Category: regulation

ECB Concludes that Gasoline is not the Best Way to Put Out a Fire

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David Bowie Says the Same

The European Central Bank has caught a clue, and realized, for this month at least, that there is no threat of inflation, so they are buying bonds and not raising their interest rates.

So, after pointless and stupid rate hikes in the teeth of a recession, they have decided that perhaps they were being stupid with their focus on non-existent inflation.

Seriously, if there has been a central bank that a greater record of rank incompetence on dealing with a recession, I’d be hard pressed to name it.

In all fairness, I would note that ECB is very limited in its charter.  Unlike the Federal Reserve, for example, is has no duty to maintain stable employment, just to forestall inflation, and so it’s all that they look for.

Just Mint the Damn Coin Already!

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I haven’t said much on the solutions on the debt ceiling debate, I’ve been more focused on the source of the problem, which is that Obama, in his eagerness to find a way to gut cut Social Security, Medicare, and Medicaid in order to feed his own ego by burnishing his self image as a bipartisan compromiser who brings people together because he’s just so damn awesome.

At this point, it would be good to have a plan B, and while there are a number of ways to work around this, though to my mind is the use of the Treasury’s explicit statutory authority to mint platinum proof coin of arbitrary value, which they could be deposited in the Federal Reserve account and used to keep the debt below the ceiling.

So if they mint a few trillion dollar coins, deposit them in their “checking account”, and it’s off to the races.

But it won’t happen, because Obama still wants to find a way to gut cut Social Security, Medicare, and Medicaid.

It’s Bank Failure Friday!!!!

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 And here they are, ordered, and numbered for the year so far.

  1. Virginia Business Bank,Richmond, VA
  2. BankMeridian, N.A., Columbia, SC
  3. Integra Bank National Association, Evansville, IN

Full FDIC list

It’s been a busy week.

In fact, it’s been a busy past 4 weeks.  There have been 13 banks closed after what had been a bit of a lull.

So, here is the graph pr0n with last years numbers for comparison (FDIC only):

You Have to Love the Bait and Switch that Obama Pulled on the CFPB

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As you know, Barack Obama decided not to appoint Elizabeth Warren as the first head of the Consumer Financial Protection Bureau (CFPB), but instead chose to nominate their current head of enforcement, Richard Cordray, former Ohio Attorney General, who had filed lawsuits against predatory banks.

It was better than the alternative, Raj Date, but it seemed to me that it was a worthless gesture to the Republicans, since they promised to filibuster anyone, because they want the bureau gutted.

Obviously, this screams “Recess Appointment,” but Obama is having none of that, not because he’s weak, but because this creates paralysis which he can exploit to effectively make a banker the head of the agency.

Raj Date has been elevated to adviser to the Treasury secretary for the Consumer Financial Protection Bureau, Warren’s old position, and I guarantee that there will be no pressure from the Obama to administration to get an up or down vote on Cordray.

They give a nod to the people who want the CFPB to work with their nomination, and then they put a bankster in charge of running the bureau.

Seriously, Obama has his tongue so far up the bankster’s asses that he tastes tonsils.

Who is Date? He’s the current associate director of research, markets and regulations, and he’s a f%$#ing bankster, having been the, “senior vice president for corporate strategy and development at Capital One and a managing director in the financial institutions group at Deutsche Bank.”

So now, Date can emasculate the CFPB while Cordray waits for a vote on his nomination that will never come.

If You Were Wondering How Evil the Banksters Were………

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The fact that they are threatening to drop millions of customers because the law may require them not to F%$# them over quite so badly might give you an inkling:

Brokerage firms may drop millions of individual retirement account holders if a proposed U.S. Labor Department rule takes effect, a lobbying group said today.

The Labor Department wants to expand the scope of fiduciary responsibility to protect those saving for retirement from conflicts of interest, such as recommending investments with higher fees. The rule would require investment professionals who advise employers and workers with retirement savings plans such as 401(k)s or IRAs to act in the best interest of their clients.

