The Ridgewood Blog Brings a Free Market Laissez-faire Point of View to Local, New Jersey State and National Issues.
the staff of the Ridgewood blog
Ridgewood NJ, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing a coordinated action to enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements.
Continue reading Central Banks Take Coordinated Action to Enhance Liquidity in the Banking System
pic J.P. Morgan’s Mr. Dimon
Bankers admit they love the guaranteed bailouts, lack of competition and regulated margins of Dodd-Frank
December 10, 2016
Ridgewood NJ, Big banks have an unexpected message for President-elect Donald Trump: Don’t trash the Dodd-Frank Act.“We’re not asking for wholesale throwing out Dodd-Frank,” J.P. Morgan Chase & Co. chief James Dimon said at a financial-services conference this week where he and other big-bank executives spoke, often addressing potential regulatory changes for the first time since the election.
During his presidential campaign, Republican Donald Trump said he would “get rid of” Dodd-Frank — the sweeping legislation passed in 2010 to address problems underlying the 2008-2009 financial crisis. Dodd-Frank a 2200 page monstrosity , was passed by congress like Obamacare without anyone reading the legislation , that is except for former NJ Congressmen Scott Garrett.
Dodd-Frank turned banks into utilities and did nothing to solve the ills that caused the banking crisis in 2008 ,it basically institutionalized the bad behavior that created the problem, put the bad debt in suspended animation and put taxpayers on the hook with its “too big to fail” provisions. Too big to fail also implies the corollary to big to really succeed.
Former Fed Chair Alan Greenspan called “too big to fail” legislation a “moral hazard” , giving bankers the excuse to engage in activities that would otherwise risk their livelihoods, feeling confident in ever larger government ie taxpayer bailouts.
The Trump team has talked about dismantling the law, although it has yet to state clearly whether this would involve a repeal of Dodd-Frank. Bank stocks have soared about 20% since the election, partly on the belief President-elect Donald Trump in some way will lighten banks’ regulatory load.
While banks favor a paring back of regulation, they tend to think in practical terms, rather than ideologically. And their core message seems to be: Make regulation simpler and less costly but don’t return banking to the Wild West days that preceded the financial crisis.
In many ways that is understandable. Banks have spent half a dozen years and hundreds of millions of dollars to adapt to the new landscape. This has caused them to exit businesses such as proprietary trading, rejig their corporate structures to make them safer and focus more on clients’ needs. While tearing up Dodd-Frank would seem to unshackle banks, starting with a new regulatory playbook would upend their new business models and divert management.
One of the biggest concerns for banks is that things don’t get worse. “The first thing I would ask for is nothing new, no new rules,” Citigroup Inc. finance chief John Gerspach said at the conference. “If you haven’t figured out yet how all the existing rules work together, don’t put on anything else.”
Banks acknowledge benefits to the new rules, noting they have helped improve the way firms manage risks and view their businesses. U.S. bankers have also said that having been forced to hold more capital, and build it quickly after the financial crisis, made their firms far stronger than troubled European peers.
So what would the big banks like to see changed?
Stress Tests—These annual exercises conducted by the Federal Reserve have become hugely important because they govern the amount of capital banks can return to shareholders, either through buybacks or dividends.
Banks want these to be based more on objective criteria and they want to have more of a view into the testing process and the Fed’s decision-making. And they should take less time and money to comply with, bankers say.
Bill Demchak, CEO of PNC Financial Services Group Inc., said his bank could theoretically get all the benefits of the stress-testing process with “60% of the effort.” He said that to comply with the tests, “you bring the place to a grinding halt once a year.”
The Volcker Rule— Banks say they aren’t eager to get back into the business of speculating on market moves using their own balance sheets. But they want the process around the Volcker Rule to be less burdensome and administered by fewer than five agencies.
Changes in this area could “probably make it easier to make markets” and improve liquidity, likely benefiting investors and other issuers, said Mr. Dimon.
