Forum Think Finance - Bolsa e Forex
Geral => Comunidade de Traders => Tópico iniciado por: John_Law em 2015-04-26 13:01:20
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Deutsche Bank Was Emphatic About Manipulating Libor
If you want proof that journalism is doomed, consider the Deutsche Bank Libor settlement. There was a time when I could make a good living just reading through Libor settlement documents, picking out funny ungrammatical quotes from e-mails and instant messages, block-quoting them, boldfacing the particularly ridiculous lines, and saying "come on!" or words to that effect after each quote. But now the Commodity Futures Trading Commission cuts out the middleman: It pulls out the funny quotes and puts them in a separate easy-to-use document, even bolding the silliest bits. The CFTC doesn't add "come on!" but it's implied. What is left for me to do?
So I mean just go read that then. Compared with other Libor manipulators, Deutsche Bank is paying much the largest settlement, a total of about $2.5 billion to the U.S. Commodity Futures Trading Commission, the U.S. Department of Justice, the New York Department of Financial Services and the U.K. Financial Conduct Authority. The fines are so big in part because the New York DFS is newly involved, and I must say that DFS already looks like an old pro at Libor settlements; its announcement does an even better job of collecting and artfully boldfacing funny quotes than the CFTC's does. It also doesn't help that Deutsche Bank stonewalled investigators: The FCA fined Deutsche Bank almost as much for failing "to deal with the Authority in an open and cooperative way" as it did for actually manipulating Libor.
But I like to think that Deutsche faced the stiffest penalty because it was the most egregious abuser of CAPS LOCK:
London U.S. Dollar Trader 1: COULD WE PLS HAVE A LOW 6MTH FIX TODAY OLD BEAN?
And:
New York U.S. Dollar Trader 2: LIBOR HIGHER TOMORROW?
U.S. Dollar LIBOR Submitter: shouldn't be
New York U.S. Dollar Trader 2: COME ON. WE ALWAYS NEED HIGHER LIBORS !!! HAHA
U.S. Dollar LIBOR Submitter: haha, i'll do my best fkcer
And:
London MMD Manager: DON'T FORGET TO SET A HIGH FIX TODAY!
Barclays Senior Euro Swaps Trader: I told them they're going to set it at 2.13
London MMD Manager: goodness! that's going to hurt
Come on.
One thing that I sometimes think about Libor manipulation is that it created a sort of market -- a demented and sad market, sure, but a market. Some banks bet on higher Libors and some banks bet on lower Libors, and their bets moved Libor not in the direct simple way that bets usually move prices (you buy a thing, your buying pushes up the price, etc.), but in an indirect corrupt way in which the derivatives traders with the bets convinced the Libor submitters at their banks to just change Libor to suit their bets. You could think both that the Libor manipulators were doing bad immoral things, and that they caused no net damage: Libor more or less reflected supply and demand for Libor, which is not quite the same as reflecting supply and demand for short-term unsecured interbank lending. The supply and demand for short-term unsecured interbank lending was often, roughly, nil; Libor was "the rate at which banks don't lend to each other." But there was a ton of demand for a number to be plugged into floating-rate debt and interest-rate derivatives, with some banks wanting that number to be high and some wanting it to be low, and their respective lying to each other could have created an uneasy equilibrium in that market.
There's some suggestive evidence for that view in the Deutsche Bank quotes. From the CFTC (emphasis and alteration the CFTC's):
London MMD Manager: Subject: “$ LIBORS: 83, 89, 96 and 11
LOWER MATE LOWER !!
U.S. Dollar LIBOR Submitter: will see what i can do but it’ll be tough as the cash is pretty well bid
London MMD Manager: [Another U.S. Dollar Panel Bank] IS DOIN IT ON PURPOSE BECAUSE THEY HAVE THE EXACT OPPOSITE POSITION - ON WHICH THEY LOST 25MIO SO FAR - LETS TAKE THEM ON!!
U.S. Dollar LIBOR Submitter: ok, let's see if we can hurt them a little bit more then
And from the DFS (emphasis DFS's):
On July 16, 2009, a managing director and the Head of the London Money Market Derivatives desk discussed the strength and accuracy of the Euro LIBOR panel in comparison to the EURIBOR panel. The managing director asked, "u think the quality of the euro-libor panel is 4.5bps better than euribor?" The Head of the London Money Market Derivatives desk responded yes, and the managing director replied, "not so sure, i have a hard time to believe if so many banks say they can better than the market while they are a part of it." The Head of the London Money Market Derivatives desk stated, "theyre all lying anyway." The managing director replied, "there is a philosophical saying: ‘one greek says: "all greeks are lying" who do u trust?"
That's some heavy philosophy on the trading desk. Come on.
On the other hand there is also some evidence that this model is wrong, and that all, or at least most, of the banks worked together at the expense of the people not in the room. The Justice Department's settlement includes a guilty plea from DB Group Services (UK) Limited, a Deutsche Bank London subsidiary, and a deferred prosecution agreement with Deutsche Bank. The guilty plea is for wire fraud, for "engaging in a scheme to defraud counterparties to interest rate derivatives trades by secretly manipulating U.S. Dollar LIBOR contributions," while the deferred prosecution agreement is for antitrust violations for "rigging Yen LIBOR contributions with other banks." Fraud can be competitive, but antitrust suggests that they were all in it together.
And in fact there are many messages between Deutsche Bank manipulators and their buddies at other banks that suggest not a war of high-Libor banks against low-Libor banks, but rather a market that was easily manipulated by a plurality of banks acting together as a team. Here's one from the Justice Department:
Trader K-1: nice fixing!!!
Trader-3: indeed
Trader K-1: why so low?
Trader-3: why not !
Trader K-1: who gets f*cked on that? I assume its all you short end guys ripping off an end user.
In a way it's a shame that the Libor settlements are mostly about collecting and typesetting embarrassing instant messages. The interesting question in Libor manipulation is whether it caused a net harm: Did Bank X push Libor up while Bank Y pushed it down in ways that mostly reflected and equilibrated underlying interest-rate market dynamics? Or did the banks mostly work together in a way that systematically enriched them as a group at the expense of their clients as a group?
This seems like a very hard question, but also one that is of curiously little interest to the regulators. Among those regulators, the U.K. FCA has the most detailed mechanism for determining penalties; it is explicitly supposed to consider "the amount of benefit gained or loss avoided." It completely shrugged off that determination for Deutsche Bank:
Deutsche Bank sought to manipulate LIBOR and EURIBOR submissions in order to improve the profitability of its trading positions. The Authority has not determined the amount of benefit gained.
Isn't that question -- for Deutsche Bank, and for the Libor-manipulating banks as a whole -- the important one? Shouldn't the Libor manipulating banks be assessed on the economic impact of their manipulation, and not just on who had the most bad quotes?
[url]http://www.bloombergview.com/articles/2015-04-23/deutsche-bank-was-emphatic-about-manipulating-libor?utm_campaign=trueAnthem:+Trending+Content&utm_content=553951d904d3016379000001&utm_medium=trueAnthem&utm_source=facebook[/url] ([url]http://www.bloombergview.com/articles/2015-04-23/deutsche-bank-was-emphatic-about-manipulating-libor?utm_campaign=trueAnthem:+Trending+Content&utm_content=553951d904d3016379000001&utm_medium=trueAnthem&utm_source=facebook[/url])
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lindo não é?
O DB caiu 0.3% por causa disto. Uma brutalidade. E a multa nem squer chegou a tornar negativos os resultados anuais.
ah e claro, uns tempitos no xilindró para alguém, nem pensar.
mas o que é mesmo mesmo preocupante, são os 133 usd que dão aos àqueles gajos do maine, para comer, por mês. O DB ao pé disto são peanuts.
L
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Isn't that question -- for Deutsche Bank, and for the Libor-manipulating banks as a whole -- the important one? Shouldn't the Libor manipulating banks be assessed on the economic impact of their manipulation, and not just on who had the most bad quotes?
hmmm talvez isso levasse o DB a ter resultados bem negativos. Claro que não pode ser. antes disso temos que tratar daquele assunto do Maine.
L
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ha muitos mercados manipulados, eu por ex sei por um amigo trader numa das maiores casas mundiais de commodities que os 2 principais traders de carvao do mundo inteiro estavam em constante contacto telefonico a fazerem combinacoes. eu proprio vi uma manipulacao a acontecer a minha frente enquanto era profissional. no entanto manipulacao na maioria dos casos nao quer dizer poder infinito de fazer o que se quer ao preco q se qier e sempre que se quer.
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Regulação e supervisão máxima para os preguiçosos que dilapidam o erário público sacando subsídios.
Regulação e supervisação mínimas na alta finança para não inibir engenho e criatividade desses grandes pilares do mercado
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Regulação e supervisão máxima para os preguiçosos que dilapidam o erário público sacando subsídios.