The change may cause financial firms to offer fewer investment options in retirement accounts and shift to a fee- based model used by investment advisers, which will raise costs, Kenneth Bentsen, executive vice president for public policy and advocacy at the Securities Industry and Financial Markets Association, said at a Washington hearing before the House Subcommittee on Health, Employment, Labor and Pensions.

He’s circumspect, but what the lobbyist from the lead financial services organization in the country just said was, “If you don’t let us f%$# our customers without lube, we’ll kick them to the curb.”

Why aren’t these guys going to jail?

H/t Naked Capitalism.

Helmut Kohl Excoriates Angela Merkel

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And it’s not just the former German Chancellor, (with the caveat that he is denying that he said this now) who was at one point considered her mentor, as well as much of the CDU’s old guard have not taken to harshly criticizing her behavior in the crisis.

This is rather unsurprising.

Unlike in America, the mainstream right (the CDU) finds the idea of hosing down taxpayers to pay off bankers, particularly when it won’t solve the problem, to be a bad thing.

Hopefully this is a step in realizing that the problems with the Eurozone, at least those not centered in EU HQ in Brussels, flow from Germany, and how it used its influence to structure the Eurozone.

Can We Please Primary the Bastard Now?

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So it appears that Barack Obama is removing Elizabeth Warren as head of the Consumer Financial Protection Bureau:

President Barack Obama has chosen a candidate other than Elizabeth Warren as director of the new Consumer Financial Protection Bureau, according to a person briefed on the matter.

The president’s choice is a person who already works at the consumer agency, the person said yesterday. Obama may make the nomination as soon as next week, another person briefed on the administration’s plans said.

The people, who spoke on condition of anonymity because the process isn’t public, didn’t name Obama’s choice.

Elizabeth Warren, a Harvard professor, was appointed last fall by Obama to set up the consumer bureau until a director was named. Warren previously was head of the congressional watchdog panel overseeing the bank bailout.

And here is the kicker:

Raj Date, a top deputy to Warren at the consumer bureau, was on a short list of candidates to become director ………

………He was senior vice president for corporate strategy and development at Capital One and a managing director in the financial institutions group at Deutsche Bank. During the debate over Dodd-Frank, Date headed the Cambridge Winter Center for Financial Institutions Policy, a research group he founded.

So he’s replacing Elizabeth Warren with a f%$#ing banker.

But in classic fashion, he’s floating out a payoff for her to keep her mouth shut until after the 2012 election, the Democratic nomination for Senate, where she would run against Scott Brown:

Elizabeth Warren’s calendar sure looks like the schedule of a woman considering a Senate bid, or at least someone being courted by power players in Massachusetts and the Senate Democrats’ campaign operation in Washington.

In recent weeks, Warren has met in person or spoke on the phone with Democratic Senatorial Campaign Committee Chairwoman Patty Murray, David Axelrod, Sen. Charles Schumer (D-N.Y.), Sen. John Kerry (D-Mass.) and Massachusetts Democratic Reps. Barney Frank, Stephen Lynch and John Tierney. The phone call with Murray took place in early June, Roll Call has learned. Warren attended a community banking event with Tierney in the Bay State and dined with Schumer, a former DSCC chairman and an aggressive recruiter who remains involved in DSCC activities.

Warren’s May calendar, the most recently available public schedule, shows the Schumer dinner along with the other meetings and discussions.

Given that Warren is leading the creation of a new Consumer Financial Protection Bureau, CFPB business could, of course, have been the lone agenda item during these meetings. But for a woman some national Democrats and liberal activists are hoping will take on Massachusetts Sen. Scott Brown (R) — a prime target in 2012 — her calendar alludes that she has at least been examining the possibility of a run.

So he’s putting her up to run against Scott Brown, which is a win-win for Obama.

Basically, she’s about the only person who appears to have a possibility to beat him right now, though it’s a tough row to hoe, because Brown is the consummate politician, and she isn’t.

If she wins, it’s easier to hold onto the Senate, and she gets buried as a low seniority Senator, where the old boys’ network keeps her far away from any meaningful banking regulation

If she loses, then no one could have won, and he keeps her inconvenient truths out of the press until his reelection.

It’s Bank Failure Friday!!!!

