). For those who care to rip apart the inner workings of our banking system, this report is the owner’s manual. The report highlights the following:
> Industry Posts Net Profit of $2.8 Billion
> Increased Revenues, Lower Securities Losses Offset Higher Loan-Loss Provisions
> Net Interest Margins Improve at Most Institutions
> Troubled Loans Continue to Rise, But Rate of Growth Slows
> Loan balances Decline by 2.8% in the Quarter
Based on this overview, it would appear that the banking industry is slowly recovering. In aggregate, perhaps that may be the case. But what doesn’t this report tell us? (more…)