Regulação e supervisação mínimas na alta finança para não inibir engenho e criatividade desses grandes pilares do mercado
comeca pela incompetencia dos reguladores, que normalmente sao advogados e q nao percebem nada de trading
no meu trading room tivemos uma investigacao por manipulacao. sabes o que o regulador la foi fazer? investigar os emails... eh so o que sabem fazer.
em todo o caso aquela queixa em particular era ridicula e sem fundamento, mas se tivesse fundamento tb nao achavam nada
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Regulação e supervisão máxima para os preguiçosos que dilapidam o erário público sacando subsídios.
Regulação e supervisação mínimas na alta finança para não inibir engenho e criatividade desses grandes pilares do mercado
hear, hear...
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alias para terem uma nocao dos limites da coisa os 2 traders de carvao em causa acabaram por rebentar
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Regulação e supervisão máxima para os preguiçosos que dilapidam o erário público sacando subsídios.
Regulação e supervisação mínimas na alta finança para não inibir engenho e criatividade desses grandes pilares do mercado
Quem é esse espantalho que defende "Regulação e supervisação mínimas na alta finança" ?
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as manipulacoes em causa sao faceis de fazer. pelo que percebi os traders tem de submeter uma lista de precos a reuters que depois tira os outliers e faz uma media. normalmente as manipulacoes que se fazem com os forwards so dao para influenciar temporariamente o p&l, portanto nao compensam muito. creio que o dinheiro esta em influenciar o spot pois isso determina o settlement dos contractos de futuros e forwards do eurodollar.
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Regulação e supervisão máxima para os preguiçosos que dilapidam o erário público sacando subsídios.
Regulação e supervisação mínimas na alta finança para não inibir engenho e criatividade desses grandes pilares do mercado
Quem é esse espantalho que defende "Regulação e supervisação mínimas na alta finança" ?
o zenith e o lark gostavam de ter mais inimigos, querem sangue :D
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Regulação e supervisão máxima para os preguiçosos que dilapidam o erário público sacando subsídios.
Regulação e supervisação mínimas na alta finança para não inibir engenho e criatividade desses grandes pilares do mercado
hear, hear...
Hear, hear, talvez depois de se compreender QUEM é que defende essa regulação e supervisão mínima do sector financeiro, não? Senão é como se fosse um debate contra oponentes imaginários.
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A New Ice-Bucket Challenge:
How Regulation is Stifling Innovation in Financial Services
By Linea Solem, Deluxe
Media outlets are buzzing with the barrage of images regarding the latest social media trend of the “ice bucket challenge”. The burden of regulatory compliance is dousing the fires of creativity and customer loyalty in banking. Just like a bucket of ice water can bring a chilly reality to one’s day, the growing regulatory burden appears to be stifling innovation in financial services.
A recent survey conducted by the ABA and routed as a call to action to members of Congress shared some sobering statistics from the banking sector that shows more regulation is resulting in fewer products and choices for consumers. Compliance considerations are clearly having an impact on the marketing of products or services in financial services based on the organizations that responded to the survey:
44% reduced current consumer financial products or services due to compliance regulatory burden
27% cancelled a new product launch, delivery channel or market due to compliance considerations
31% are ‘holding off’ on new products, delivery channels or markets, while they determine the regulatory impact
The increased costs of compliance, including increased compliance staffing are reducing the amount of available investments both financial and human capital in the development of new financial products or services. The regulatory burden alone for the Dodd-Frank Act has added 14,000 pages of new rules, regulations and pending guidance. Dodd-Frank is requiring more than 60 million hours of paperwork for compliance; and we are only 50% through the mandated rules. That’s a lot of time that could have been used to identify customer needs and develop solutions to meet those needs. It is not surprising that over the past decade, the growing costs of compliance are fueling consolidation between smaller financial institutions. The era of growth and creating innovation of start-up de novos is a fading memory. Traditional community banks are faced with challenges of maintaining profitability while maintaining compliance to the same regulations are national banks with significantly more resources. The resulting impact means fewer choices for consumers in many communities.
An emerging shift in corporate governance, as demonstrated by recent Office of Comptroller of the Currency (OCC) guidance shows the need for maturity in risk management oversight, including gaining board-level approvals for key changes in product strategy, critical suppliers or risk appetite. The need for a cadence in approvals, and risk management has expanded timelines for product decisions, but also requires a level of acumen and organizational readiness to balance regulation and innovation in products and services. Risk & Governance committees are being established to facilitate the oversight process, but can require time and investment in people, process, and technology.
The Unintended Consequences of Regulation Stifling Innovation
While most financial regulations start from a good intentions point of view of protecting consumers, financial assets or the banking sector in general; there are unintended consequences in the execution and operations of compliance that can hinder creativity and innovation.
Fears of UDAAP Enforcement: Consumer protection rule-making and enforcement start from a good construct – to protect the consumer from unfair, deceptive, or abusive marketing practices. Creating simple-to-understand terms and conditions is a good thing. However, most financial products are complicated – even the simple checking account can contain an accountholder agreement longer than the play Romeo and Juliet. Enhancing customer disclosures and notices can improve customer understanding of their financial options. However the fines and enforcement are sponsoring a culture of fear, uncertainty and doubt in bank marketing team’s ability to be creative in marketing. Over-regulation of a particular product’s features or functionality risk commoditization of the product, resulting in a ‘vanilla’ approach to structuring a financial product or service. Last year’s ABA Bank Compliance Officer Survey showed that 78% of banks said they will or may need to change the nature, mix and volume of mortgage products. In the last three years, the market share of non-bank mortgage services has nearly tripled, and that shifts consumers into product systems that are less regulated.
Big Data and Privacy: Privacy is fundamental in financial services. Online privacy preferences are a staple of web privacy statements. Privacy regulation has evolved as technology has evolved. Conflicts with privacy and technology, including surveillance have been headlines for the last year. Big data and the usage of data to drive customer experience and eMarketing can be a tricky ski slope. Traditional notice and choice concepts of fair information practices could not have anticipated how data analytics and big data have emerged. Creating regulation that could anticipate future uses of data would be difficult to enforce or interpret, especially with pace of technological change. Rather, collectively, the advances in innovation enabled by big data need to be balanced with clear customer awareness of data usage and respect for context.
Net Neutrality: While not directly a result of prudential banking regulators, the recent FCC actions are prompting an online debate over net neutrality and the risks that regulatory change could hinder innovation on the internet. The concept that all internet data is equal is under scrutiny. When the Internet was created, we could not have anticipated things like digital video streaming, Netflix, social media or You Tube. While big players in the internet service provider (ISP) space debate the interpretation of the ruling the implications to pricing and access to content for smaller and medium sized ISPs can’t be forgotten. Small businesses are a primary driver for economic growth, and profitability to financial institutions. The net neutrality debate stems from a legal interpretation of jurisdiction, but has creating an avalanche of concerns regarding competition, payments processing and evolution of payments.
The Evolution of Payments: Historically, no payment method has truly ever been totally obsolete – barter is still used today, just like checks are still written by consumers and businesses. The rapid emergence of technology has driven changes to payments, including testing our perceptions of traditional payment mechanisms. Mobile technology alone spurs innovation in customer access and usage. It is difficult for regulations to keep pace with technology innovation and can risk applying old business models to a new hybrid banking landscape. Debates over remotely written checks, industry efforts to electronify checks, and virtual currency are creating a hailstorm of questions about how to protect payments, but not halt innovation. Bottom line the debate can create confusion for end customers – both financial institutions and service providers need to monitor the influx of regulatory commentary and how it may affect the development of their payment strategy roadmap. Innovation in payments requires technology + meeting customer needs in a way that still delivers a protected transaction. Payments are a critical component to most financial institutions profitability, and as payments evolve, the regulatory oversight needs to evolve in parallel, but without slowing down technology innovations.
Enhancing Your Risk and Compliance Culture
While the pendulum for shifting governance and oversight has forced a more conservative approach, that correction can be balanced by broadening the risk acumen and organizational agility with an intentional strategic plan. Accountability is a critical success factor in the new landscape of demonstrating how risk is addressed. Organizations need to move behind checklist compliance to truly managing risk. Taking steps to invest in readiness for executives to make informed business decisions, and manage risk without halting innovation is an important element in risk process maturity. Here are five simple things your organization can do to help minimize the stifling of creativity while meeting the burdens of regulatory compliance.
Create a Risk & Compliance Education & Awareness Plan: Develop an internal communication plan for all levels of the organization, to expand acumen on changes in regulation and regulator expectations. Executives will need to have more familiarity with the governance processes, and how they are evolving. Identify your internal stakeholders who manage different areas of risk, and define what types of training or education they may need to help them in the governance process.
Broaden Executive Management Reporting: With expanded risk & governance committees, assess internal scorecards and dashboards to ensure that the “hows” are being monitored and addressed. Governance is an ongoing process, not a once and done event. Consider starting quarterly educational scorecards for Audit Committees to broaden their industry awareness of changes in expectations and the organizational action in process to respond to market events. Look at the makeup of current decision makers and even board members, to identify what gaps in functional experience could make enabling technology and product innovation simpler to execute. Identifying the “Digital Director” can help streamline the navigation for technology innovation, and mobile opportunities.