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Well, after a lull, the past two weeks have been pretty active, with 7 banks closed.

It still looks better than last year, but it ain’t good by a long shot.

Here are this week’s, ordered, and numbered for the year so far.

  1. One Georgia Bank, Atlanta, GA
  2. High Trust Bank, Stockbridge, GA
  3. First Peoples Bank, Port St. Lucie FL
  4. Summit Bank, Prescott, AZ

Full FDIC list

And here is the credit union closing:

  1. Vensure Federal Credit Union, Mesa, AZ

Full NCUA list

So, here is the graph pr0n with last years numbers for comparison (FDIC only):

Bernanke is Scared

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He just explicitly left the door open for another round of quantitative easing, or some similarly extreme measure:

The Federal Reserve chairman, Ben S. Bernanke, gave a subdued account of the economy’s health Wednesday and said that the Fed was prepared to expand its economic aid campaign once again, if necessary, though such a step was not imminent.

Less than a month has passed since Mr. Bernanke said at a press conference that the central bank intended to stand back and take the measure of the nation’s sluggish recovery. Wednesday’s remarks amounted to acknowledgment that so far, the news has been almost uniformly bad.

“I think we have to keep all the options on the table,” Mr. Bernanke said in testimony before the House Financial Services Committee. “We don’t know where the economy is going to go.”

This is about as close as you will ever hear a central banker get to saying that, “This scares the sh%$ out of me.”

It’s Bank Failure Friday!!!!

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It’s been a busy week, with closings of both bank and credit unions this week, 3 banks, one credit union, which is the most action we’ve seen since mid May.

And here they are, ordered, and numbered for the year so far.

  1. First Chicago Bank & Trust, Chicago, IL
  2. Colorado Capital Bank,Castle Rock, CO
  3. Signature Bank, Windsor, CO

Full FDIC list

And here are the credit union closings:

  1. Borinquen Federal Credit Union, Philadelphia, PA

Full NCUA list

So, here is the graph pr0n with last years numbers for comparison (FDIC only):

It’s better than last year but still plenty ugly.

When Ron Paul Sounds Sane…..

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We are living in strange times, and he just suggested that the Federal Reserve destroy the $1.6 trillion in Treasury notes that it bought as a part of quantitative easing program:

Representative Ron Paul has hit upon a remarkably creative way to deal with the impasse over the debt ceiling: have the Federal Reserve Board destroy the $1.6 trillion in government bonds it now holds. While at first blush this idea may seem crazy, on more careful thought it is actually a very reasonable way to deal with the crisis. Furthermore, it provides a way to have lasting savings to the budget.

The basic story is that the Fed has bought roughly $1.6 trillion in government bonds through its various quantitative easing programs over the last two and a half years. This money is part of the $14.3 trillion debt that is subject to the debt ceiling. However, the Fed is an agency of the government. Its assets are in fact assets of the government. Each year, the Fed refunds the interest earned on its assets in excess of the money needed to cover its operating expenses. Last year the Fed refunded almost $80 billion to the Treasury. In this sense, the bonds held by the Fed are literally money that the government owes to itself.

Unlike the debt held by Social Security, the debt held by the Fed is not tied to any specific obligations. The bonds held by the Fed are assets of the Fed. It has no obligations that it must use these assets to meet. There is no one who loses their retirement income if the Fed doesn’t have its bonds. In fact, there is no direct loss of income to anyone associated with the Fed’s destruction of its bonds. This means that if Congress told the Fed to burn the bonds, it would in effect just be destroying a liability that the government had to itself, but it would still reduce the debt subject to the debt ceiling by $1.6 trillion. This would buy the country considerable breathing room before the debt ceiling had to be raised again. President Obama and the Republican congressional leadership could have close to two years to talk about potential spending cuts or tax increases. Maybe they could even talk a little about jobs.

In addition, there’s a second reason why Representative Paul’s plan is such a good idea. As it stands now, the Fed plans to sell off its bond holdings over the next few years. This means that the interest paid on these bonds would go to banks, corporations, pension funds, and individual investors who purchase them from the Fed. In this case, the interest payments would be a burden to the Treasury since the Fed would no longer be collecting (and refunding) the interest.

