Stocks slide as Obama calls for tougher bank rules - AP

[Tierra_y_Libertad]

It will be interesting to see how the congresscritters handle the conflict between regulating the banks and getting their payoffs...er..campaign contributions.

http://news.yahoo.com/s/ap/20100121/ap_on_bi_st_ma_re/us_wall_street

Financial shares drove the stock market lower Thursday as President Barack Obama proposed rules that would limit the types of trading banks can do with their money.

The Dow Jones industrial average tumbled 210 points after dropping 122 on Wednesday. The index has seen four straight triple-digit swings and the latest slide erased the Dow's gains for 2010. Bond prices rose as the stock market became more volatile.

Tightening the rules on risk-taking and trading at banks could hurt profits at those companies. Obama said he would seek to limit the size and complexity of large financial companies so that a bank's collapse wouldn't endanger the overall financial system.

The move could mean sweeping changes for how big financial institutions like Bank of America and JPMorgan Chase & Co. are structured. Bank of America shares fell 7 percent, while JPMorgan lost 6 percent.

[amborin]

1. speaking of BOA, this saddens me:

......Sheila Bair, one of the chief regulators overseeing Bank of America's federal rescue, took out two mortgages worth more than $1 million from the banking giant last summer during ongoing negotiations about the bank's bailout and its repayment.

In the weeks between the closings on her two mortgage loans, Bair met with Bank of America's chief negotiator in the bailout talks.

To avoid conflicts of interest, the Federal Deposit Insurance Corp., which Bair heads, prohibits employees from participating in "any particular matter" involving a bank from which they are seeking a loan.

Bair did not seek or receive an exemption until last week, when her agency gave her a retroactive waiver from the rules after an inquiry by the Huffington Post Investigative Fund.

FDIC officials said there was no link between Bair's duties and her mortgages. They also contend that even without the waiver Bair violated no ethics rules. Moreover, the FDIC said, Bair received no preferential treatment for either loan, paying interest rates at or above the national average.

However, the circumstances surrounding the mortgage on Bair's house in Amherst, Mass., raise questions about whether she and her husband should have qualified for the terms they received.

Bair was teaching financial regulatory policy at the University of Massachusetts in Amherst when President Bush appointed her to head the FDIC in 2006. Her family rented a house in Washington until they borrowed $898,000 from Bank of America in July 2009 to buy a $1.1 million six-bedroom home in the Maryland suburbs. Seven weeks later, they borrowed $204,000 from Bank of America to refinance the Massachusetts house as a second home.

snip

http://www.commondreams.org/headline/2010/01/21-5

[mdmc]

2. $