“You have active market-marking in lumber, rebar, chicken, pork, cotton; we need it in financial instruments, it’s not different,” he said. “I do think a little more liquidity could be good.”
Mr. Gerspach said Citigroup would like less paperwork. “We don’t want to do proprietary trading,” he said. “But I also would love to work with regulators to lessen the burden of proving that we’re not engaging in proprietary trading.”
Capital and Liquidity—Banks say there are so many new rules relating to so many areas of their balance sheets that they too often run the risk of working against each other. And it isn’t clear when enough capital really is enough.
Wells Fargo chief Timothy Sloan cited differences between rules about how much capital a bank must hold and the amount of liquid assets a firm has to keep on hand. The intersections of these rules, bankers argue, hampers lending.
Bankers would also like more clarity around how much capital is enough for banks. Regulators have applied various capital surcharges to the biggest banks and these can change as regulations evolve.
“It’s getting certainty around the ability to have access to your capital return once you’ve met all the hurdles and whether those hurdles move up or down because of various people’s point of view,” said Bank of America Corp. chief Brian Moynihan.
J.P. Morgan’s Mr. Dimon said that regulators’ authority should be “cut back a little bit. It should be more prescriptive in exactly what they’re trying to accomplish.”
For all that, bankers are taking a wait-and-see stance before making any big changes to their businesses. “I think the difference going into 2017 is that we do have hope,” Citigroup’s Mr. Gerspach said. “But…we can’t build a plan on hope.”
https://onesmallvoice.blogspot.com/2016/12/banks-to-donald-trump-dont-kill-dodd.html
November 6,2016
PJ Blogger and the staff of the Ridgewood blog
Ridgewood NJ, in a recent editorial in the Glen Rock Patch former Ridgewood Mayor Paul Aronsohn gave Congressmen Scott Garrett a Negative Endorsement .
What’s a Negative Endorsement you ask ? A Negative Endorsement is a when a disreputable person with dubious motives supports a candidate making the candidate they support even less desirable.
Aronsohn started with the usual, “On a whole range of issues, he has taken positions that are extreme and completely out-of-sync with the mainstream values of northern New Jersey. This was true when I ran against him in 2006. This is still true today. In fact, he often takes positions that are out-of-sync with the other 11 members of the New Jersey delegation — democrats as well as republicans.”
Garrett is “out-of-sync”,says the man who tried to sell out the whole Village of Ridgewood to hand full of developers .
Garrett is “out-of-sync”, says the man who every single candidate he supported in the last election lost in a massive landslide .
Garrett is “out-of-sync”, despite the fact he beat Aronsohn easily and has been reelected over and over by New Jersey Voters .
Garrett is “out-of-sync” , says the man who tried to blame PSEG Super Storm Sandy and pissed them off so much they cut power to the Village Hall .
Maybe Garrett is not “out-of-sync”, maybe Mr Ex Mayor , you are “out-of-sync” and a sore loser . To many in the Village of Ridgewood Aronsohn and his cronies represented the low water mark in Village history.
Former New York Mayor Ed Koch once said, “If you agree with me on nine out of 12 issues, vote for me. If you agree with me on 12 out of 12 issues, see a psychiatrist.”
I have always felt this was good advice and perhaps the Ex Mayor could seek some professional help.
Scott Garrett is a soft-spoken policy wonk , contrary to poor and biased coverage he receives from much of New Jersey’s Democratic and Union controlled media he is no “Right-wing firebrand”.
Garrett actually read Dodd-Frank all 2000 plus pages. I know not very glamorous , but what is glamorous is all the work Scott has done on making “CrowdFunding ” easier. Easy enough to have a Pizza Shop in Ridgewood rebuilt because of Indego. On a larger scale, many entrepreneurs can now raise capital independently on Wall Street Investment banks .
Scott has also pushed back on the “too big to fail” , which contrary to media coverage this has made him a target of Wall Street and a target of Real-estate interests . Do you really think all banks should be entitled to taxpayer bailouts and for that matter, Dodd-Frank makes many key industries in the US “too big to fail” creating a “bailout nation”.
