Coated in the Black Tar of Darkness. a War Against Financial Reform Continues

As weak as Financial Reform bills are in the House and Senate, that's not good enough for some. The White House and Legislators want it weaker and are working under the cover of oil disaster to make it so.

UPI is reporting the conference committee has killed derivatives reform. Blanche Lincoln is the one who killed her own amendment, according to the Wall Street Journal. I guess she won her primary so it's back to business as usual.

The latest version would not force banks to spin off their swap desks, but would cordon off the derivatives operations by giving big banks two years to form affiliates to handle the derivatives bets, which are private contracts that hedge against future price changes in various securities.

Unless I'm missing something that is no change at all. SIVs are affiliates, little shell corporations, usually incorporated in the Caymans to hold CDOs and CDSes or other securities. Is there any difference between a Structured Investment Vehicle and this newly coined phrase affiliate? Looks like a duck.....

Even CNBC immediately caught the Banks are winning in destroying any meaningful or even token financial reforms.

Senator Blanche Lincoln is considering a “compromise” that will neuter her proposal to ban banks from trading derivatives by including a long delay before requiring any change to the swaps business, allowing banking regulators discretion about implementing the provision, permitting special derivatives entities to operate inside of federally supported bank holding companies, and pre-authorizing federal bailouts of the derivatives entities if they blow themselves to financial smithereens.

Meanwhile Barney Frank wants to weaken any controls on credit rating agencies. Credit Ratings Agencies were complicit by slapping on AAA ratings on junk. Seems weakening the bill is a tag team effort.

The credit-rating industry has been widely criticized for assigning rosy ratings to dubious debt offerings that imploded and brought Wall Street to its knees during the 2007-2009 financial crisis. The Senate's bill, passed last month, would set up a new government panel to eliminate perceived conflicts of interest.

But Representative Barney Frank, who heads the House-Senate conference committee, is instead pressing for a one-year study of the issue by the Securities and Exchange Commission.

That would allow credit raters to continue soliciting business directly from the businesses, municipalities and other issuers' offerings which they assess.

A spokeswoman for Democratic Senator Al Franken, sponsor of the original proposal, called Frank's counter-proposal "very concerning."

Even worse, they want to exempt private equity houses:

House Democrats also want to strike a provision that would exempt private equity funds from having to register with the SEC.

Then the big one. The Obama administration is working against derivatives reform.

President Barack Obama's Treasury Department, led by Timothy Geithner, continues to oppose the measure, Senate aides say, who add that Treasury is supporting Wall Street over Main Street by opposing the measure considered of "utmost importance" to financial stability.

"It shows the access of the major Wall Street banks in the Treasury Department in spades," one Senate aide said on the condition of anonymity. Assistant Treasury Secretary for Financial Institutions Michael S. Barr is said to be leading Treasury's efforts.

Senate aides say that more letters of support from other regional Fed presidents are on the way.

Treasury is joined in its opposition to the measure by the Federal Reserve's Washington-based Board of Governors and the head of the Federal Deposit Insurance Corporation, Sheila Bair.

Only 25 of the 8,000 banks are dealing with derivatives and would have to spin off these glorified gambling chips if this amendment was not ripped asunder after it had passed the Senate. As it was, there is no consequence for failure to comply. The derivatives reforms are being referred to as section 176, it's location in the Senate bill.

These cats called our representatives, are as slick as the oil in the gulf. They know all of the games to make you think you got somewhere, all the while doing last minute bait -n- switches.

Here is the list of other dilutions offers on compromise between the House and Senate versions of the bill.

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Comments

Rubes for Obama!!!!!

Highly predictable and easily predictable, as I mentioned in my other remarks the other day.

Lincoln did an obvious feint, just as Cantwell did on her phony vote (which she knew wouldn't count) against the so-called financial reform -- whereas Sen. Feingold really meant it and voted consistently, but Bush-dog Cantwell, who has voted to spread depleted uranium throughout the planet, and kill as many foreigners as possible with all her pro-war votes, and voted to offshore any and all American jobs whenever the opportunity presents itself, along with Lincoln, are dangerous cretins.

Just as Obama ("Go and eat seafood from the Gulf!" sounds eerily like Bush's admonishing us to go shopping after 9/11/01, doesn't it?) is far more dangerous than Bush, 'cause we knew Bush was evil, but there are still too many rubes who aren't familiar with any of Obama's neocon and neolib appointees.

And private equity funds often behave as hedge fund, along with PE firms actually owning a number of hedge funds, and hedge funds investing in PE firms' LBO funds, completely and totally interlocking.

