U.S. To Tighten Screws on Wall Street

[cal04]

Source: Reuters

- In an effort to quash Wall Street excesses that nearly collapsed the U.S. financial system, the Obama administration on Thursday will propose tough new restrictions on big financial firms, hedge funds and derivatives markets, officials said on Wednesday.

The U.S. Treasury will work with Congress to form a powerful systemic risk regulator with the authority to look deep into non-bank financial firms, such as hedge funds and private equity firms, the officials said, speaking on condition of anonymity.

U.S. Treasury Secretary Timothy Geithner will outline the plans in testimony before Congress on Thursday, and the proposals will form the basis for discussions on regulatory reform when President Barack Obama meets with leaders from the Group of 2O rich and developing nations on April 2.

The U.S. plan does not specify which agency should take on the role of systemic risk regulator to spot potential problems that could threaten the financial system. The decision on which regulator should play that role will be decided in consultation with lawmakers, the officials said.

Read more: http://www.nytimes.com/reuters/2009/03/25/business/business-us-financial-usa-regulation.html

---

Geithner to Propose Vast Expansion Of U.S. Oversight of Financial System
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/25/AR2009032502311.html?hpid=topnews


Geithner to Seek Power Over Large U.S. Hedge Funds, Derivatives
http://www.bloomberg.com/apps/news?pid=20601087&sid=aYBnVQwOqVoQ

[tularetom]

1. Look for the Dow to take a giant dump tomorrow.

Short sellers be prepared to act.

[Waiting For Everyman]

7. The short sellers should be dumped.

That would make too much sense though.

[natrat]

22. exactly-futures up this am, giving trillions to banks might have that effect

[Mind_your_head]

2. "Lawmakers"

....that would be "whom"? Not in 'theory', but in FACT. "Lawmakers" would be "whom"??????

:rofl:

[DJ13]

3. tough new restrictions

My concern is what is the definition of "tough"?

[FreakinDJ]

4. Yep - Close the Barn door after all the Cows got out

but I guess better late then never

[Double T]

5. Regulation and oversight of the wall street and corporate criminals is sorely needed.

I'll believe it when I see it. The free market assholes had their chance and as usual destroyed most peoples economic stability. Still there is unbelievable silence about the millions and millions of outsourced jobs that have been lost. True economic recovery is not possible with business as usual.

[SpartanDem]

6. I can hear

the Obama is a socialist cries warming up again.

[Frank Booth]

8. This is very good news.

"The administration wants to require advisers to hedge funds, private equity funds and venture capital funds to register with the U.S. Securities and Exchange Commission if their assets exceed a to-be-specified amount.

These advisers should be subject to investor and counterparty disclosure requirements and regulatory reporting that would include information necessary to assess their leverage and whether they pose a threat to financial stability."

As it is now, hedge funds get to keep all their operations private. If regulations like this existed before (and assuming they were enforced), Madoff probably wouldn't have been able to get away with his scheme.

[Optical.Catalyst]

9. I want legislation linking the salary of the highest paid CEO to the pay of the lowest employee

Let the CEOs make all the money they can, but the lowest payed worker in the company has to linked to the highest payed worker. If the person at the top wants more, they have to give more to everyone in the company across the board.

[woodwrite]

16. Totally agree.

The old European model works for me,... I think it had the top guy making about 60 times what the lowest guy made. And the stock options, bonuses and other compensation need to be counted for what they are --- profit-sharing --- and taxed accordingly.

[steven johnson]

10. Geithner to Propose Vast Expansion Of U.S. Oversight of Financial System

Source: Washington Post

By Binyamin Appelbaum and David Cho Washington Post Staff Writers
Thursday, March 26, 2009; Page A01
Treasury Secretary Timothy F. Geithner plans to propose today a sweeping expansion of federal authority over the financial system, breaking from an era in which the government stood back from financial markets and allowed participants to decide how much risk to take in the pursuit of profit.

The Obama administration's plan, described by several sources, would extend federal regulation for the first time to all trading in financial derivatives and to companies including large hedge funds and major insurers such as American International Group. The administration also will seek to impose uniform standards on all large financial firms, including banks, an unprecedented step that would place significant limits on the scope and risk of their activities.

Geithner plans to make the case for the regulatory reform agenda in testimony before Congress this morning, and he is expected to introduce proposals to regulate the largest financial firms. In coming months, the administration plans to detail its strategy in three other areas: protecting consumers, eliminating flaws in existing regulations and enhancing international coordination.

The administration's signature proposal is to vest a single federal agency with the power to police risk across the entire financial system. The agency would regulate the largest financial firms, including hedge funds and insurers not currently subject to federal regulation. It also would monitor financial markets for emergent dangers.



Read more: http://www.washingtonpost.com/wp-dyn/content/article/2009/03/25/AR2009032502311.html

---

Officials said the administration will seek to regulate the market for credit default swaps and other types of derivatives and require hedge funds to register with the Securities and Exchange Commission.

The program the administration was presenting to Congress will also include a recommendation for creation of a systemic risk regulator, possibly at the Federal Reserve, to monitor risks to the entire system.

"Systemic risk regulator" is the administration's phrase to describe a new regulatory body that would operate like the Federal Deposit Insurance Corporation in regulating and, when necessary, intervening to divest a bank that fails to meet safe operating standards.
The administration is proposing that hedge funds and other private pools of capital, including private equity funds and venture capital funds, be required to register with the SEC if their assets exceeded a certain size.