This would be a change in plan for the Fed, the intent was to sell those bonds at a later date to soak up currency, but the same thing can be done by raising reserve requirements.

Needless to say, this won’t happen. It makes too much sense.

H/t Naked Capitalism.

Think of it as Evolution in Action

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In Onondaga, NY, a man died after falling from his motorcycle while not wearing a helmet.

He was protesting against helmet laws at the time of his accident:

Police say a motorcyclist participating in a protest ride against helmet laws in upstate New York died after he flipped over the bike’s handlebars and hit his head on the pavement.

The accident happened Saturday afternoon in the town of Onondaga, in central New York near Syracuse.

State troopers tell The Post-Standard of Syracuse that 55-year-old Philip A. Contos of Parish, N.Y., was driving a 1983 Harley Davidson with a group of bikers who were protesting helmet laws by not wearing helmets.

Troopers say Contos hit his brakes and the motorcycle fishtailed. The bike spun out of control, and Contos toppled over the handlebars. He was pronounced dead at a hospital.

Troopers say Contos would have likely survived if he had been wearing a helmet.

(emphasis mine)

On a meta note, I have decided to add an “irony” tag. This story inspired me.

Remember, the Banksters Own Our Asses

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That’s why the Federal Reserve almost doubled the interchange fees that banks can charge on debit card swipes, despite the fact that the initial proposal was much higher than what is charged in other industrialized nations:

Responding to an outcry from financial institutions, federal regulators on Wednesday significantly increased a new limit on fees that large banks can charge to merchants for processing debit card purchases, and they delayed the implementation of the cap until October.

The Federal Reserve voted 4-1 to set the limit for so-called swipe fees at 21 cents per transaction, an increase from the 12-cent fee it proposed in December. That fee would have gone into effect next month for large banks with more than $10 billion in assets.

In addition, the Fed on Wednesday allowed debit card issuers to add a fee of .05% of each purchase to cover a portion of fraud losses. That would add 2 cents to a $40 purchase. And debit card issuers could add a 1-cent-per-transaction fee if they undertook tougher fraud prevention policies and procedures.

The Fed said the new fee for an average transaction would be 24 cents. That’s still a big decrease from the current average swipe fee of 44 cents.

BTW, that “outcry from financial institutions,” they refuse to happens every time someone tries to reduce the ability of the banksters to rob the general public, and the “Responding to”, means that the Fed really has no interest inhelping consumers, they just had to determine the least that they could do to avoid a sh%$ storm.

Ben Bernanke and the Federal Reserve can bite my shiny metal………

Greeks Approve Suicide Pact

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You know, I was in the car, talking with my son about Greece, and I said that the Greek parliament had approved their own suicide pact by approving the austerity program demanded by the ECB and IMF.

My son, ever the precocious almost 11-year-old, asked me why it was a suicide pact, and I explained that austerity causes the economy to contract, which makes you less able to repay your debts.

I said that it was like demanding a salary cut so that you can better pay your debt.

My son did not understand this at all.

I explained that it was because they are stupid, and by “they” I mean the European Central Bank, the International Monetary Fund, and Angela Merkel.

Charlie did not find this a satisfying answer, and, truth be told, I don’t find it a particularly satisfying answer.

OCC Gives Another Monica to the Banks

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How bad is this one?

It’s so bad that even Timothy Geithner’s Treasury Department finds it excessive:

The Treasury Department has unexpectedly allied with state regulators and consumer groups in their bid to force the Office of the Comptroller of the Currency to dial back its preemption standards.

The Obama administration sent a letter to the OCC this week objecting to a proposal that said Dodd-Frank left preemption standards mostly unchanged. But Treasury said the OCC was ignoring Congressional intent.

“Although Congress adopted a specific preemption standard in Dodd-Frank, the OCC’s rule articulates a preemption standard that is broader than the language of the Dodd-Frank standard,” Treasury General Counsel George Madison wrote to the OCC.