Broaden Tools to Enable Consistent Governance: Risk process maturity comes from repeatability and scoping. Understand the decision makers for changes in nature and structure of process, and embed compliance requirements up front in the design phase. Ensure feedback loops are in place from your customer complaint process to not just “react” to complaints, but to show ownership in the risk monitoring. Structure standardized templates that directly speak to “how” compliance has already been address in product release plans.
Practice your Risk Posture Positioning: Proactive risk and compliance management requires taking a bit of the fear, uncertainty, and doubt off the table. Figure out how to tell the compliance story to your internal stakeholders, the board, and your regulator. Practice how you would defend the decisions made and how you met the compliance burden.
Clarify Roles and Responsibilities: It can take a village to manage risk and compliance in financial services. Ensure that lines of sight and organizational accountabilities are clear, so that ownership for governance is understood. If products or services are outsourced, ensure that the third party risk management governance model and process is updated to account for non-IT risks.
We need regulation in financial services, to avoid the repeat of the mistakes seen during the financial crisis. The structuring and marketing of financial products and services needs to continually evolve, but at a much faster pace due to the pace of technology innovation. The avalanche of regulation and the corresponding delays in product enhancement are an “ice-bucket” wake up call for financial services. As an industry, we need to understand how regulation can stifle innovation and take steps to address the fear, uncertainty and doubt within our organizations and identify ways to tip the scales and creating a more balanced governance model for compliance and innovation.
fonte (http://www.wib.org/publications__resources/compliance_digest/sep_14/solem.html)
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ECONOMY
Morning Bell: Dodd-Frank Financial Regulations Strangling Economy
Amy Payne / July 20, 2012 / 39 comments 542 1
Has your bank raised its fees or stopped offering free checking accounts in the last couple of years? If so, you can thank the regulatory boondoggle that is the Dodd-Frank financial law.
Since its passage two years ago tomorrow, the number of large banks that offer free checking has declined sharply. In 2009, 96 percent of them offered free checking, but just 34.6 percent did in 2011.
Senator Chris Dodd (D-CT) and Representative Barney Frank (D-MA) argued that their namesake would save America from another financial crisis—but most of the law’s provisions have little or no connection to the most recent crisis.
For example, Dodd–Frank does not end bailouts and taxpayer support for big banks. Under the act, the Federal Deposit Insurance Corporation (FDIC) is permitted to purchase the assets of a failing firm, guarantee the obligations of a failing firm, take a security interest in the assets of a failing firm, and borrow on the failed firm’s total consolidated assets. (For Bank of America, that would be $2 trillion in bailout authority to be paid by taxpayers.)
Congress has proven, in fact, that it grossly misdiagnosed the factors responsible for the financial crisis, while ignoring primary culprits such as Fannie Mae and Freddie Mac. But in its haste to appear relevant and on top of things, Congress has unleashed a staggering amount of new regulations that are actually harming—not helping—the economy.
There’s a reason the financial regulation law has been called “Dodd-Frankenstein.” This monstrous creation will swell the ranks of regulators by 2,849 new positions, according to the Government Accountability Office. It created yet another new bureaucracy called the Consumer Financial Protection Bureau (CFPB) that has truly unparalleled powers.
This new bureau is supposed to regulate credit and debit cards, mortgages, student loans, savings and checking accounts, and most every other consumer financial product and service. And it’s not even subject to congressional oversight.
Frighteningly, the CFPB’s regulatory authority is just as vague as it is vast. More than half of the regulatory provisions in Dodd–Frank state that agencies “may” issue rules or shall issue rules as they “determine are necessary and appropriate.” This means, as The Economist put it, “Like the Hydra of Greek myth, Dodd-Frank can grow new heads as needed.”
Congress avoided making real law here and passed the responsibility for “fixing” the financial sector to these newly minted bureaucrats. And that hasn’t been going too well.
As Heritage’s Diane Katz explains in a two-year checkup of the law:
As of July 2, 63 percent of the deadlines have been missed, which has intensified the cloud of uncertainty enveloping the finance sector—and the economy—since passage of the act. Thousands of businesses do not know what the government demands they do differently or when they must do it.
The results of this haphazard regulation are dire, Katz says, because “consumers will experience tight credit, higher fees, and fewer service innovations. Job creation will suffer.” She adds that “financial firms of all sizes are shelling out hundreds of millions of dollars for regulatory compliance officers and attorneys rather than making loans for new homes and businesses.”
So the law that was supposed to fix the financial sector—and created something called the Consumer Financial Protection Bureau—is hurting consumers rather than “protecting” them. Congress should repeal Dodd-Frank before it can do any more damage.
fonte (http://dailysignal.com/2012/07/20/morning-bell-dodd-frank-financial-regulations-strangling-economy/)
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Four Years of Dodd-Frank Damage
The financial law has restricted credit and let regulators create even more too-big-to-fail companies.
By PETER J. WALLISON
July 20, 2014 5:55 p.m. ET
When the Dodd-Frank Wall Street Reform and Consumer Protection Act took effect on July 21, 2010, it immediately caused a sharp partisan division. This staggeringly large legislation—2,300 pages—passed the House without a single Republican vote and received only three GOP votes in the Senate. Republicans saw the bill as ObamaCare for the financial system, a vast and unnecessary expansion of the regulatory state.
Four years later, Dodd-Frank's pernicious effects have shown that the law's critics were, if anything, too kind. Dodd-Frank has already overwhelmed the regulatory system, stifled the financial industry and impaired economic growth.
According to the law firm Davis, Polk & Wardell's progress report, Dodd-Frank is severely taxing the regulatory agencies that are supposed to implement it. As of July 18, only 208 of the 398 regulations required by the act have been finalized, and more than 45% of congressional deadlines have been missed.
The effect on the economy has been worse. A 2013 Federal Reserve Bank of Dallas study showed that the GDP recovery from the recession that ended in 2009 has been the slowest on record, 11% below the average for recoveries since 1960.
ENLARGE
PHIL FOSTER
There is always a trade-off between regulation and economic growth, but Dodd-Frank—by far the most intrusive and costly financial regulation since the New Deal—placed few if any limitations on regulatory power. Written broadly and leaving regulators to fill in the details, the act has often left regulators in doubt about what Congress meant. Even after regulations have been finalized, interpreting them can be a trial. For example, the regulations implementing the inconsistent Volcker Rule, which prohibited banks and their affiliates from trading securities for their own account, took more than three years to write, but key provisions are still unclear.
These uncertainties, costs and restrictions have sapped the willingness or ability of the financial industry to take the prudent risks that economic growth requires. With many more regulations still to come, Dodd-Frank is likely to be an economic drag for many years.
None of this was necessary. The administration and Congress acted hastily. The Treasury Department sent draft legislation to Congress only a few months after taking office in 2009, and the law—spurred by a promise from then-Rep. Barney Frank for a "new New Deal"—passed a year later. The left's view had been settled: the crisis would be blamed on Wall Street greed and insufficient regulation. The act set out to implement that worldview by subjecting American finance to unprecedented government control.
It is now clear, however, that government housing policies—implemented primarily by Fannie Mae and Freddie Mac—forced a reduction in mortgage underwriting standards, which was the real cause of the crisis. The goal was to foster affordable housing for low-income and minority borrowers, but these loosened standards inevitably spread to the wider market, building an enormous housing bubble between 1997 and 2007.
By 2008 roughly 58% of all U.S. mortgages—32 million loans—were subprime or otherwise low quality. Of these 32 million loans, 76% were on the books of government agencies, primarily Fannie and Freddie, showing incontrovertibly where the demand for these loans originated. When the housing bubble burst, mortgage defaults soared to unprecedented levels. Although the left's narrative placed all blame on the private sector, these numbers show that private firms were responsible for less than a quarter of the problem.
Yet Dodd-Frank said nothing about government housing policies and ignored Fannie and Freddie. It focused on placing additional restrictions on financial firms, often for no apparent purpose other than to extend government control. For example, all bank holding companies with consolidated assets of more than $50 billion were automatically designated as systemically important financial institutions, although a bank of that size would not bring down the multitrillion-dollar U.S. financial system.
The Volcker Rule was inserted in the act, even though there is no evidence that banks trading securities for their own account had anything to do with the financial crisis.
Even the Constitution's checks and balances did not impede the left's objectives. To block Congress from limiting the Consumer Financial Protection Bureau's activities, Dodd-Frank set up the agency to be funded directly by the Federal Reserve. This is a clear evasion of the constitutional structure in which Congress appropriates funds for executive-branch operations.
Dodd-Frank also created the Financial Stability Oversight Council, consisting of the leaders of all federal financial regulators and headed by the Treasury secretary. FSOC has the extraordinary power to designate certain nonbank financial firms as systemically important financial institutions (SIFIs) if, in the judgment of the council, the firm's "material financial distress" would cause financial "instability." By definition, then, SIFI designation means a nonbank financial institution is "too big to fail." Although we are currently saddled (thanks to past government policies) with several enormous banks that may be too big to fail, the act gave the FSOC the power to create more too-big-to-fail institutions in other industries.
The SIFI process is underway, with AIG, Prudential Financial and GE Capital already designated. These firms are now subject to banklike regulation by the Fed—though the central bank has given no hint of what this regulation will ultimately entail.
