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Posts Tagged ‘how Wall Street Bought Washington’

Barney Frank: “…Now They’re Starting to Hate Me…”

Posted by Larry Doyle on July 1st, 2009 12:21 PM |

U.S. Rep. Barney Frank (D-MA), House Financial Services Committee Chairman

Barney Frank should not be so presumptuous to think that it is just “now” that a large percentage of America is starting to hate him. The displeasure, if not the contempt, for Barney and his minions who have run our country into the ground over the last twenty years is soaring!!

As the Wall Street Journal reports this morning, Finance Lobby Cuts Spending as Feds Targeted Wall Street:

Wall Street’s spending on efforts to influence policy making diminished at the start of this year as the image of financial institutions has suffered with lawmakers and the public. Some of the sector’s major advocate groups lost funding and staff. Their spending declined just as the administration was hammering out its proposal for the biggest reorganization of financial-market oversight since the 1930s, details of which the White House released last month.

Industry lobbyists met last week to craft a response to the White House’s draft regulatory overhaul, particularly its creation of a consumer-oriented regulator for financial products, which could force major changes in how financial instruments are created and marketed. Whether or not the industry can influence this top administration priority, now that the plan is in the hands of Congress, will be a big test of its remaining clout.

The gig is up!! (more…)

Wall Street’s Great Enabler Dodges a Bullet

Posted by Larry Doyle on June 23rd, 2009 7:46 AM |

Did Barack Obama and team give a sly and subtle wink to Wall Street that ‘the game goes on’ and the ‘fix is still in?’ I believe they did.

Many analysts, myself included, view Obama’s proposed regulatory reforms as a combination of ‘reshuffling the deck chairs’ and ‘cosmetic surgery.’ In the process of those maneuvers, the rating agencies – Wall Street’s Great Enabler – went largely untouched.

The rating agencies business model presents massive conflicts of interest for all involved. The greatest conflict centers on the fact that the rating agencies’ stream of revenue remains beholden to the Wall Street banks. Without addressing that issue, any dialogue on this topic holds no water.

The Wall Street Journal does yeoman work in highlighting the continuation of the Wall Street charade in this area in writing, A Triple AAA Punt:

If world-class lobbying could win a Stanley Cup, the credit-ratings caucus would be skating a victory lap this week. The Obama plan for financial re-regulation leaves unscathed this favored class of businesses whose fingerprints are all over the credit meltdown.

How is it possible in the midst of such a massive financial meltdown that Obama, Geithner, and team could leave this critically important piece of the regulatory puzzle untouched? Actually, it is quite simple.

As with any heist, the perpetrators need a ‘bag man,’ who will take a payoff while providing cover to the operation. This scenario with the rating agencies is a prime example of How Wall Street Bought Washington.

Obama is flexing his muscles for the public, but without changes within the rating agencies the signal to Wall Street from Washington is that it is ‘business as usual.’ The WSJ offers as much:

The Obama plan does make plenty of vague suggestions, similar to those proposed by the rating agencies themselves, to improve oversight of the ratings process and better manage conflicts of interest. The Obama Treasury has even adopted the favorite public relations strategy of the ratings agency lobby: Blame the victim. “Market discipline broke down as investors relied excessively on credit rating agencies,” says this week’s Treasury reform white paper. After regulators spent decades explicitly demanding that banks and mutual funds hold securities rated by the big rating agencies, regulators now have the nerve to blame investors for paying attention to the ratings.

Sense on Cents believes strongly we need transparency and integrity in the regulatory process. What Obama has delivered in this key area are ‘vague suggestions.’

Am I surprised? No. Once again, the American public at large and investors specifically are subjected to ‘business as usual.’

LD

Dylan Ratigan Asks for Some Transparency

Posted by Larry Doyle on June 22nd, 2009 5:04 PM |

Credit to Nathan Martin, a contributing author at Wall Street Pit, for highlighting this engagement between Dylan Ratigan and Christina Romer, Chair of the Council of Economic Advisers in the Obama administration.