To quote former Fed Chair Alan Greenspan , as a policy “too big to fail” creates a”moral hazard”. Meaning the risk in the USA is socialized while profits and concentrated on the politically favored.
Garrett has been attacked repeatedly on his supposed “anti-gay “comments , his offices have even been the target of media coordinated , media and Democrat orchestrated fake protests . No evidence has ever been offered as to these comments ,no tapes, video , pictures or transcripts ,nothing period.
the staff of the Ridgewood blog
Ridgewood NJ, Josh Gottheimer has picked up the support of another special interest looking to scam the US taxpayer out of more money. Gottheimer and his “Bailout Nation” are getting help from the National Association of Realtors Congressional Fund which is looking to spend $1.3 million supporting Gottheimer, including $146,000 for online ads, $529,000 for mailings and $590,000 for TV ads .
Congressmen Scott Garrett in an effort to end bank bailouts crossed the Realtors group by pushing a bill in 2013 that would have scaled back the role of Fannie Mae and Freddie Mac, the government-backed agencies that buy mortgages from lenders.
The bill, known as the PATH Act, (Protecting American Taxpayers and Homeowners), would have ended the government guarantee that stands behind mortgage-backed securities issued by Fannie and Freddie and relieve taxpayers of the burden of among other things of bailing out subprime mortgages issued by banks.
In 2013 Garret called the PATH Act a bill that would create a sustainable housing finance system, saying, “Approximately five years ago our nation was hit with an unprecedented financial crisis. Today, I am pleased to be introducing legislation that continues the process of addressing the core cause of it—the government’s misguided efforts at allocating mortgage credit through Fannie Mae and Freddie Mac.
“The federal government’s domination of the housing finance market has left taxpayers on the hook for $5.1 trillion in mortgage guarantees. The PATH Act finally takes control away from Washington bureaucrats and allows the American people the freedom to have more choices in determining which mortgage best suits their needs.
“The PATH Act will finally end the largest bailout in history and will put our country back on a path to a sustainable housing finance market that benefits both taxpayers and homebuyers. I urge its swift passage by Congress and look forward to it being signed by the President.”
October 2,2016
the staff of the Ridgewood blog
Ridgewood NJ, just days after Hillary Clinton trolled two White House opponents with a single response, according to the main stream media ,”dinging Gary Johnson and Donald Trump by naming Angela Merkel as her favorite world leader.”
The Ridgewood blog found it more interesting the 30 years in politics and this is who Hillary Clinton singled voluntarily out without being asked .
Angela Merkel could use some friends about now , like Clinton’s immigration proposal Merkel has continued to defend her decision to admit more than a million migrants to Germany last year has left her increasingly isolated from other leaders coping with anti-immigrant, anti-Muslim sentiment in their electorates, especially after terrorist attacks.
Worse yet ,Merkel also currently finds her self in “deep do do” as fears of a Deutsche Bank collapse have rattled financial markets across the globe. Under capitalized Deutsche Bank shares were hit first by a demand for up to $14 billion from the U.S. Department of Justice for mis-selling mortgage-backed securities, then a reported Berlin lead rescue plan seemed tenuous at best.
In Italy six current and former managers of Deutsche Bank, including Michele Faissola, Michele Foresti and Ivor Dunbar, were charged in Milan for colluding to falsify the accounts of Italy’s third-biggest bank, Monte Paschi (which itself is so insolvent it is currently scrambling to finalize a private sector bailout) and manipulate the market. Two former executives at Nomura Holdings Inc. and five at Banca Monte dei Paschi di Siena were also charged.
On September 24th Chancellor Angela Merkel ruled out any state assistance for Deutsche Bank AG in the year heading into the national election in September 2017, a magazine called Focus magazine reported.