The FSOC is now turning to asset-management firms and mutual funds, with what looks like an effort to bring large players in the capital markets and securities industry under Fed regulation. The obvious danger in subjecting the unique and innovative U.S. capital markets to banklike restrictions recently drove the House Financial Services Committee to pass a one-year moratorium on additional SIFI designations.
There is much more, but one example says it all. Several months ago J.P. Morgan Chase announced that it plans to hire 3,000 more compliance officers this year, to supplement the 7,000 brought on last year. At the same time the bank will reduce its overall head count by 5,000. Substituting employees who produce no revenue for those who do is the legacy of Dodd-Frank, and it will be with us as long as this destructive law is on the books.
wsj (http://www.wsj.com/articles/peter-wallison-four-years-of-dodd-frank-damage-1405893333)
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podia estar aqui a postar até ao dia do juízo final
tens a certeza que queres isso?
L
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Que há opiniões nesse sentido não se duvida. O que se duvida é que estejam a ser expressas neste debate.
E também se duvida que estejam a ser expressas simultaneamente.
Portanto essa opinião no mínimo não é algo para o qual existam dois lados aqui. O lado que podes achar aqui é o que defende:
* A necessidade de programas de apoios não serem abusados juntamente com;
* A necessidade do sector financeiro ser regulado.
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The Republican Strategy To Repeal Dodd-Frank
Posted on January 7, 2015 by Simon Johnson | 32 Comments
By Simon Johnson
On January 7, 2015, Day 2 of the new Congress, the House Republicans put their cards on the table with regard to the 2010 Dodd-Frank financial reforms. The Republicans will chip away along all possible dimensions, using a combination of legislation and pressure on regulators – with the ultimate goal of relaxing the restrictions that have been placed on the activities of very large banks (such as Citigroup and JP Morgan Chase).
The initial target is the Volcker Rule, which limits the ability of megabanks to place very large proprietary bets – and their ability to incur massive losses, with big negative consequences for the rest of us. But we should expect the House Republican strategy to be applied more broadly, including all kinds of measures that will reduce capital requirements (i.e., make it easier for the largest banks to fund themselves with relatively more debt and less equity, taking more risk while remaining Too Big To Fail and thus benefiting from larger implicit government subsidies.)
The repeal of Dodd-Frank will not come in one fell swoop. Rather House Republicans are moving in several stages to reduce the scope of the Volcker Rule and to gut its effectiveness.
The first step in this direction came on Wednesday, with a bill brought to the floor of the House supposedly to “make technical corrections” to Dodd-Frank. This legislation was not considered in the House Financial Services Committee, and was rushed to the House floor without allowing the usual debate or potential for amendments (formally, there was a “suspension” of House rules).
Buried in this legislation is Title VIII, which will extend the deadline for one important aspect of Volcker Rule compliance to 2019. (The specific topic is by when big banks should divest themselves of some Collateralized Loan Obligations, CLOs – on how these investments function as internal hedge funds at the largest three banks, see this primer from Better Markets, a pro-reform group.)
Some very large banks and House Republicans previously asked to extend this deadline for CLO compliance through 2017, and a full extension was actually granted by the Federal Reserve in 2014. (Specifically, in April 2014 the Fed extended the divestment deadline for CLOs to 2017and then, in December 2014, extended the divestment for all covered funds under the Volcker Rule until 2017.)
Now that Citigroup, JP Morgan Chase and Wells Fargo already have the extension through 2017, they immediately ask for… an extension through 2019.
The strategy here is clear: delay for as long as possible. Perhaps the regulators will cave in, again, under pressure. Perhaps the White House will agree to another rollback of Dodd-Frank, for example attached to a spending bill – which is what happened in December 2014. (Remember that government spending is only authorized until September 2015, so there will be plenty of opportunities).
And perhaps, after November 2016, a Republican president will work with a Republican Congress to eliminate all parts of Dodd-Frank that crimp the style of very large leveraged financial firms.
On Wednesday, the Republican bill that would have weakened the Volcker Rule actually failed – under the suspension of the rules, it needed two-thirds of all members present in order to pass, and the vote was 276 in favor and 146 against. When enough Democrats hold together, they can make a difference.
But all of this is just a warm-up. In coming months we should expect: the largest few banks (always masquerading as representing the social interest) will pressure for a change in technical definitions, e.g., what kind of hedge fund they are allowed to own and what it means to “own” something. They will ask for more delays and “clarifications”. And they will argue that lending to some category of firms (“job creators”) should be exempt from any kind of restriction.
Section 716, which would have forced big banks to keep their derivatives business somewhat separated from their insured deposits, was repealed in December 2014. This measure primarily benefited Citigroup and JP Morgan Chase. At the time, some Democrats – including people close to the White House – said, not to worry, “we’ll always have the Volcker Rule.”
In fact, the signal from the repeal of Section 716 is that the store is open. The White House had previously said “no” to any proposed repeal of Dodd-Frank, including when attached to a spending bill. This moratorium has clearly been lifted, and the lobbyists are hard at work.
The House Republican rhetoric will be “technical fixes” and “job creation”. But the reality is that they are determined to strip away all meaningful restrictions imposed on Citigroup, JP Morgan Chase, and other megabanks – and to roll-back Dodd-Frank as far as possible, until it becomes meaningless or they are finally able to repeal it completely.
fonte (http://baselinescenario.com/2015/01/07/the-republican-strategy-to-repeal-dodd-frank/)
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Wall St. Wins a Round in a Dodd-Frank Fight
By PETER EAVIS DECEMBER 12, 2014 8:24 PM December 12, 2014 8:24 pm 63 Comments
Jamie Dimon, left, called lawmakers to express his support for repeal of the derivatives rule.
(http://graphics8.nytimes.com/images/2014/12/13/business/Bank/Bank-tmagArticle.jpg)
When Wall Street traders sense opportunity in the markets they pursue it with a sharklike intensity.
After scoring a victory in Washington that repeals a rule that the industry has long assailed, the large banks are most likely weighing where to strike next.
Wall Street won when the House of Representatives on Thursday passed a broad spending bill that contained a provision that rolls back a rule affecting derivatives, the financial product that helped cause the financial crisis of 2008. The Senate is expected to pass the budget legislation containing the repeal this weekend.
A repeal would show that, six years after the financial crisis, large banks have found a way to kill off regulations that were part of the Dodd-Frank Act, the sweeping legislation that Congress passed in 2010 to overhaul the financial system.
The House’s vote seemed to reverberate around Washington on Friday.
“I thought that, when Dodd Frank started, that the banks would not succeed in influencing it, having lost all the prestige they lost,” said Stanley Fischer, the vice chairman of the Federal Reserve, at a conference on Friday at the Peterson Institute for International Economics in Washington. “Boy, was I wrong,” he added.
Wall Street’s recent campaign also suggests that large banks now see fewer risks in openly fighting to overturn regulation. Citigroup, which received over $50 billion of bailout money after it nearly collapsed in 2008, helped write legislation that was behind the proposed repeal of the rule. And The Washington Post reported that Jamie Dimon, the chief executive of JPMorgan Chase, called lawmakers to express his support for the repeal. Only last year, Mr. Dimon was fighting to save his professional reputation after his bank racked up huge losses trading the type of instruments that the derivatives rule focused on.
In going after the rule, Wall Street used a well-orchestrated way to sway Washington.
The rule tried to chip away at some of the implied taxpayer subsidies that banks’ derivatives operations enjoy. Eroding such subsidies was a cause that Wall Street’s critics, like Senator Elizabeth Warren, Democrat of Massachusetts, could rally around.
But the regulation is arcane, and that created a problem for the opponents of the rule’s repeal. One way to stop Wall Street from killing off the rule was to vote against the whole spending bill and risk shutting down the government.
And it might have been hard for some members of Congress to contemplate going to such lengths for an esoteric measure, says Nolan McCarty, a professor of politics at Princeton. “It’s not the most important part of Dodd-Frank,” he said, “but the worst-case scenario is that they now have a playbook to go after the more important parts.”
There is no shortage of complex regulations in Dodd-Frank that the big banks want to eliminate or dilute.
They have, for instance, a special loathing for the Volcker Rule, which restricts banks from engaging in speculative trading. The Obama administration has trumpeted the Volcker Rule as a signature part of the overhaul. But for months, the banks have been lobbying the Federal Reserve to postpone by another year the date at which they must comply. A senior Fed official recently made remarks that seemed sympathetic to a delay.
Though securing such a concession might generate anger on Capitol Hill, the banks may now care less about such opposition. “You have a Senate that’s just changed hands, so that might change things,” said Donald N. Lamson, a partner at Shearman & Sterling, a law firm.
A victory over the derivatives rule would follow smaller — but still significant — gains for Wall Street in recent months. After strong pressure from the asset management industry, the Securities and Exchange Commission this year completed an overhaul of money market funds that fell well short of what other regulators had called for. In a gain for mortgage banks, the Federal Housing Finance Agency loosened contracts that demand that lenders take back shoddy mortgages that they might have sold to the government. Still, for the next couple of years, Wall Street may win only in smaller skirmishes, rather than the bigger battles.
