House eases restrictions on derivatives trades

[Adsos Letter]

Source: AP
By JIM KUHNHENN, Associated Press Writer

WASHINGTON – A bipartisan coalition in the House voted late Thursday to make it easier for corporations to engage in complex derivatives trades without government restrictions, eroding the reach of proposed regulations to govern Wall Street.

Democratic attempts to toughen the legislation failed.

Though not major setbacks, the votes illustrated the difficulties facing House Financial Services Committee Chairman Barney Frank and the Obama administration as they seek to pass legislation aimed at preventing a recurrence of last year's Wall Street crisis.

Key votes loomed ahead, with a final vote on the sweeping legislation scheduled Friday.

Link: http://news.yahoo.com/s/ap/20091211/ap_on_bi_ge/us_financial_overhaul;_ylt=Aieh7yCowlBSj44QXWuP8Tl34T0D;_ylu=X3oDMTJtcGwzYW1uBGFzc2V0A2FwLzIwMDkxMjExL3VzX2ZpbmFuY2lhbF9vdmVyaGF1bARjcG9zAzEEcG9zAzIEc2VjA3luX3RvcF9zdG9yeQRzbGsDaG91c2VlYXNlc3Jl
_______________________________________

:wtf:

[HuckleB]

1. Ugh.

[Goldstein1984]

5. Here we go again!

Bend over America!

[amborin]

2. "swap execution facilities"

"But some derivatives, called over-the-counter (OTC) derivatives, are simply agreed to by the contracting parties. Many swaps, like the credit default swaps you've heard so much about (or the interest rate swaps you probably haven't heard about), are OTC derivatives. Critics of such products claim that the lack of transparency that surrounds them allowed companies like AIG to build up huge amounts of one-sided risk. The Peterson bill is supposed to end that by forcing most OTC derivative trades onto exchanges, where volume and prices will be more transparent. The problem, as POGO explained it, was that an amendment to the reform bill created an enormous loophole:

Under this amendment—which was adopted by voice vote with little debate—an "alternative swap execution facility" is simply defined as anything that "facilitates" swap trades. Such a facility would not be subject to the requirements of an actual exchange, thereby avoiding the new requirements for increased transparency and accountability.... We believe that the creation of this loophole is contrary to the avowed purpose of the bill. It will inevitably lead to the same kind of trading that created the financial crisis; it will undermine the transparency requirements that are needed to protect the public from fraud and manipulation; and it is inconsistent with confining financial trading, to the greatest extent possible, to well-regulated clearing houses.

the latest version of the amendment:

(77) SWAP EXECUTION FACILITY.—The term ‘swap execution facility’ means a person or entity that facilitates the execution or trading of security based swaps between two persons through any means of interstate commerce, but which is not a national securities exchange, including any electronic trade execution or voice brokerage facility.

As you can see, this would define a "swap execution facility" as simply anything or anybody that facilitates a trade, including electronic and voice brokerage facilities. This amendment would completely undermine the avowed purpose of the derivatives legislation, which seeks to move as much trading as possible to well-regulated clearing houses and exchanges."

snip

<http://motherjones.com/mojo/2009/12/problem-derivatives>

[niceypoo]

3. Another bubble?

We barely survived this one

[phasma ex machina]

4. +1

[Double T]

6. It's bubble time.

wall street can official;y continue business as usual. Thank you do nothing congress; keep up the destructive work.

[Common Sense Party]

7. Thank god the Democrats are in charge.

I'd hate to see what the corporatist Repukes would be doing.

Oh. Wait...

[Lydia Leftcoast]

8. Is it corporate fascism yet?

:grr:

[truedelphi]

12. Yep here in the Banana Republic

Formerly known as America, it is indeed Corporate Fascism all the way.

[amborin]

9. uh oh: Melissa Bean:

"Melissa Bean’s backers are key Obama associates
By: kevinc Thursday December 10, 2009 1:25 pm


A group of "New Democrats" led by Representative Melissa Bean has reportedly won major concessions in the financial reform fight:

The compromise reached late Wednesday between pro-reform House Democrats and the banker-friendly wing of the party could significantly weaken consumer protection in states where lawmakers support tougher rules against tactics such as predatory lending and excessive ATM fees than historically submissive federal regulators.

