Whither Financial Reform ?

Sulla's cram-down tactics failed as the Republicans showed solidarity, hence the financial reform bill will hit the Senate floor completely open to amendments of any relevant kind. All this should have been settled in committee in good faith negotiations, but Dodd & Sulla thought they could jam the R's again, as in health care, by buying one vote. They failed. Now we get a free for all and plenty of "populist" amendments are being planned to be offered. Anything can happen.

[FYI: Sulla = Barry = Obama]

My dog, Sky would never have let this happened to a flock under his power. He keeps the sheep in a tight formation and doesn't cause them to burst or splinter. They understand and respect his power, and thus he can be gentle in guiding them through gates and to the pen. Sulla is arrogant - what would you expect from one with such a nickname ?

Enough bashing of Sulla. What is being considered ?

***various quotes follow***

WSJ: Sens. Maria Cantwell (D., Wash.) and John McCain (R., Ariz.) have worked on an amendment that would force commercial banks to separate from investment banks—revisiting the Glass-Steagall Act of the 1930s.

Sens. Ted Kaufman (D., Del.) and Sherrod Brown (D., Ohio) plan an amendment that would prohibit any bank from ever holding more than 10% of the country's deposits and put strict caps on the debt banks issue.

Big banks are already lobbying to kill parts of the bill. One provision would make them spin off derivatives-dealing operations

If adopted, the amendments would change the banking industry far more than the current version of the bill that aims to overhaul financial-sector regulations. The provisions would make companies smaller, simpler and less likely to take risks.

***quotes end***

To me, those amendments would be good if made in workable forms. The financial industry has grown to be dominated by huge, interconnected conglomerates. Deposits of the common man are being sucked out of cities and towns to Wall Street to fund trading and speculation. Loans to business are far too hard to get as a result.

What would be a good result ?

Make banks be banks, securities firms be securities firms and hedge funds be hedge funds. Return brokerage to brokerage. All this would simply the industry and prevent a future collapse as was threatened in the Panic of 2008. That occurred because of the interconnectedness that excessive trading and derivatives brought on. Failure of one firm was linked to all others because of the huge counterparty risks. Get rid of that.

Break up the big "banks".

Bring back Glass-Steagall and make it even tougher.

Derivative operations go to the securities industry with tough capital requirements for any derivative not cleared on exchanges..

Deposits are to fund loans, not trading. Those loans can go directly to business or consumers or to specialized finance companies (which in turn lend to business and consumers). Regulators should enforce this.

Stop securities firms from trading against customers.

Impose the Volcker rule in a strong form: banks - get rid of proprietary trading.

Insurance companies and pension funds should make long term investments, not make "trades" (directly or via hedge funds).

I could go on and one, but I think you get the picture: regulate the big boys, let the common man and small business - including small financial intermediaries - have near total freedom. Return industry participants to their natural state from the Frankenstein monsters they have become - pieces of all sorts of businesses sown together.

What else would you expect form a Fraternal Libertarian ?

Word of the Day

"Anomie" - noun [$10] also "anomy"
Anomie means lack of the usual social or ethical standards.
Sentence: A good financial reform bill should curb the anomie on Wall Street and the big banks. We need a clean, simple, moral financial industry. Financial Vikings should be crushed.