The Obama administration strongly opposed the repeal of the derivatives rule. And parts of the spending bill will secure more money for regulatory agencies like the Securities and Exchange Commission and the Commodity Futures Trading Commission.
More broadly, the administration is expected to hold the line firmly on regulations that it says are crucial for the Dodd-Frank overhaul to do its job. The most prominent of these are capital regulations, which make banks stronger by demanding that they use less borrowed money to finance their lending and trading.
For instance, the Federal Reserve proposed increasing capital requirements for the country’s eight largest banks to levels that were substantially higher than in other countries. “That was by far the most important thing,” said Phillip L. Swagel, a professor of international economic policy at the University of Maryland, and an assistant secretary at the Treasury Department in the second administration of President George W. Bush.
Janet L. Yellen, chairwoman of the Fed, suggested that the Fed’s new capital rules might even prompt some large banks to shrink their operations. Indeed, after it was revealed that JPMorgan would theoretically need to increase its capital by least $20 billion under the new rules, banking analysts said that it might now make sense for the bank to pare back its activities.
Still, people who view Wall Street skeptically are unnerved by the campaign to repeal the derivatives rule. Professor McCarty was struck by how banks of different sizes seemed to work together to overturn the regulation. “That suggests there is a larger, longer-term strategy, in which the banks are going to work together,” he said.
nyt (http://dealbook.nytimes.com/2014/12/12/wall-st-wins-a-round-in-a-dodd-frank-fight/)
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e a carinha do jamie dimon ali acima?
chega para espantalho?
L
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lark: era fixe escolheres os posts mais pela qualidade do que pela quantidade, 5 de seguida ate parece spam
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este texto que vou transcrever talvez seja o mais elucidativo de todos.
leiam com atenção.
é um pouco longo mas vale bem a pena
L
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e a carinha do jamie dimon ali acima?
chega para espantalho?
L
Estando num debate aqui e não com o Jamie Dimon, esperar-se-ia que os argumentos se centrassem naquilo que aqui se diz e não naquilo que o Jamie Dimon possa dizer.
Aliás, o Jamie Dimon nem deve corresponder ao que tu pensas estar debater, pois é duvidoso que ele partilhe do "concern" com os abusos de programas de apoio -- afinal ele apoia maioritariamente os Democratas com as suas doações.
Novamente, até ao momento um dos lados aqui defende:
* Evitar abusos nos apoios, sejam os apoios aos "fracos", tipo os RSIs e afins, sejam aos fortes, tipo Tesla;
* Regular e supervisionar o sector financeiro, que devido à sua natureza exige regulação apertada.
O que não existe, é o que tu pensas estar a debater - um contingente que defende:
* Evitar abusos nos apoios, sejam os apoios aos "fracos", tipo os RSIs e afins;
* NÃO regular e supervisionar o sector financeiro.
Por fim, dir-se-ia, por oposição ao que está acima, que pareces defender (mas não é certo):
* Não se preocupar com abusos nos apoios, sejam aos fracos sejam aos fortes;
* Regular fortemente a indústria financeira.
De resto, essa posição é estranha, porque no passado defendeste que a indústria financeira deveria ser fortemente apoiada para se safar bem da crise.
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Não sei se me expliquei bem.
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The Woman Who Knew Too Much
Millions of Americans hoped President Obama would nominate Elizabeth Warren to head the consumer financial watchdog agency she had created. Instead, she was pushed aside. As Warren kicks off her run for Scott Brown’s Senate seat in Massachusetts, Suzanna Andrews charts the Harvard professor’s emergence as a champion of the beleaguered middle class, and her fight against a powerful alliance of bankers, lobbyists, and politicians.
On the afternoon of July 18, in remarks from the Rose Garden amid the bruising showdown with congressional Republicans over the debt ceiling, President Obama made what the White House billed as a simple “personnel announcement.” In a brief speech, the president announced that he was nominating Richard Cordray, the former attorney general of Ohio, to head the Consumer Financial Protection Bureau, the new government agency set up to protect consumers from abusive lending practices. In his remarks he described the agency, part of the massive 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, as creating “the strongest consumer protections in history,” set up “so ordinary people were dealt with fairly.” After which he turned to thank the woman standing to his right, Elizabeth Warren.
A Harvard law professor, one of the nation’s leading bankruptcy experts and consumer advocates, the 62-year-old Warren had come up with the idea for the agency in 2007. She had advised the Obama administration on its creation in the aftermath of the 2008 financial collapse and helped to push it through Congress. Warren had also spent the last 10 months working tirelessly to build the agency from scratch—hiring its staff of 500, including Richard Cordray, organizing its management structure, and getting the C.F.P.B. up and running for its opening on July 21.
As she crisscrossed the country, spreading the word about the C.F.P.B., Warren became a familiar face to many, especially to those who had seen her on television—on CNBC, Real Time with Bill Maher, and The Daily Show with Jon Stewart. She had gained millions of supporters. With her passionate defense of America’s beleaguered middle class, under assault today from seemingly every direction, she had become like a modern-day Mr. Smith, giving voice to regular citizens astonished at the failure of Washington to protect Main Street—and what increasingly appeared to be its abandonment of middle-class America. By July, the A.F.L.-C.I.O.—speaking for its 12 million members—had called on Obama to name Warren to head the agency. So had scores of consumer groups. Eighty-nine Democrats in the House of Representatives had signed a letter, publicly urging him to choose Warren. Newspapers around the country editorialized on her behalf, as did hundreds of bloggers. By July 18, when Obama announced that he was passing Warren over, he did so after receiving petitions signed by several hundred thousand people and organizations urging him to appoint Warren as the country’s top consumer watchdog.
At the end of his remarks, Obama turned to Warren and kissed her on the cheek. She smiled gamely, though if there are kisses a woman can do without, this was one of them. A Judas kiss, some would say. But if so, the betrayal was not just of Elizabeth Warren. In his remarks, Obama would hint at what had happened to Warren, commenting that she had faced “very tough opposition” and had taken “a fair amount of heat.” He also alluded to the powerful forces arrayed against her, and against the C.F.P.B.—“the army of lobbyists and lawyers right now working to water down the protections and reforms that we’ve passed,” the corporations that pumped “tens of millions of dollars” into the fight, and “[their] allies in Congress.” But he was mincing his words. The fight against Warren and the C.F.P.B. was one of the most brutal Washington battles this year, up there with the debt-ceiling showdown and now the looming battle over the jobs bill—but part of the same war. Arrayed against Warren, and today against the very existence of the C.F.P.B., was the full force of what many, most notably Simon Johnson, the M.I.T. professor and former International Monetary Fund chief economist, have called the American financial oligarchy: Wall Street firms and banks supported mainly by Republican members of Congress, but also politicians on the other side of the aisle, along with members of Obama’s own inner circle.
At a time of record corporate profits, a time when 14 million Americans are out of work, when millions have lost their homes and, according to the Census Bureau, the ranks of those living in poverty has grown to one in six—that Elizabeth Warren could be publicly kneecapped and an agency devoted to protecting American consumers could come under such intense attack is, ultimately, the story about who holds power in America today.
When the C.F.P.B. was first proposed to Congress, in early 2009, the Chamber of Commerce, the leading business lobbying group in the country, announced that it would “spend whatever it takes” to defeat the agency. According to the Center for Public Integrity, from 2009 through the beginning of 2010, it would be one of the biggest spenders among the more than 850 businesses and trade groups that together paid lobbyists $1.3 billion to fight financial reform.
Although a Gallup poll in the fall of 2010 would show that 61 percent of Americans supported Dodd-Frank—which was designed to curb the risky bank activities that triggered the 2008 meltdown and the ensuing recession—the financial establishment would continue to attack it even after it became law on July 21, 2010.
According to the Center for Responsive Politics, in 2010 the financial industry flooded Congress with 2,565 lobbyists. They were financed by the likes of the Financial Services Roundtable, which, according to the Center, paid lobbyists $7.5 million, and is on its way to spending as much or more this year. The Chamber of Commerce spent $132 million on lobbying Washington in 2010. The American Bankers Association spent $7.8 million. As for individual banks: JPMorgan Chase, which received $25 billion in TARP funds from taxpayers, spent nearly $14 million on lobbying during the 2009–10 election cycle; Goldman Sachs, which received more than $10 billion from taxpayers, spent $7.4 million; Citigroup, which was teetering on the brink of insolvency and received a $45 billion infusion, has paid more than $14 million to lobbyists since 2009. And none of this money includes the direct campaign donations these organizations, and their surrogates, made to members of Congress.
The banks “do not like to lose,” says Ed Mierzwinski, of the National Association of State Public Interest Research Groups, which was part of the grossly outmatched consumer coalition that managed to scrape together a paltry $2 million to lobby in favor of reform.
