General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsThe Wall Street reform law would have a significant impact if implementation is sped up.
Think about the last two Senate Banking Committee hearings.
Elizabeth Warren Embarrasses Hapless Bank Regulators At First Hearing
http://www.democraticunderground.com/10022377143
WARREN TO BERNANKE: "So when are we gonna get rid of 'too big to fail?'"
http://www.democraticunderground.com/10022434722
I like what Senator Warren is doing, which is highlighting the problems that have plagued the implementation and enforcement of Dodd-Frank. See the exchange beginning at 3:25 mins of the Bernanke clip at the link. First , she went after regulators for not doing their jobs, which has huge implications for Dodd-Frank.
An $83 billion dollars subsidy for the biggest banks runs counter to the notion that these institutions are too big to fail. Invoking Dodd-Frank is fine, but it requires enforcement of its provisions.
Under section 121 of the Dodd-Frank Act, if the Board determines that a financial institution poses a grave threat to U.S. financial stability, then the Board, with approval from the Council, shall mitigate that threat.2 The Act offers regulators the flexibility to take a range of actions, including limiting the institutions mergers and acquisitions, restricting or imposing conditions on its products or activities, or ordering it to divest assets or off-balance sheet items.
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http://www.citizen.org/documents/Public-Citizen-Bank-of-America-Petition.pdf
To the extent that the Act expanded the scope of financial firms that may be liquidated by the federal government, beyond the existing authorities of the FDIC and SIPC, there needed to be an additional source of funds, independent of the FDIC's Deposit Insurance Fund, to be used in case of a non-bank or non-security financial company's liquidation. The Orderly Liquidation Fund is to be an FDIC-managed fund, to be used by the FDIC in the event of a covered financial company's liquidation[75] that is not covered by FDIC or SIPC.[76]
Initially, the Fund is to be capitalized over a period no shorter than five years, but no longer than ten; however, in the event the FDIC must make use of the Fund before it is fully capitalized, the Secretary of the Treasury and the FDIC are permitted to extend the period as determined necessary.[36] The method of capitalization is by collecting risk-based assessment fees on any "eligible financial company" which is defined as "[ ] any bank holding company with total consolidated assets equal to or greater than $50 billion and any nonbank financial company supervised by the Board of Governors." The severity of the assessment fees can be adjusted on an as-needed basis (depending on economic conditions and other similar factors) and the relative size and value of a firm is to play a role in determining the fees to be assessed.[36] The eligibility of a financial company to be subject to the fees is periodically reevaluated; or, in other words, a company that does not qualify for fees in the present, will be subject to the fees in the future if they cross the 50 billion line, or become subject to Federal Reserve scrutiny.[36]
To the extent that a covered financial company has a negative net worth and its liquidation creates an obligation to the FDIC as its liquidator, the FDIC shall charge one or more risk-based assessment such that the obligation will be paid off within 60 months (5 years) of the issuance of the obligation.[77] The assessments will be charged to any bank holding company with consolidated assets greater than $50 billion and any nonbank financial company supervised by the Federal Reserve. Under certain conditions, the assessment may be extended to regulated banks and other financial institutions.[78] Assessments are imposed on a graduated basis, with financial companies having greater assets and risk being assessed at a higher rate.[79]
http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act#Title_II_.E2.80.93_Orderly_Liquidation_Authority
Now a group is pushing for implementation of the Volcker Rule.
by bobswern
Just a few days plus a year after approximately 100 supporters of the former Occupy Wall Street (OWS) working group, the now-autonomous Occupy the SEC (OSEC), peacefully marched on Wall Street carrying signs stating, We dont make demands so this is a suggestion: Enforce the Volcker Rule, were now learning via a concise and inspiring post by Naked Capitalism Publisher Yves Smith that Occupy the SEC, Frustrated With Regulatory Defiance of Volcker Rule Implementation Requirements, Sues Fed, SEC, CFTC, FDIC and Treasury.
First, heres the link to Wednesdays story, directly from the OSEC blog: Occupy the SEC Sues Federal Reserve, SEC, CFTC, OCC, FDIC and U.S. Treasury Over Volcker Rule Delays.
Occupy the SEC (OSEC) has filed a lawsuit in the Eastern District of New York against six federal agencies, over those agencies delay in promulgating a Final Rulemaking in connection with the Volcker Rule (Section 619 of the Dodd-Frank Act of 2010).- more -
Congress passed the Volcker Rule in July 2010 in order to re-orient deposit-taking banks towards safe, traditional activities (like offering checking accounts and loans to individuals and businesses), and away from the speculative proprietary trading that has imperiled deposited funds as well as the global economy at large in recent years. Simply put, the Volcker Rule seeks to limit the ability of banks to gamble with the average persons checking account, or with public money offered by the Federal Reserve.