So does this imply that Deutsche Bank’s likely recapitalization effort while asking German Tax Payer Bailout or German Bank Depositor Bail-in? Let face it ,Deutsche Bank is going to need some money ASAP. Remember in a concerted effort to reduce or potentially eliminate the risk of taxpayer-funded bail-outs of European banks, the EU implemented a new “bail-in” regime beginning on January 1, 2016.
Or perhaps her new friend Hillary Clinton will come to the rescue with some kind of a US sponsored US taxpayer subsidized bailout?
It is not so far fetched with the Obama Administration setting the precedent with the Iranian payoff earlier this year.
September 14,2016
the staff of the Ridgewood bog
Washington DC, Legislation to end bailouts for big banks, toughen penalties for wrongdoing on Wall Street, promote economic growth, and provide desperately needed regulatory relief for small community banks and credit unions passed the House Financial Services Committee 30-26 today.
The legislation – the Financial CHOICE Act – ends the Dodd-Frank Act’s taxpayer-funded bailouts of large financial institutions; relieves banks that elect to be strongly capitalized from growth-strangling regulation that slows the economy and harms consumers; imposes tougher penalties on those who commit financial fraud; and demands greater accountability from Washington regulators.
“Democrats just voted against a bill that increases penalties against those who commit financial fraud. They just voted against a bill that ends taxpayer-funded bailouts, and they just voted against legislation that provides relief from Washington’s crushing regulatory burden for small banks, credit unions and consumers,” said Financial Services Committee Chairman Jeb Hensarling (R-TX), the sponsor of the bill.
“The bill holds Wall Street accountable with the toughest, strongest, strictest penalties ever – far greater than those in Dodd-Frank. And as recent headlines attest, obviously stronger penalties are needed. It requires banks to be well capitalized to prevent another financial crisis and puts in place the toughest penalties in history to protect consumers from fraud and deception.
“The Financial CHOICE Act will help grow the economy for all Americans, not just those at the top. It promotes strong and transparent markets to revitalize job creation in our poorest communities and ensures every American has the opportunity to achieve financial independence, no matter where they start out in life.”
The Financial CHOICE Act, which stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs, received strong support from community banks and credit unions, small business groups and conservative organizations. Large financial institutions did not offer their support for the bill.
Democrats on the Committee – despite having spent months criticizing the Financial CHOICE Act – refused to offer a single amendment to the bill.
For more information on the Financial CHOICE Act, visit www.financialservices.house.gov/choice/.
Organizations offering praise for the Financial CHOICE Act include the following:
“The [Financial CHOICE Act] would provide meaningful regulatory relief to help community banks foster economic and job growth in their local communities.” — Independent Community Bankers of America
“This bill provides significant regulatory relief essential to restoring economic growth. Republican members of Congress have repeatedly promised to get rid of Dodd-Frank and stop taxpayer funded bailouts. Now they have the opportunity to fulfill that promise by bringing the Financial Choice Act to a vote in the House and Senate, and sending the bill to the President’s desk.” — Heritage Action
“Chairman Hensarling’s CHOICE Act would be a win for Main Street consumers, workers and small businesses. Since Dodd-Frank was passed in 2010, access to free-checking has decreased while lobbyists’ importance has increased. The CHOICE Act helps reverse this trend.” — Main Street Growth Project
“Americans for Prosperity applauds your leadership in reining in the overbearing financial regulations that threaten growth and threaten consumer financial stability. Repealing and replacing the failed policies established in the Dodd-Frank Act will mean that Americans will have greater access to capital, which will lead to greater job growth, personal wealth, and overall economic prosperity. We are proud to support the CHOICE Act, and we urge your colleagues to support it.” — Americans for Prosperity
“….[the Financial CHOICE Act] is precisely the right combination to get the American economy moving again. The CHOICE Act offers sensible regulatory relief for qualifying institutions, protects the American taxpayer and consumer from another Wall Street meltdown, and holds federal financial regulatory agencies accountable.” — Independent Bankers Association of Texas
“….several components of this legislation target reforms specifically to facilitate investment in small business. The inclusion of these provisions and others will provide regulatory relief and modernization that will allow the private sector to fuel economic growth in our 21st century economy.” — Small Business Investor Alliance