While Wall Street and the banks oppose virtually every aspect of Dodd-Frank—from the new rules on derivatives to higher capital requirements—the C.F.P.B. would become among the most controversial aspects of the reforms, the banking industry’s particular bête noire. Its chief mission, on the face of it, would seem unremarkable: enforcing the rules protecting consumers already on the books, bringing laws that had been overseen by seven different federal agencies under a single authority. Most of the rules were overseen by the bank regulators. The catch was that none of them had paid much attention to consumer protection. Their primary focus had been ensuring the “safety and soundness” of the banks, which for decades had translated as ensuring bank profits. For the banks, the C.F.P.B. meant not only a new regulator rifling around in their books but also a regulator with a mission that did not focus on their bottom lines. And in a world where the banking industry makes billions of dollars off consumers from what’s hidden in the fine print—including $22.5 billion in credit-card penalty fees last year, according to R. K. Hammer, a bank-card consultant—the banks perhaps had reason to be concerned.
Talk to most bank executives and they’ll still place the blame for the 2008 financial crisis on “irresponsible consumers” who took out mortgages they couldn’t afford; dishonest mortgage brokers; and—at the top of the list—the government, which used Fannie Mae and Freddie Mac to finance mortgage lending to “people who shouldn’t own homes,” as one senior New York bank executive put it to me recently. All of which is partly true but omits the enthusiasm with which Wall Street feasted on that market, and the fact, as Warren puts it, “that Wall Street made tens of billions of dollars” from it. In short, there is no remorse, let alone a sense of obligation, because bank executives generally do not believe they were the cause of the financial collapse. As Neil Barofsky, Treasury’s former inspector general charged with oversight of TARP, the $700 billion government bailout of the banks, recalls from his interviews with bankers, the attitude instead was that “shit happens.” The state of denial has been massive. On Wall Street today, says the vice-chairman of a private-equity firm, “there is this enormous persecution complex in the banking industry about Dodd-Frank, that everyone is going after the banks.”
This Wall Street psychosis—“We did nothing wrong, but everyone is trying to hurt us”—was given a dramatic airing in June by Jamie Dimon, the chairman of JPMorgan Chase, at a conference in Atlanta. Clearly agitated during a Q&A with Federal Reserve chairman Ben Bernanke, Dimon launched into the reasons why the regulators were being too tough on banks. The causes of the financial crisis had been dealt with. “Most of the bad actors are gone,” he said, rattling off a long list of the perpetrators, which included C.D.O.’s, Fannie Mae, Freddie Mac, “thrifts, all the mortgage brokers, and, uh, obviously some banks.” He said that he worried that Dodd-Frank was “holding us back at this point”—suggesting that the regulation of banks was the reason why the economy was not recovering. In other words, what was bad for Wall Street was very bad for the country.
What Dimon did not say is that having been supported through the crisis by billions of dollars in TARP aid from American taxpayers, and another $1.2 trillion in emergency loans from the Fed, the largest banks are bigger today than they were before the crisis—way too big to fail—and that many of them are generating even fatter profits. At Dimon’s $2 trillion JPMorgan Chase—which rewarded Dimon’s performance last year with pay estimated at $20.8 million and $17 million in restricted stock and options—revenues hit $27.4 billion, with a profit of $5.4 billion, in the second quarter of 2011 alone. Nevertheless, Dimon’s argument was essentially the one that bank executives, their lobbyists, and supporters in Congress would make against financial reform: that it would kill job creation, cut off lending to businesses and consumers, stifle financial innovation, and strangle free enterprise in America. Spencer Bachus, the Alabama Republican who chairs the powerful House Committee on Financial Services and who is one of the C.F.P.B.’s leading opponents, would—invoking Mao Zedong—even suggest at a Chamber of Commerce gathering in March that Dodd-Frank was, as he put it, a move toward “a government command-and-control” economy.
Warren followed Bachus to the podium at that conference. It was one of countless meetings she had been having with bankers and business leaders to win their support for the C.F.P.B. She spoke about her belief in free markets, and in government regulation as a mechanism that protected free enterprise by ensuring that the markets functioned fairly and honestly. Perhaps because she did not expect—or get—a rousing reception, she refrained from giving the passionate cri de coeur on the plight of the middle class that brought resounding applause and cheers from audiences around the country.
In those speeches, sometimes using slides filled with numbers and graphs, she would, as she did at a speech in Manhattan in early June, outline the impact on middle-class Americans of rising health-care costs, burgeoning debt, and the depletion of not only their savings but also, with the rise in joblessness, their confidence. She spoke of “the Wild West” conditions deregulation had created, where banks could sell virtually any product they wanted, on any terms: mortgages they knew consumers could not pay off, credit cards whose rates they could raise at whim, products that came with a mind-boggling array of penalty fees, many of them not fully disclosed. But it was her final remarks that brought down the standing-room-only house in June. “We cannot run our country without a strong middle class. We cannot run a democracy without a strong middle class,” she said, her voice quavering slightly. “If we hollow out the middle class,” she said, “then the country we know is gone.”
But while audiences applauded her, Warren’s opponents lacerated her. She was called incompetent, power-hungry, ignorant, a media whore, and, in a widely televised moment, a liar, by a Republican congressman during a hearing in May. “It was like she was the Antichrist,” says Roger Beverage, the president of the Oklahoma Bankers Association and one of the few bankers who publicly supported her. She had become the lightning rod for the opposition to the C.F.P.B. Says Barney Frank, the Massachusetts congressman who is the “Frank” in “Dodd-Frank,” “It’s partly sore-losership. They are blaming her for something they all swore would never happen.” But it was also because she was eloquent and convincing, and relentlessly tough in her criticism of Wall Street and its enablers.
That bluntness was evident in an interview even in late May, when Warren, who learned only in July that she wouldn’t get the job, still believed that Obama might ask her to run the C.F.P.B. “It’s money and power, the only two things we are talking about here,” she said, speaking of the people who were trying to kill the C.F.P.B. “in the back alleys,” as she put it. “There are many who are rich and powerful who say the system works fine as it is,” she continued. “America had been a boom-and-bust economy going into the Great Depression—just over and over and over, fortunes were wiped out, ordinary families were crushed under it. Coming out of the Great Depression we said, We can build a structure that makes us all safer. And notice, it’s from the end of the Great Depression to the 1980s that we built America’s middle class. That’s when we got stronger as a country. That’s when that big, solid, boring, hardworking, play-by-the-rules group in the middle emerged and defined what America was. You still had the ability to become a billionaire, but the center stayed strong and, notice, provided opportunity for growth, opportunity for getting ahead, opportunity that your kids were going to do better than you did. That was what defined America. And then we started, inch by inch, pulling the threads out of that regulatory fabric, starting in the 1980s.”
Today, Warren says, one “vision of how America works is that it’s an even game, that anybody can get started—just roll those dice; that booms and busts will come and millions of people will lose their homes, millions more will lose their jobs, and trillions of dollars in savings retirement accounts will be wiped out. The question is, Do we have a different vision of what we can do? This agency is out here in a sense to try to hold accountable a financial-services industry that ran wild, that brought our economy to the edge of collapse,” she said. “There’s been such a sense that there’s one set of rules for trillion-dollar financial institutions and a different set for all the rest of us. It’s so pervasive that it’s not even hidden.”
Warren was not always a critic. Born and raised in Oklahoma, Elizabeth Herring spent most of her early life performing all the good-girl Stations of the Cross. She won the Betty Crocker competitions, married for the first time at 19, had two children before she was 30, and was once a registered Republican. She was the youngest of four children and the only daughter. Her father worked as a janitor, and her mother brought in extra money working in the catalogue-order department at Sears. Warren would recall her mother hesitating to take her to the doctor because money was so tight. A brilliant and competitive student, Warren was named Oklahoma’s top high-school debater at 16, the same year she graduated with a full debating scholarship to George Washington University. She left G.W. after two years to marry her high-school boyfriend and moved to Houston, where she finished her degree in speech pathology. The first member of her immediate family to graduate from college, Warren then worked as a teacher, followed her husband to New Jersey, and had her first child in 1971. She got her law degree in 1976 from Rutgers University. In the next years, as she divorced and remarried—her current husband, Bruce Mann, is a Harvard law professor—she moved around the country, teaching at the University of Texas, the University of Michigan, and the University of Pennsylvania, before finally settling at Harvard in 1995.
It was in 1979 that Warren had her Damascene conversion—the experience that would lead her to become the nation’s top authority on the economic pressures facing the American middle class, and trigger her passionate advocacy. In 1978, Congress had passed a law that made it easier for companies and individuals to declare bankruptcy. Warren decided to investigate the reasons why Americans were ending up in bankruptcy court. “I set out to prove they were all a bunch of cheaters,” she said in a 2007 interview. “I was going to expose these people who were taking advantage of the rest of us.” What she found, after conducting with two colleagues one of the most rigorous bankruptcy studies ever, shook her deeply. The vast majority of those in bankruptcy courts, she discovered, were from hardworking middle-class families, people who lost jobs or had “family breakups” or illnesses that wiped out their savings. “It changed my vision,” she said.
From then on, Warren would focus her research on the economic forces bearing down on the American middle class. She would chart the disintegration of government policies that, since the New Deal, had helped create perhaps the strongest middle class in the world—in particular, the deregulation of the banks that began in the 1980s. It was a process that she says transformed the middle class into “the turkey at Thanksgiving dinner,” carved, “pulled from,” picked at, something from which everyone “could make a profit.” Her research into how that profit was made would take her into the world of subprime and teaser-rate mortgages, huge credit-card and checking-account penalties, and everything that was buried deep in incomprehensibly worded fine print—the “tricks and traps,” as she calls them, that banks used to lure people into increasingly risky credit products. It would be her immense knowledge of banking practices that would make her such a dangerous and natural foe to Wall Street.
