Watching Up With Steve Kornacki because I refuse to watch the bobbleheads and the Cheney tonguebathing, so that means that MSNBC has two viewers this morning- me and Steve’s mom. Both of us want to tell him to comb his hair. At any rate, one large segment was devoted to how mad many Republicans are at Ted Cruz, and Steve repeatedly mentioned that Mitch McConnell, when asked about his caucus and whether he was mad at them, answered with a “wink and a smile.” This line of thinking tracks nicely with this TPM piece:
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It’s all bullocks. The Republicans love Cruz. Notice what really got no attention whatsoever in the Senate? Elizabeth Warren, and something really worth fighting for in the CROMNIBUS, the big giveaway to Citigroup and friends (for a primer on why this was so important to them besides oodles of money, read this - it’s all about the credit ratings). Instead of having a serious debate about that, the conversation tilted to the right on immigration, and the progressive concerns were squelched as the right and center right banded together to fend off the “lunatic right,” and CROMNIBUS was passed and everyone not named Jamie Dimon gets screwed.

http://www.balloon-juice.com/2014/12/14/hes-useful-idiots/

Ratings Game Behind Big Banks’ Derivatives Play

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Of vital importance, especially for Citi, is where the derivatives are legally housed. Except for Morgan Stanley, the banks hold most derivatives in their depository unit. The advantage: The bank subsidiaries, with implicit government backing, are considered less risky than parent holding companies. Being seen as a less-risky counterparty gives banks an advantage in pricing and collateralization of derivatives.

Bank-capital rules matter, too. These impose capital charges based on an assessment of counterparty risk, which is closely linked to credit ratings. And those ratings explain the big banks’ desire for the rule change.

Citigroup’s insured depository unit is rated A2 by Moody’s ; the parent company is a far lower Baa2. So a bank buying a derivative contract from the parent would receive a higher capital charge than if it bought it from the depository unit. So the price Citi could fetch for it would be lower. The same divergence exists at the other banks, though to a lesser degree.

The result: Each would suffer from having to push derivatives out of their depository units. In effect, they would lose the advantage of the higher rating and the view the government will support the bank unit.

http://www.wsj.com/articles/ratings-game-behind-big-banks-derivatives-play-heard-on-the-street-1418417119