To be perfectly frank, our general media has inured us to softball questions for our political and financial establishment. To that end, financial blogs are carrying the real weight of the day in terms of investigative journalism and critical questioning.

Against that backdrop, Mr. Ratigan’s questioning of Ms. Romer about the lack of transparency and integrity of Wall Street lobbyists’ engagement with Washington is particularly appreciated if only because it happens so infrequently,if at all.

 

For those interested in this topic, I resubmit:

1. A Real Regulatory Review: Sense on Cents Interview with Bill Singer

2. Future Financial Regulation: Not a Question of Sufficiency, But of Transparency and Integrity

3. How Wall Street Bought Washington

LD

Stay the course . . . we will continue to fight the good fight in airing the issues surrounding this topic!!

LD

FROM THE ARCHIVES . . .
Future Financial Regulation: Not a Question of Sufficiency, but of Transparency and Integrity

Posted by Larry Doyle on June 15th, 2009 5:30 AM |

I hope people far and wide will listen to the interview I had with Bill Singer on last evening’s NQR’s Sense on Cents with Larry Doyle. Bill is the preeminent veteran Wall Street regulatory lawyer and market reform advocate. He pulled no punches in our conversation. My chat with Bill compels me to republish my posting from mid-May on the future of financial regulation.

Editor’s Note – this piece was originally posted on May 18, 2009:

Will our future regulatory structure of the financial industry allow capitalism to thrive? Will the political wizards in Washington prioritize personal agendas and expediency over unquestioned transparency and integrity? I believe we are at a critical regulatory crossroads not seen since financial regulations implemented in the Securities Act of 1933.

Do the powers that be both in Washington and Wall Street understand the magnitude of responsibilities and obligations involved in this process? Initial returns are decidedly mixed. The debate by those intimately involved in the regulatory oversight is typically framed as a question of sufficiency. That is, does the industry have enough regulation or not?

The media often frame the debate in political terms between laissez-faire proponents and those favoring increased government intervention. Both camps are missing the bigger picture, because both camps are feeding from the same trough. Allow me to expound.

The critical regulatory question facing our markets is not of sufficiency but is one of transparency. Regrettably, both ends of the regulatory spectrum do not want to address this glaring shortcoming because it exposes the very nature of the incestuous relationship between Wall Street and Washington.

The mainstream media, to a large extent, is dependent on both Wall Street and Washington for their financial well being so they do not press or pursue the need for total regulatory transparency. Fortunately, Sense on Cents and other leading financial websites are not under this restriction.

Let’s dig deeper and review where regulatory developments stand currently. As the Financial Times reports, U.S. Poised For Finance Regulation Shake-Up:

Congress will next month start the biggest regulatory overhaul of the US financial system in decades, bringing into the open a frantic lobbying effort between banks, regulators and policymakers on what it contains and who pays for it.

The House financial services committee, chaired by Democrat Barney Frank, will hold hearings early in June into reforms outlined by Timothy Geithner, Treasury secretary, say people familiar with the timetable.

Regrettably, before the debate even begins the premise of sufficiency versus transparency is accepted without question. Well, Sense on Cents is questioning the lack of transparency and resulting integrity of the process, which by its very nature strongly influences the outcome. Allow me to be more specific. Much as the Parliament in the U.K. is being rocked by a current scandal over expenses submitted by legislators, I strongly exhort those who truly care about capitalism, free market principles, and our democracy to address the very nature of the relationship betwen the banks, regulators, and policymakers. (more…)

Future Financial Regulation: Not a Question of Sufficiency, But of Transparency and Integrity

Posted by Larry Doyle on May 18th, 2009 12:38 PM |

Will our future regulatory structure of the financial industry allow capitalism to thrive? Will the political wizards in Washington prioritize personal agendas and expediency over unquestioned transparency and integrity? I believe we are at a critical regulatory crossroads not seen since financial regulations implemented in the Securities Act of 1933.