It is relatively unusual for federal agencies to weigh in on another regulators’ proposal, but even more rare in this case. The OCC is nominally a bureau of Treasury, but the administration has only limited oversight of the agency.

At issue is language used by the OCC to preempt state consumer protection laws. The agency has said it can preempt laws that “obstruct, impair or condition” the business of banking.

But those words were not part of the 1996 Barnett Supreme Court decision, which Dodd-Frank said should be the preemption standard.

In a proposal issued May 26, the OCC dropped the controversial language, but still said its previous rulings stood intact.

In his letter, Treasury’s Madison said that did not make sense.

“The proposed rule validates all prior preemption determinations, including those based on its deleted ‘obstruct, impair or condition’ standard,” Madison wrote. “In our view, this position is contrary to Dodd-Frank.”

Madison said the OCC was trying to ignore the law.

(Emphasis mine)

The fact here is that the head of the OCC’s term ended some time ago, and Obama has allowed the position of the Comptroller of the Currency to remain unfilled, he has not even proposed a successor, and allowed Acting Comptroller of the Currency John Walsh to continue in office when a recess appointment could put someone in place who might actually be interested in, well, you know, regulating.

Seriously, recess appoint someone who is not a corrupt sellout.  Having the Treasury department call them names is not a proactive solution.

Silly Developing Nations, Don’t You Know that the IMF is for White People?

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So, Christine Lagarde has been appointed the new head of the IMF.

What striking about all this is how the powers that be have insisted that they need to have a European in charge, because of the current crises in the Euro zone.

Gee, no one ever said that when it was Indonesia, Mexico, Korea, Malaysia, etc., but once it’s the Euro’s head in the noose, suddenly we need to institute a affirmative action for white people legacy admissions program for the window office at a major international financial agency.

Senators Call for OCC Head’s Removal

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After pimping for the big banks for the past few years, Acting Comptroller of the Currency John Walsh has finally become so blatant that 3 Senate Dems called for his removal:

On Tuesday, Acting Comptroller of the Currency John Walsh said regulators are in danger of going too far to curb risk-taking by big banks.

Now, some Democratic senators are calling for his head.

Three Senate Democrats – Jack Reed of Rhode Island, Carl Levin of Michigan and Jeff Merkley of Oregon – have publicly called for the White House to replace Mr. Walsh, a Republican, following his speech in London Tuesday.

The lawmakers were particularly rankled by Mr. Walsh’s statements that bank capital requirements – the cushion banks hold against future losses — are already “exceedingly high” and that regulators should be cautious about much more they require the largest banks to hold, something foreign and U.S. regulators are now negotiating.

“Mr. Walsh’s latest comments provide further evidence that he is not interested in leading an agency charged with ensuring the safety and soundness of our financial institutions,” Mr. Reed said in a statement. Mr. Reed, a senior member of the Senate Banking panel which oversees the OCC, went on to call for the Obama administration “to fundamentally re-think the OCC’s leadership and ensure that American taxpayers are never again on the hook for Wall Street’s misdeeds.”

Mr. Levin, who leads an investigative committee that investigated the 2008 financial crisis, said it is “past time for the president to nominate new leadership at the OCC to protect American families and businesses from the excesses of Wall Street.”

When Yves Smith wrote, “OCC Gives Banks Another Blow Job,”  she was spot on.

It was past time to ditch him, and for that matter, to ditch the whole OCC,  in January 2009, but he he’ll keep Walsh, for the same reason that Timothy “Eddie Haskell” Geithner is Obama’s secretary of the treasury.

The Federal Reserve Speaks

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And they are saying that the economy sucks, and will continue to suck, but they won’t do anything about it:

The economic recovery is slowing and the outlook for next year has gotten worse, Federal Reserve Chairman Ben S. Bernanke said Wednesday, backing away from the view that the slowdown of the past few months was merely temporary.

The central bank released new economic projections that showed weaker growth in both 2011 and 2012 than had been forecast just two months ago. Despite the slowdown, the Fed said it will end a program of buying vast sums of Treasury bonds at the end of June as scheduled and gave no sign it is contemplating new action.

We are unbelievably screwed.