Credit default swaps, which trade in a $60 trillion global market without government oversight, are contracts to insure against the default of financial instruments like bonds and corporate debt. They played a prominent role in the credit crisis

http://www.foxnews.com/politics/first100days/2009/03/25/obama-seek-expanded-power-wall-street/

[aquart]

11. Uh huh. I've been begging for regulation. And ENFORCEMENT.

My motto is get government out of the bedroom and back in the boardroom. And the bank. And business.

What's the bad part?

[Enthusiast]

12. Me too. One can only hope there will

be authentic oversight and not the faux oversight we have witnessed in the past. Sorry to be so cynical, but.........................

[acmavm]

13. When will this abomination be repealed? Nothing will work until then:

<snip>
But Gramm's most cunning coup on behalf of his friends in the financial services industry—friends who gave him millions over his 24-year congressional career—came on December 15, 2000. It was an especially tense time in Washington. Only two days earlier, the Supreme Court had issued its decision on Bush v. Gore. President Bill Clinton and the Republican-controlled Congress were locked in a budget showdown. It was the perfect moment for a wily senator to game the system. As Congress and the White House were hurriedly hammering out a $384-billion omnibus spending bill, Gramm slipped in a 262-page measure called the Commodity Futures Modernization Act. Written with the help of financial industry lobbyists and cosponsored by Senator Richard Lugar (R-Ind.), the chairman of the agriculture committee, the measure had been considered dead—even by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. "Nobody in either chamber had any knowledge of what was going on or what was in it," says a congressional aide familiar with the bill's history.

It's not exactly like Gramm hid his handiwork—far from it. The balding and bespectacled Texan strode onto the Senate floor to hail the act's inclusion into the must-pass budget package. But only an expert, or a lobbyist, could have followed what Gramm was saying. The act, he declared, would ensure that neither the sec nor the Commodity Futures Trading Commission (cftc) got into the business of regulating newfangled financial products called swaps—and would thus "protect financial institutions from overregulation" and "position our financial services industries to be world leaders into the new century."
http://www.motherjones.com/politics/2008/05/foreclosure-phil

[radfringe]

14. stricter regulation would discourage risk-taking

---snip--- LA TIMES article (last paragraph)

http://www.latimes.com/business/la-fi-bank-regs26-2009mar26,0,5201443.story?page=2


But opponents maintained that stricter regulation would discourage risk-taking by the firms, damp economic growth and threaten New York's status as a global financial center by pushing firms to relocate in Europe or Asia. Amid bulging profits and heavy lobbying by Wall Street, that argument held sway in the deregulatory climate that held sway during the Bush administration.

isn't "RISK-TAKING" part of what got us into this mess in the first place?

Too Big to Fail = Too Big to Exist. Bust the Trusts.

[nyy1998]

15. Yeah since Europe is far less

regulated then the US :sarcasm:

[Jeep789]

18. Lol and who were they so busy attempting to sell that risk to?

American workers for retirement plans. Great idea, gamble your retirement money. Course it worked for a while, like all pyramid schemes, until the suckers ran out and those at the top refused to play anymore. Unfortunately, they are already starting it up again.

[Jeep789]

17. And all it took was for the government (read taxpayers) billions

or trillions of dollars in bailouts for this to occur. Too bad they (yes, even some of our own Dems) couldn't have foreseen the need for this (like so many here did) long ago.

[Zynx]

20. I felt that no bailot bill should be passed in the absence of a regulatory bill.

I'm still glad to see this.

[amandabeech]

27. I'm glad to see that they're at least talking about it.

This is likely to be a monster piece of legislation, and I'll reserve judgment on the actual plan until I see what they've got.

Former securities lawyer speaking here.

[IthinkThereforeIAM]

19. Derivatives should be declared "caveat emptor"...

...buyer beware! The are unregulated, after all, by intent. They were a scam from day one and keeping them unregulated made it even worse. This whole financial mess can arguably be blamed on the unregulated derivatives and the fall out.

[amandabeech]

28. Don't forget incredibly greedy people who were capable of seeing the risk,

but chose to ignore it.

People are capable of talking themselves into anything, and if it benefits the talker, so more the better.

[mbperrin]

21. Believe it when I see it.

Probably more of "Now that we've posed on TV asking you questions, you can pick up your checks on the way out."

[Odin2005]

23. But, but, I though Geithner was a Wall Street patsy! *SARCASM*

Sometimes it takes a insider bastard like Joe Kennedy to fix things.

[amandabeech]

29. Wait until he presents the plan.

This is a massive undertaking and the devil will be in the details.

I used to practice securities law and I am reserving judgment, although I find the fact that the economic team is talking about a regulatory plan to be a positive sign.

[SnoopDog]

24. They enact laws - then they repeal them...

Gram and Clinton repealed the very law that would have protected us from this economic collapse. (FDR's Glass Steagall Act).

Then they write laws that prevents regulation...

Is there really a solution to the inherent flaws in our legal system? That is, Congress write laws, Congress repeal laws, and Congress doesn't enforce the laws on the books...

[SpartanDem]

25. Solution?

I'd say attach criminal penalties to those who blatenly resfuses to do their job I'll bet the SEC wouldn't have buried in head about Madoff.

[SnoopDog]

26. Don't know the solution...

We have a government that enact laws to protect America and Americans. As I said, FDR's Glass-Steagall Act
was to stop and prevent what happened in the 20's and 30's.

But our Congress and Presidents repeal those laws so that the rich get richer... and of course off the backs of you and me.

So our Congress is suppose to do their job protecting America but they do not.

It is like all the laws passed that were in direct conflict of our Constitution....

So the solution? Well the final balance of power is... us, we the people.

But we the people don't do anything to stop them. I guess we are all to busy, or cowards, or don't care.

We are definitely not like the French or the Ukrainians...