Do the powers that be both in Washington and Wall Street understand the magnitude of responsibilities and obligations involved in this process? Initial returns are decidedly mixed.  The debate by those intimately involved in the regulatory oversight is typically framed as a question of sufficiency. That is, does the industry have enough regulation or not?  

The media often frame the debate in political terms between laissez-faire proponents and those favoring increased government intervention. Both camps are missing the bigger picture, because both camps are feeding from the same trough. Allow me to expound.

The critical regulatory question facing our markets is not of sufficiency but is one of transparency. Regrettably, both ends of the regulatory spectrum do not want to address this glaring shortcoming because it exposes the very nature of the incestuous relationship between Wall Street and Washington. 

The mainstream media, to a large extent, is dependent on both Wall Street and Washington for their financial well being so they do not press or pursue the need for total regulatory transparency. Fortunately, Sense on Cents and other leading financial websites are not under this restriction. 

Let’s dig deeper and review where regulatory developments stand currently. As the Financial Times reports,  U.S. Poised For Finance Regulation Shake-Up:

Congress will next month start the biggest regulatory overhaul of the US financial system in decades, bringing into the open a frantic lobbying effort between banks, regulators and policymakers on what it contains and who pays for it.

The House financial services committee, chaired by Democrat Barney Frank, will hold hearings early in June into reforms outlined by Timothy Geithner, Treasury secretary, say people familiar with the timetable. 

Regrettably, before the debate even begins the premise of sufficiency versus transparency is accepted without question. Well, Sense on Cents is questioning the lack of transparency and resulting integrity of the process, which by its very nature strongly influences the outcome. Allow me to be more specific. Much as the Parliament in the U.K. is being rocked by a current scandal over expenses submitted by legislators, I strongly exhort those who truly care about capitalism, free market principles, and our democracy to address the very nature of the relationship betwen the banks, regulators, and policymakers. (more…)

Uncle Sam’s Regulatory Double Standard

Posted by Larry Doyle on May 7th, 2009 5:24 PM |

As I have referenced previously, Jonathan Weil of Bloomberg truly distinguishes himself as the finest commentator within the world of financial journalism. Weil takes on the financial regulatory authorities for their selective enforcements. Today he reports, Lehman Bosses Walk, While Small Fry Walk Plank. Why after 2 years haven’t senior executives from mortgage origination firms (Countrywide, Ameriquest, New Century, Long Beach), quasi-government agencies (Freddie and Fannie), commercial and investment banks, and credit rating agencies been more thoroughly investigated, if not arrested and prosecuted?

Is there any doubt these firms and executives effectively purchased their own protection? After writing “How Wall Street Bought Washington,” it became exceedingly clear that money from Wall Street bought protection for the business units and the individuals. It is not likely that Uncle Sam will target executives at firms holding government money. Additionally, if Uncle Sam targets execs at failed firms, those execs would be likely to finger others.

As Uncle Sam is now both investor and regulator in the markets, how do market participants compel him to be an honest broker on both fronts? As Weil writes, quoting former SEC head Chris Cox:

“From the standpoint of the SEC, the most obvious problem with breaking down the arm’s-length relationship between government, as the regulator, and business, as the regulated, is that it threatens to undermine our enforcement and regulatory regime,” Cox said in a Dec. 4 speech.

“When the government becomes both referee and player, the game changes rather dramatically for every other participant. Rules that might be rigorously applied to private-sector competitors will not necessarily be applied in the same way to the sovereign who makes the rules.”

Haven’t we already seen this play? Why is it that public confidence in the markets and those overseeing them is so low? When the security patrol in the casino also has LOTS of chips on the table, how do we know the dealer isn’t also in on the action? If so, is it any wonder why the unsavory activities of other “boys in the club” who have run out of chips aren’t being prosecuted?

I commend Weil for raising this topic. I can only hope other media outlets will pressure the regulators to level the playing field.

LD






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