Warren’s first foray into politics was a bitter experience. It began in 1995, when she was asked to advise the new National Bankruptcy Review Commission. She helped draft the commission’s report and then spent several years fighting congressional legislation that would severely restrict the right of consumers to file for bankruptcy. It was a brutal fight. “On the one side you had a huge business alliance, starting with the credit-card companies,” says Travis Plunkett, legislative director of the Consumer Federation of America. “And on the other side you had a sort of ragtag public-interest coalition.” The bill that finally passed in 2005 was a resounding victory for the business lobby and a defeat for consumers. The wheeling and dealing—the millions in political donations, the spectacle of even sympathetic allies in Congress swayed by wealthy special interests, particularly the banks and credit-card companies—left its mark on Warren. And what happened next would be the genesis of Wall Street’s outrage at her.
In November 2008, Warren received a call from Senator Harry Reid. Lehman Brothers had collapsed two months before; A.I.G.’s bailout had just been upped to $150 billion, and Congress had passed TARP. Reid asked Warren to head the congressional panel overseeing the $700 billion bailout. The job was vague, with no clear goals, but Warren would turn it into a tough, prosecutorial committee. She did real investigations, grilled government officials, and issued blunt monthly reports demanding more accountability from banks and better returns for the taxpayer. She held public hearings that were televised, asking the questions that many taxpayers wanted asked—and questions that bankers and Treasury officials did not want to answer.
Perhaps the most widely watched hearing is the one that took place in September 2009. A video of part of that hearing can still be found on YouTube, under the title “Elizabeth Warren Makes Timmy Geithner Squirm.” It opens with Warren asking the question that was on the minds of many taxpayers: “A.I.G. has received about $70 billion in TARP money, about $100 billion in loans from the Fed. Do you know where the money went?” What followed during the rest of the hearing was the spectacle of the Treasury secretary tripping over his words, his eyes darting around the room as Warren, calm and prosecutorial, kept hammering him with questions. At another hearing, in December 2009, Geithner appeared to be barely able to contain his annoyance, at one point almost shouting at her. Warren’s questioning “was masterful,” says Neil Barofsky, who ran the TARP oversight for Treasury. “She eviscerated him.” But Warren would pay a price for those hearings.
“Geithner hated her,” says a former administration official. Part of it was seen as personal because she had scorched him in public. But the whole thrust of her work on the oversight panel—getting the facts out to the public—was at odds with Geithner’s perceived conviction, shared by the Wall Street establishment, that the details of the banks’ TARP rescue should be hidden from public scrutiny whenever possible in order to give the banks time to recover, an assessment that a Treasury spokesperson disputes, insisting that “Secretary Geithner initiated unprecedented disclosure requirements for financial institutions.”
According to Barofsky, however, “Treasury’s descriptions of what was happening were very skewed towards the positive and often incomprehensible. There was this reluctance towards transparency,” and Warren’s work on the oversight panel “helped bring light in a lot of dark areas.” As Treasury sought to cosset the banks, never requiring them, for example, as Barofsky points out, to explain what they were doing with their billions in TARP bailout money, Warren persisted. She went on television shows to criticize the government’s secrecy, the huge bank bonuses, the fact that even after the bailout the banks had escaped disciplinary measures. Obama’s top economic advisers, according to a former administration official, thought Warren was “a pain in the ass.” On Wall Street, Warren was regarded, says one bank vice-chairman, as “the Devil incarnate,” and, according to another executive, a “showboater,” who didn’t really know what she was talking about.
But her sin was actually quite the opposite: she knew what she was talking about. Wall Street’s power in Washington, says a former congressional staffer who worked on the Dodd-Frank bill, has been built partly on the fact that few people outside Wall Street understand the esoterica of finance—the intricacies of C.D.O.’s and the labyrinthian structures of credit-default swaps. And that knowledge is used to control and confuse. But Warren did understand. Says Carolyn Maloney, a New York Democratic representative, “She understands the information as well as the top players in the business.” She knew the secret handshake, the secret language—and she used it against “that tight little group,” as Warren would refer to Wall Street C.E.O.’s and Washington officials who basically controlled the terms of the bailout.
In early spring, several weeks before Obama’s April announcement that he was running for re-election, 24 Wall Street executives gathered in the Blue Room of the White House for a meeting with the president. According to the New York Times account of the meeting, Obama spent more than an hour listening to the financiers’ thoughts on the economy, the deficit, and financial regulation. After the meeting, Obama would follow up with phone calls to the executives who had not been able to attend. The event, the Times wrote, was organized by the Democratic National Committee and “kicked off an aggressive push by Mr. Obama to win back the allegiance of one of his most vital sources of campaign cash.” The financial industry contributed $43 million to Obama’s 2008 presidential campaign, a record haul. But his relations with Wall Street had soured—remarkably many of them were enraged over his criticism of their bonuses in late 2009, which is also when he called them “fat cat bankers.”
By April, however, Warren’s standing in the White House was shaky. Three months earlier, in what was seen as an attempt to “repair” his relationship with his Wall Street donors, Obama had brought in William Daley as his new chief of staff. A former banker at JPMorgan Chase, Daley came into the administration just as senior Obama adviser David Axelrod left. But while Axelrod and another top adviser, Valerie Jarrett, were perceived as strong Warren supporters, Daley had reportedly opposed the creation of the C.F.P.B. A spokesperson for the White House said that, although Daley was “not recused from” discussions about the C.F.P.B., he chose “not to participate in the process of selecting a nominee for C.F.P.B. director.” Which is possible. But with Daley and Geithner—one of Obama’s closest advisers—sharing center stage, the balance of power in the debate over Warren shifted. Geithner would never criticize Warren publicly—and indeed, as a Treasury spokesperson says, he “has expressed his support and admiration for Professor Warren many times”—but few people in Washington doubted that he remained opposed to her candidacy. To at least one person who saw them in meetings together it appeared that “he looked down on her for no apparent or justifiable reason.” As for Warren, if one mentions the video “Elizabeth Warren Makes Timmy Geithner Squirm,” she says nothing, but an impish smile crosses her face.
By this spring, Spencer Bachus, along with his fellow Alabaman, Senator Richard Shelby, was one of the C.F.P.B.’s leading opponents. But they would be joined by the vast majority of Republicans. Some of them had previously admitted to having no particular interest in or understanding of banking, but had developed strong feelings about the C.F.P.B. after receiving campaign donations from banking groups. Among them was former MTV Real World star Sean Duffy, a Wisconsin Republican elected to Congress in 2010, who has been showered with $178,000 in campaign donations from the financial sector for his next election. But the real battle was against Dodd-Frank. Attempts were popping up throughout Congress to slash the budgets of regulatory agencies, including the C.F.P.B. There was even one that denied funding for a consumer-complaint database at the Consumer Product Safety Commission, which businesses had opposed on the grounds that consumers might call in fake complaints. In a sense, says Barney Frank, the C.F.P.B. and Warren had become “a symbol” in a broader battle that was partly ideological. The anti-government, free-market, unregulated-business-as-the-savior-of-America sentiment of the Republican Party today, assisted by Wall Street’s campaign donations, dovetailed perfectly with the interests of the country’s banking Goliaths. To a degree, the attitude regarding Warren, Frank says, was “How dare this woman criticize the free-enterprise system?”
But it wasn’t just Republicans. In May, Christopher Dodd, the former Democratic senator from Connecticut, who had chaired the powerful Senate Banking Committee, denied to Politico the rumors that he was trying to kill Warren’s nomination. But his cryptic statement about people with “ego” problems standing in the way of the bureau was widely seen as a poison dart aimed at Warren. During the passage of Dodd-Frank, Dodd, who is now chairman of the Motion Picture Association of America, was seen as one of Warren’s more influential opponents. Among Wall Street’s staunchest allies—to the tune, in his last election, of almost $4 million in campaign donations for a race he did not even complete—he had sponsored the reform bill in the Senate but had several times appeared to yield to bank opposition, entertaining a number of proposals that would have either killed the C.F.P.B. outright or severely restricted its independence. Warren fought back, not only by calling in support from the White House, but also by speaking out in public. In March 2010 she lashed out in the Huffington Post: “My first choice is a strong consumer agency,” she said. “My second choice is no agency at all and plenty of blood and teeth left on the floor.”
If the friction between Warren and Dodd was an open secret, there would be other Democrats—apparent allies—who also appeared to be trying to pry her away from the C.F.P.B. Those most notable would be Senators Harry Reid and Chuck Schumer, who led the effort, which began in the late spring, to encourage Warren to leave Washington to run against Scott Brown, the Massachusetts Republican, who is up for re-election next year. Some speculated that they were doing the president’s dirty work, trying to rescue him from a tough decision. But others would note the gush of Wall Street donations these Democrats received for their 2010 elections: $6.2 million for Chuck Schumer, the most of any senator, and $4.7 million for Harry Reid, who would clock in as the third-highest beneficiary of Wall Street largesse in the Senate—after New York Democrat Kirsten Gillibrand—according to the Center for Responsive Politics.
