Wednesday, July 15, 2009

Whose Good Start?

"With clear signs of stability returning to the US financial system, this is an appropriate time to look ahead to the rebuilding process and to the steps that must be taken to prevent the recurrence of another such crisis. ... I especially support the creation of a single bank regulator, which is long overdue. ... Also welcome in the administration's new proposals is the focus on strong capital and liquidity requirements for a broad range of financial institutions. ... A big chunk of the activity that led to the current crisis took place in the shadows at financial institutions that weren't as carefully watched as banks. ... However, let's not forget that businesses large and small still need customized derivative products to hedge risk. ... Regulation of derivatives must be smart and effective, and done in a manner that reduces the risk of manipulation or abuse without choking off access to a needed product. ... First, we must preserve the ability to innovate and to steer capital toward the most promising innovations. ... The primary regulators of financial institutions must be responsible and held accountable for protecting consumers", my emphasis, Jamie Dimon (JD) at the WSJ, 27 June 2009, link:

"At issue was whether New York's AG could demand mortgage data from federally chartered banks to fish for evidence of discrimination under the state's fair lending laws. Mr. Spitzer was running for Governor, and he wanted to play the racial lending card even as he now denounces the same banks for lending too much to the same people. ... As recently as two years ago in Watters v. Wachovia, the Supreme Court upheld precisely this principle. But now a five-Justice majority, improbably led by Antonin Scalia, who was joined by the Court's entire liberal wing, has opened the gates of state regulation against national banks", original italics, my emphasis, Editorial at the WSJ, 30 June 2009, link:

This is special pleading. JD, JPMorgan CEO, wants the "to steer capital toward the most promising innovations". Is he kidding? Shades of the Atari Democrats of 24 years ago. "Single bank regulator"? Easier to control, you mean. JD wants non-banks subject to capital requirements. Why? They do not create money unlike commercial banks. It sounds like JD wants the Feds to "muscle out" his competition. "Weren't as carefully watched as banks". Hahahahaha, would say the Mogambo Guru. So? How carefully were banks watched? Did JD forget Citigroup got about $306 billion in various forms of federal largesse? Why do small businesses need derivatives? How did they exist in the old days? I don't want any bank holding FDIC insured deposits to "innovate". Period. Bank regulators, which protect banks should protect consumers? This sounds like a conflict of interest. This piece was titled, "A Unified Bank Regulator Is a Good Start". I say for who? Banks or bank customers?

How terrible. Get out your crying towel for Citibank, et. al. Since the Feds won't regulate these monsters, which is why they originally sought federal charters, apparently the states will have to do it. This give me another idea for our current regulatory stew: end national banking charters. That might cut a Citigroup down to size.


Anonymous said...

Stew... goulash...mess...

"The primary regulators of financial institutions must be responsible and held accountable for protecting consumers", Jamie Dimon

Yes protecting consumers... hahahaha.

The Fed was ASLEEP on mortgage standards among many other things.

Here is what the Fed currently offers to protect investors.

Sure Jamie... you know the game... that consumer protection junk at the Fed site is exactly what you want.

Jr Deputy Accountant said...

Isn't it cute, though, when they come out saying what they prefer?

At this point they do not even have to pretend. How important does Jamie Dimon feel right about now?

Talk about a complex.