Almost three years since the passage of the Dodd-Frank Act, these agencies have yet to finalize regulations implementing the Volcker Rule. Section 619(b)(2)(A) of the Dodd-Frank Act set a mandatory deadline for the finalization of the Volcker regulations. That deadline passed over a year. Despite this fact, the federal agencies charged with finalizing the Rule have yet to do so. In fact, senior officials at the agencies have indicated that they do not intend to finalize the Volcker Rule anytime soon.
The longer the agencies delay in finalizing the Rule, the longer that banks can continue to gamble with depositors money and virtually interest-free loans from the Federal Reserves discount window. The financial crisis of 2008 has taught us that the global economy can no longer tolerate such unrestrained speculative activity. Consequently, OSEC has filed a lawsuit against the agencies, seeking declaratory, injunctive and mandamus relief in the form of a court order compelling them to finalize the Volcker Rule within a timeframe specified by the court
http://www.dailykos.com/story/2013/02/28/1190410/-Occupy-the-SEC-Sues-Fed-SEC-OCC-CFTC-FDIC-Treasury-Due-To-Failure-To-Implement-Volcker-Rule
Wall Street reform was a huge achievement, but while its implementation is being ignored by supporters, its opponents are doing everything in their power to delay it.
Anyone paying attention saw this coming in 2011.
Bedrock Consumer Protections Once Were Flogged as Exceedingly Dangerous, Monstrous Systems That Would Cripple the Economy
WASHINGTON, D.C. As the nation approaches the first anniversary of the Dodd-Frank financial reform law, opponents are claiming that the new measure is extraordinarily damaging, especially to Main Street. But industrys alarmist rhetoric bears striking resemblance to the last time it faced sweeping new safeguards: during the New Deal reforms. The parallels between the language used both then and now are detailed in a report released today by Public Citizen and the Cry Wolf Project.
In the decades since the Great Depression, Americans acknowledged the necessity of having safeguards in place to prevent another crash of the financial markets, including the creation of the Federal Deposit Insurance Corporation (FDIC) and the Securities and Exchange Commission (SEC), and laws requiring public companies to accurately disclose their financial affairs. Although these are now seen as bedrock protections when they were first introduced, Wall Street cried foul, the new report, Industry Repeats Itself: The Financial Reform Fight, found.
The business communitys wildly inaccurate forecasts about the New Deal reforms devalue the credibility of the ominous predictions they are making today, said Taylor Lincoln, research director of Public Citizens Congress Watch division and author of the report. If history comes close to repeating itself, industry is going to look very silly for its hand-wringing over Dodd-Frank when people look back.
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In fact, the Dodd-Frank Wall Street Reform and Consumer Protection Act is designed to prevent another Wall Street crash, which really made it tough on everyone by causing massive job loss and severely hurting corner butchers and bakers, as well as retirees, families with mortgages and others. The Dodd-Frank law increases transparency (particularly in derivatives markets); creates a new Consumer Financial Protection Bureau to ensure that consumers receive straightforward information about financial products and to police abusive practices; improves corporate governance; increases capital requirements for banks; deters particularly large financial institutions from providing incentives for employees to take undue risks; and gives the government the ability to take failed investment institutions into receivership, similar to the FDICs authority regarding commercial banks. Much of it has yet to be implemented.
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http://www.commondreams.org/newswire/2011/07/12-0
patrice
(47,992 posts)ProSense
(116,464 posts)ProSense
(116,464 posts)By: Bartlett Naylor
Eugene Scalia: Meet Akshat Tewary.
On Feb. 26, 2013, attorney Tewary, a member of Occupy the SEC, filed a lawsuit against the Securities and Exchange Commission (SEC) and other bank regulators to compel them to obey the law and finalize the Volcker Rule. Thats the part of the Dodd-Frank Wall Street Reform Act that bars banks gambling with depositors money. Dodd-Frank mandated that the regulators, including the Federal Reserve, Comptroller of the Currency, FDIC, SEC and Commodity Futures Trading Commission (CFTC), complete this rule by July 2012.
They have not.
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The Tewary lawsuit becomes the first litigation initiated to hasten, as opposed to delay, rulemakings from Dodd-Frank. Eugene Scalia, an attorney with Gibson Dunn & Crutcher (and son of Supreme Court Justice Antonin Scalia), has successfully argued cases against financial rulemaking. The law firm notes Scalias success on its website: Retained by two financial industry trade groups, Scalia and his Gibson Dunn team moved aggressively to beat back certain financial rules.
For example, one of his lawsuits succeeded in stopping an important SEC rule, congressionally mandated by Dodd-Frank, to improve shareholder rights. Scalias suit, echoing a familiar right-wing complaint, claimed the agency inadequately weighed the rules costs and benefits.
Insiders such as CFTC Commissioner Bart Chilton observe that the Scalia lawsuits have essentially frozen the pace of regulation with this cost-benefit strategy. Regulators found themselves outmatched by Scalia, observes a story posted on the Scalia law firm website.
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http://www.citizenvox.org/2013/02/28/occupy-the-sec-volcker-rule-lawsuit/