In a letter dated May 2, 2011, 44 Republican senators issued an ultimatum to Obama. Citing “the lack of accountability in the structure” of the C.F.P.B., and “the unprecedented authority” of its director “over financial institutions and main street businesses,” they announced that they would block the confirmation of anyone he chose to nominate as C.F.P.B. director unless the bureau’s structure was overhauled. There were many in Washington who viewed this as the perfect opportunity for Obama to appoint Warren during a congressional recess. It would have triggered a bitter fight in Congress, but one that many of Warren’s supporters believed was worth having. “It would have sharpened the issues,” says Jonathan Alter, the author of The Promise: President Obama, Year One.
But for weeks Obama did nothing. As the attacks on Warren and the C.F.P.B. heated up during May and June, the silence from the White House was deafening. Even leading Democrats, like Barney Frank, were confused about the president’s intentions—would he name Warren in a recess appointment or not? And they were stunned when Obama jettisoned her.
Today, David Axelrod, who is now Obama’s chief campaign strategist, denies that placating Wall Street donors influenced Obama’s thinking on the C.F.P.B. “If we were concerned about that, we never would have brought in Elizabeth in the first place,” he says. Nominating Warren to head the C.F.P.B. would have been “a big bloody fight,” he says, insisting that if it had been the right battle Obama would have gone for it. “Look, the president expended a lot of political currency on passing Dodd-Frank and on passing this consumer bureau because he believes in it. So we’re not averse to battles,” he says. “The question is: What are the battles that are in the best interests of the enterprise?” While the fight “would be a wonderful rallying tool in the campaign,” a “symbolic battle that would thrill people,” he says that trying to “score political points by martyring her” would ultimately have hurt the C.F.P.B. “With middle-class people and consumers having so much at stake here, we don’t have the luxury of self-immolation; we don’t have the luxury of symbolism.”
Axelrod’s argument that a fight over Warren’s nomination might damage the C.F.P.B.—although utterly pragmatic and a passionate argument against taking a stand on principle, a view which seems to have overtaken the president on many issues—makes sense. Except for one key point. The man Obama chose, Richard Cordray, is hardly more likely to win Senate confirmation, or Wall Street’s support, than Elizabeth Warren. The Wall Street Journal would write that his career “sounds like Mrs. Warren without the charm.” As Ohio’s attorney general, he had been one of the nation’s leading prosecutors of the financial industry. Before he was nominated, Cordray, who was then chief of enforcement at the C.F.P.B., announced that once the agency went into business he would continue his tough approach “on a 50-state basis … with a more robust and a more comprehensive authority.”
On September 6, Cordray went before the Senate Banking Committee for his confirmation hearing. He met with far more polite treatment from Republican members than Warren ever had, but Republican senators reiterated their pledge to block any nomination to the C.F.P.B. until their demands for changes to the agency were met. Whether they will back down from that promise is anyone’s guess. But the C.F.P.B. will be under fire either way, as will Dodd-Frank. Today, with the battle over regulating Wall Street already an issue in the 2012 presidential race, there are at least a dozen bills and amendments floating around Congress that would weaken the C.F.P.B. or kill it outright. How hard the Obama administration will fight the attacks is another question. The president’s concessions to Republicans on the debt-ceiling deal inspired little confidence among the agency’s supporters. But a new Obama appears to have suddenly emerged—one who, perhaps propelled by his sagging approval ratings and the coming campaign, has suddenly stopped compromising “with himself,” as The New York Times recently editorialized. An Obama who—with his jobs plan and his call for economic fairness in cutting the deficit, including raising taxes on corporations and the rich—seems, for the moment, to be taking a stand for Main Street.
As for Elizabeth Warren, on September 14, ending weeks of speculation, she officially announced that she was entering the Massachusetts Senate race. Today, Warren is considered the Democratic front-runner in what is likely to be one of the most closely watched congressional elections next year. In early September, one poll put her within nine points of Scott Brown—even before she had announced her candidacy. A few weeks later, after her official entry into the field, another poll had her ahead of Brown by two points.
Speaking from a car on her way from one campaign event to another, Warren told me that the stakes are too high for her not to run, too high not to try to continue the fight “for the middle class.” Too high not to try to bring it into the belly of the beast, to the floor of the U.S. Congress. Middle-class families “are getting hammered and you know Washington doesn’t get it,” she said. “G.E. doesn’t pay any taxes and we are asking college kids to take on even more debt to get an education, and asking seniors to get by on less. These aren’t just economic questions. These are moral questions.”
Although heavily lobbied by leading Democrats to run, Warren was warned by many that the fight would be brutal. Even her brother David told her, “Don’t do this, it’s too nasty.” Looking back on her time in Washington, though, and the months she spent setting up and fighting for the C.F.P.B., she says, “I’ve done brutal.”
But the fight for Ted Kennedy’s old Senate seat is expected to redefine brutal. A Republican golden boy and Wall Street favorite, Brown was rolling in campaign money—some $10 million—even before Warren’s announcement, thanks in large part to the financial industry’s largesse. With Warren in the race, the Republican party and the nation’s corporatocracy is expected to flood Brown’s coffers with even more cash.
vanityfair (http://www.vanityfair.com/news/2011/11/elizabeth-warren-201111)
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estes artigos tem a qualidade informativa de um panfleto publicitario
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UPDATE 2-Deutsche Bank Q1 profit falls by half as legal charges bite
* Rising investment bank revenue eroded by legal charges
* Legal reserves at 4.8 bln euros, contingent liabilities up
* Details of strategy shift due on Monday, April 27 (Adds contingent liabilities from statement, detail, background on restructuring)
By Thomas Atkins
FRANKFURT, April 26 (Reuters) - Deutsche Bank's earnings fell by half in the first quarter, a greater-than-expected drop as hefty legal charges eroded gains in investment banking revenue, while it prepares to unveil details of a strategic overhaul.
Quarterly net profit sank to 559 million euros ($608 million) versus a year ago, despite a 24 percent rise in revenue driven primarily by an increase in client trading activity.
Group revenue rose to a near record 10.4 billion euros. Almost half came from the investment bank, but its pre-tax contribution fell by more than half due to litigation and regulatory expenses and currency swings, the bank said on Sunday.
Deutsche has so far positioned itself as Europe's "last man standing" in investment banking, even though it has made cuts in certain business lines.
That strategy bore fruit in quarterly revenue figures, with the contributions from its debt trading business rising 9 percent versus a year ago and from its small but growing equities trading division by 31 percent.
Deutsche on Friday announced a new strategic plan including the sale of its Postbank retail chain and additional paring back in investment banking. Details are to be unveiled on Monday.
Big trading banks such as Deutsche received a boost in fee income in the first quarter after the Swiss National Bank scrapped a cap on the franc, the European Central Bank announced its quantitative easing programme and the U.S. Federal Reserve took steps to tighten monetary policy.
Rival Morgan Stanley, for example, posted its most profitable quarter since the financial crisis, with a 60 percent rise in net profit compared with a 41 percent rise at Goldman Sachs.
European rivals such as UBS and Barclays have taken an axe to trading desks, while Deutsche has kept its dealing divisions. Already in the previous quarter, trading revenue at Deutsche had risen 20 percent, bucking declines at Goldman Sachs and Morgan Stanley.
LEGAL COSTS
A 1.5 billion euro charge to fortify the bank's legal reserves, depleted in the wake of a $2.5 billion legal settlement for alleged rate rigging, bit into its bottom line.
Signalling that more pain is in store, Germany's flagship bank raised contingent liabilities - or legal costs that it deems possible but unlikely - by half to 3.2 billion euros, saying it was now able for the first time to estimate costs of certain risks.
At Deutsche Bank's retail franchise, which will shrink with the planned disposal of Postbank, revenue increased by 1 percent on the year, a slower pace than other operating divisions.
Analysts had expected net income to drop 40 percent to 655 million euros for the quarter, according to a poll of five brokers.
The results, published three days earlier than originally scheduled, come at a tumultuous time for its co-chief executives, Juergen Fitschen and Anshu Jain.
U.S. and British regulators fined Deutsche a record $2.5 billion on Thursday for trying to manipulate benchmark interest rates. The bank has said that neither Jain, who was running the investment bank at the centre of the scandal, nor other management board members were found to have been involved or aware of the trader misconduct.
Fitschen, meanwhile, will stand trial on Tuesday in Munich over allegations that he and other former executives worked to precipitate the collapse of the Kirch media empire in order to generate bountiful advisory fees to restructure the group. [ID: nL5N0W43E3]
Fitschen has said publicly that he "neither lied nor deceived" in the Kirch case.
Deutsche Bank has paid over 9 billion euros in fines and settlements since 2012, with analysts pointing to around 4 billion more expected in 2015.
reuters (http://in.reuters.com/article/2015/04/26/deutsche-bank-results-idINL8N0XN0IJ20150426)