“This is an important bill that will truly reform rules governing the financial system, encourage innovation across the system, vastly improve access to capital for entrepreneurs and small businesses, and transform a regulatory structure that lacks accountability, is too secretive, and ignores its responsibilities concerning small businesses.” — Small Business & Entrepreneurship Council
“We greatly appreciate the Chairman’s efforts in Title III of the bill to reform the Consumer Financial Protection Bureau (CFPB or Bureau). This title will help to ensure the Bureau serves as a non-partisan regulator that operates within the framework of the law by giving Congress more oversight authority, taking into account the opinions of all stakeholders, and properly weighing the impact its regulations have on the availability of credit.” — Consumer Bankers Association
“NAR is pleased that the FCA [Financial CHOICE Act] includes provisions that will enhance transparency, accountability and fairness in our financial system. As a result, the FCA will help expand financial product choice and promote economic opportunity. These provisions are an important step towards making property ownership a reality for hardworking Americans and U.S. businesses.” – National Association of Realtors
“If we want the economy to improve — if we want to give all Americans the chance to prosper again — we need to put an end to Washington’s destructive regulatory agenda once and for all. Thankfully, an increasing number of elected officials in Washington are fighting against the harmful effects and unintended consequences of these onerous regulations. Leading the fight in Congress has been House Financial Services Committee Chairman Jeb Hensarling (R-TX), who recently outlined a comprehensive plan to turbocharge the American economy. His new legislation, The Financial CHOICE Act, aims to curb regulations to create opportunity and choice for investors, consumers, and entrepreneurs nationwide.” — Conservative Coalition Letter of Support
“If signed into law, the bill would end the era of too big to fail, and would move banking and financial decisions away from Beltway and back to Main Street. This bill is balanced, meets key conservative criteria, and should continue to move through the House to final passage.” — FreedomWorks
“….[the Financial CHOICE Act] would begin the process of implementing sensible, necessary reforms to the U.S. financial system. That system has been saddled with an ineffective regulatory structure and an array of conflicting legislative and regulatory requirements that, individually or collectively, constrain growth. The Chamber believes the Financial Choice Act is a positive first step for unlocking the capital markets to better facilitate the financing of America’s economic growth and job creation.” — U.S. Chamber of Commerce
“….the CHOICE Act offers a strong alternative to Dodd-Frank and the regulatory morass it created. Rather than creating a flurry of complex rules in response to the financial crisis, Congress should have mandated higher capital requirements for financial institutions. That is why NTU is enthusiastic about the CHOICE Act’s “off ramp” from the bulk of the current Dodd Frank regulatory regime.” — National Taxpayers Union
“….the CHOICE Act and the substantial regulatory relief it provides…will generate meaningful economic and job growth in our communities.” — Mid-Size Bank Coalition of America
“….[the Financial CHOICE Act] address[es] the challenging credit conditions that home builders and home buyers continue to experience as a result of an overly zealous regulatory response to the financial crisis. NAHB appreciates your efforts to initiate regulatory reform to support a more robust recovery.” — National Association of Home Builders
“….it is vital that we take heed of any policy that claims to “fix” the voluntary actions of consumers. Price controls go against everything we stand for as a country and do nothing but redistribute wealth, damaging the lives of hardworking Americans. The first step forward is reform. The Financial CHOICE Act is that first step.” — Red State
“….the Financial Choice Act if passed will restore competition in the marketplace by removing arbitrary government price caps. Additionally, it will allow banks the ability to recoup the money they spend on fraud protection from the retailers that reap the benefit of the use of debit cards. Consumers will once again have affordable access to basic banking services, and small businesses will have the freedom to negotiate processing fees that make sense based on the type of goods they sell. In short, all true conservatives in Congress should rally behind Neugebauer and Hensarling’s bill, because it will cut back on big government red tape and allow the free market to thrive again.” — Liberty Unyielding