Barney Frank chalked up Bean’s intransigence to the lobbying of a generic group of "big banks," without providing much in the way of details. The Huffington Post has pointed to the amount of campaign cash flowing from Wall Street, and Public Citizen released a report on the subject on Tuesday.

But "big banks" have a human side, after all; Bean draws her support from real, live, human beings. And a closer look at who these people are suggests that the Representative’s efforts are backed by financial elites tightly linked to President Obama.


Bean’s Wall Street is located not in New York but Obama’s Chicago (she represents the northern suburbs). The Representative draws heavily on a group of mega-donors that includes close friends of the first family, elite "bundlers" of Obama campaign cash, and two individuals who have been, at various points, rumored to be up for cabinet-level posts.

Two of these mega-donors are John W Rogers and Mellody Hobson, executives at mutual fund company Ariel Capital Management, who have given more than $14,200 combined to Bean, including $4600 in July 2009 alone, according to OpenSecrets.

Rogers is a personal friend of Barack and Michelle Obama, and his ex-wife currently serves as the White House social secretary (yes – that social secretary; she also shares a Georgetown apartment with Valerie Jarrett). Hobson has been a fundraiser for Obama since his first campaign, in 1995, and was rumored for an economic advisory post in the administration.

Obama’s "favorite banker," JP Morgan CEO Jamie Dimon, recently rumored to be a possible successor to Treasury Secretary Tim Geithner, is also a major Bean donor, giving her $5900 since 2005 and $2000 in 2009 alone. Dimon is in New York now, but spent a critical period heading US Bank in Chicago, where he appears to have gotten close to Jarrett, Rahm Emanuel, and other Obama insiders.

JP Morgan executive Bill Daley (brother of Richard), another major political force in the windy city, has given Bean $8520 over the years, and $2000 this year. Daley is also a key Obama backer and was rumored to be a candidate for Secretary of Commerce, at one point.

JP Morgan has a lot riding on the financial reform fight, especially on regulation of derivatives. That may explain Dimon and Daley’s support, and the $11,000 Bean took in from key JP Morgan executives in the space of ten days in late June.

In addition to support from Dimon and Daley, Bean took contributions from JP Morgan lobbyist Peter Scher, executive Blythe Masters (leading derivatives expert and chair emeritus of SIFMA), chief risk officer Barry Zubrow, chief investment officer Althea Duersten, and head of commercial banking Todd Maclin.

More recently, Obama bundler Bruce Heyman, a Chicago-based Goldman Sachs executive, maxed out to Bean in late September. He shows more liberal tendencies than some of his friends, and had never given to the New Democrat before. Heyman raised over $50,000 for Obama, and contributed over $20,000 to his campaign and "victory fund."

Other Obama-linked Chicago financial elites giving big to Bean this year include Penny Pritzker, Obama’s campaign finance chair; Obama bundlers Stephen Malkin and Michael Sacks, both of Grosvenor Capital Management; Obama bundler James Tyree of Mesirow Financial; and Debra Cafaro, CEO of real estate investment trust Ventas, who has given over $20,000 to Obama. Cafaro, Pritzker, and Tyree all joined JP Morgan executives in giving big to Bean in late June."

snip

<http://seminal.firedoglake.com/diary/18369>

[laughingliberal]

15. Thanks. That answers a question I had yesterday

When I read that Bean was opposing the restriction and saw she is a rep from IL, I wondered if there were connections to President Obama. I had hoped not but...

[anonymous171]

10. Way to fail "democrats." nt

[slipslidingaway]

11. knr nt

[Warren DeMontague]

13. Wow. Who knew there ever *were* restrictions?

You mean it could have been worse? :shrug:

Fuck.

[JCMach1]

14. They want to turn the U.S. into Britain where there were virtually no restrictions

That's almost every bank in the world had an operation in London and why Britain is hurting majorly now.

[AllyCat]

16. What on earth did we vote for last Nov?

These people are not only corrupt, they are frickin' stupid. Who were the bipartisan a$$holes?

[chill_wind]

17. K & R n/t

[blindpig]

18. Regulating capitalism is a fools game

As long as they got the deep pockets they will use that capability to shape their environment as suits their mandate of increasing profits. The brazenness of this move underscores their confidence in the system which they own.

The man behind the curtain doesn't care if he is revealed, there is no viable opposition....yet.