And from this NY Times article (no surprise as I've been closely following that devil, Eric Holder):

In 17 months in office, President Obama has already outdone every previous president in pursuing leak prosecutions. His administration has taken actions that might have provoked sharp political criticism for his predecessor, George W. Bush, who was often in public fights with the press.

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stupid bloggers

Ya know, by now maybe some of those Obamamaniac bloggers are feeling the pain. I managed to remain unscathed by the "purge" for anyone who wasn't an Obama fan but it was unreal in their devotion. This is what's wrong in focusing in on trivial issues, ignoring facts, ignoring statistics and economic theory. This is also why I said corporate funded Ms. India representative herself, Hillary was the better candidate. They just didn't get it.

Even worse, the exact same thing is going on. Instead of forming a host of policy positions that are based in economic sanity, proven to work and most importantly are not bought and paid fors by corporations, we get more rhetoric, more sound bytes and as a result we have Populist rage being funneled into.....uh, the Tea Party? Jesus, have you heard anyone out of those people that makes sense, including it's not "big government" it's corrupt and ineffectual, wasteful government?

I knew this would happen and it's an outright crime. These people are so corrupt, so absurd, they literally are refusing to reform a financial "system" with such obvious, brazen public ripoff and gambling it brought the entire globe to it's knees and ruining the economic future of the nation. Here they are, making sure it happens again.

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Love (of the Banksters) is not better the Second Time Around

Try to visualize a second round of bailouts in the near future. It's really not so hard. Does anyone one imagine that there is anything less than systemic risk involved. By systemic, I mean something a lot bigger than the banks or financial system.
The second collapse of the financial system is one that the hierarchy will have difficulty explaining, apologizing, lying about.
This fraud is being peddled as 'reform', that it will really fix things, and it is so transparently pointless and corrupt.

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Burton Leed

Volcker Rule

If you saw the interview with Bill Isaac and Paul Volcker on CNBC, it's also Volcker against the Lincoln amendment. Get this reasoning. Derivatives are profitable. Profitable. Uh, does it matter that they are mathematical fiction? Does it matter that they have strong contagion effects, create a domino affect, cause systemic risk?

It's like all of the details on derivatives, the bad mathematics, the fact you cannot even evaluate them after the fact, you cannot crunch them computationally to see if they are valid....or the entire credit ratings agencies slapping AAA ratings on them is being dismissed.

Profitable. Right, that AIG thing sure was profitable....for Goldman Sachs and Societe Generale. Bummer the taxpayers funded it. The only good news is there might be a sliver of a chance to get the Volcker rule, Merkley amendment in.

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Thank you Regional Fed Presidents!

We now have 3 Regional Fed. chiefs speaking out on the lack of derivatives reform, also saying these units should be plain spun off, firewalled.

James Bullard, St. Louis Fed (who has the most awesome public analysis tools on the web, thank you St. Louis!)

Dallas Fed President Richard Fisher

Kansas City Fed (who has been speaking publicly with such a focus on middle class America, smaller banking, really good analysis I wish he was Fed Chair), Thomas Hoenig

Again, I don't know how many posts I've written at this point digging in deep into CDOs,CDSes, SIVs, structured finance, but absolutely this stuff is deadly and I'm sorry, if these cats want to make massive profits, they need to find investment vehicles that are not glorified gambling chips. This is like dealing with a gambling addict on a good run.

HuffPo

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Citigroup is planning hedge, private equity funds

See how worried one of our worst Zombie banks is on financial reform? They are planning on raising $3 billion for their new hedge and private equity funds.

Beyond business as usual, obviously Citigroup doesn't believe either Lincoln's amendment or the Volcker rule will be in the final bill.

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White House blocks shareholder say on executive pay

The measure was meaningless yet believe this or not, the White House blocked it so now shareholders have zero say, regardless that it was not binding, on executive pay.

Is this bill one of the worst examples to show how corrupt and complicit our government is?

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HuffPo Duped by "report"

I cannot believe I just read this, but HuffPo has front paged a report listing all of the lost "profits" if the Volcker rule or the original derivatives reform amendment passes.

What a crock! What do they not get about LOSSES? They list potential profits but it's so obvious, these can be losses! It's like the media is just buying into these glorified gambling chips, as if they don't have a downside, which we just experienced and had the U.S. taxpayer pay the bill for!

What do they not get about that money going into real investments, that also generate profits, instead of gambling with the house and clients money?

Front paged, a clearly lobbyist written report, as if there is no other alternative. anyone remember that old fashioned banking where banks would loan money to new businesses, develop industries and all of that real economy stuff?

Unreal! Jesus, the models themselves are not even valid for many of these derivatives, what is it about the financial meltdown people do not understand or remember?

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