La riforma del sistema finanziario negli Stati Uniti

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Una è dell’ 8 marzo scorso

ECONOMY

Compromising Financial Reform

Late last year, the House of Representatives passed the Wall Street Reform and Consumer Protection Act of 2009, a regulatory reform package aimed at protecting consumers and taxpayers from Wall Street excess, but the Senate has yet to approve its own regulatory reform bill. Last month, Senate Banking Committee Chairman Chris Dodd (D-CT), who is leading the Senate negotiations, reached an “impasse” with the committee’s ranking member, Sen. Richard Shelby (R-AL). Sen. Bob Corker (R-TN) restarted negotiations, saying that regulatory reform is “too important to fail,” and last week, Corker said that a deal with Dodd was “real close.” The main sticking point that remains in the process is whether or not to create an independent Consumer Financial Protection Agency (CFPA) like the one included in the House bill. While Dodd’s initial bill included a CFPA, Corker has called a new agency a “non-starter” and Shelby has characterized it as “folly and dangerous.” The banking industry has also been lobbying heavily against the CFPA, claiming that it will drive up the cost of credit. So instead, Dodd is reportedly looking to create a consumer protection division inside of another bank regulator. The Senate has also not moved on an Obama administration proposal to prevent banks from trading with federally insured money.

COMPROMISED CONSUMERS: The goal behind creating an independent CFPA is to ensure that there is a body within the regulatory structure focused solely on consumer protection — as the rest of the bank regulators make bank “safety and soundness” their primary concern — and to crack down on the pernicious lending practices that helped precipitate the financial crisis. Dodd’s initial compromise proposal, which the Republicans rejected, placed a new consumer division inside the Treasury Department. Instead, Corker proposed placing it inside the Federal Reserve. That proposal, and Dodd’s willingness to examine it, represent quite a turnaround from the previous few months, when the Fed was the subject of heavy criticism from lawmakers on both sides of the aisle. Dodd himself has said that the Fed was “an abysmal failure” at consumer protection, “which failed for over 14 years to put an end to the predatory mortgage lending practices that led to the financial crisis.” The “Fed option” has been met with skepticism from Democrats on the banking committee and consumer advocates. “In my 20 years of trying to get the Federal Reserve to properly protect consumers, it has been an uphill, and very often unsuccessful, battle. I am very leery of any consumer regulator being placed inside the Fed,” said Sen. Chuck Schumer (D-NY). “Why put consumer protection back in the Fed after it’s been so woefully neglected?” asked Sen. Jeff Merkley (D-OR). House Financial Services Chairman Barney Frank (D-MA), meanwhile, called the proposal “a joke,” and said that he wouldn’t bring the Senate bill to a vote if the “Fed option” remained.

REPUBLICAN VETO POINTS: As Demos’ Heather McGhee said, leaving consumer protection responsibilities with the Fed “would codify consumer protection’s secondary status in federal financial regulation.” And, in fact, the banking industry considered the proposal a “victory” that “alleviates their concern.” “Regulation of the products should be connected to the regulation of the bank,” said Scott Talbott, senior vice president of government relations for the Financial Services Roundtable, which represents the country’s largest financial firms. Sen. Judd Gregg (R-NH) wants to go even further, saying that he would only agree to support regulatory reform if the Federal Reserve Chairman was given veto power over the consumer division’s rule-writing. Shelby supports Gregg, even though he had previously said that the Fed’s “poor oversight of our financial institutions and markets helped produce the greatest economic crisis this country has experienced in eighty years.” Dodd, however, has said that the consumer division must have rule-writing authority and an independent source of funding, both of which are indeed critical if the agency is to be effective. “Consumer abuses were one of the root causes of the financial crisis and regulatory reform legislation should address this problem,” said Andrew Gray, a spokesman for FDIC Chairman Sheila Bair. “[T]he ideal way to do this is through an independent agency with the power to write rules for the banks and non-banks alike.”

VOLCKER ON THE SHELF?: While the CFPA has been contentious, both parties seem united in wanting to shelve a proposal by the administration aimed at reining in banks’ risky trading. The administration’s “Volcker rule” would bar banks from trading for their own benefits with federally insured dollars and mandate that no bank hold more than ten percent of the liabilities in the financial system. However, Dodd dismissed the idea, saying that “I can’t write regulations,” and Corker said the proposal is “just not helpful.” Outside of the Senate, meanwhile, the proposal has garnered significant praise. Five former Treasury secretaries said that it is “a key element in protecting our financial system and will assure that banks will give priority to their essential lending and depository responsibilities.” Former Citigroup CEO John Reed added that it would “limit the propagation of [bank] failures.” The rule also gained the backing of one current bank CEO last week, with Citgroup’s Vikram Pandit saying that “banks should operate as banks, focused completely on serving their clients.” “I don’t believe banks should use capital to speculate that way,” Pandit said, when asked about the kind of trading the Volcker rule is meant to curb. Last week, Dallas Federal Reserve President Richard Fisher advocated a more radical approach to the banks, saying that financial firms considered “too big to fail” should be broken up “into ones of more manageable size.” “Given the danger these institutions pose to spreading debilitating viruses throughout the financial world, my preference is for a more prophylactic approach,” he said. “And this should be done before the next financial crisis, because it surely cannot be done in the middle of a crisis.”

Una è di oggi 17 marzo

ECONOMY

Making Wall Street Play By The Rules

Senate Banking Committee Chairman Chris Dodd (D-CT) unveiled a sweeping financial regulatory reform bill Monday, designed to make the banking system work better for average Americans and help prevent another financial meltdown. Coming months after the House passed its own reform bill, Dodd’s proposal would create a Financial Stability Oversight Council “to watch for systemic risks” and would “direct the Federal Reserve to supervise the nation’s largest and most interconnected financial institutions, not just banks.” It would also create a Consumer Financial Protection Bureau, housed within the Fed, which would have authority to write rules governing all financial entities and have the “authority to examine and enforce regulations for banks and credit unions with assets over $10 billion and all mortgage-related businesses.” The bill would also take steps to prevent banks from becoming “too big to fail” by creating disincentives and regulations to curb outlandish growth. President Obama hailed it as “a strong foundation to build a safer financial system.” “We cannot wait any longer for real financial reform that brings accountability to the financial system and makes sure that the American taxpayer is never again asked to bail out the irresponsibility of our largest banks and financial institutions,” Obama said. Treasury Secretary Tim Geithner called it a “strong bill” that “we need,” and urged lawmakers to “move forward quickly.” Eighteen months after the financial meltdown, the industry is emboldened and the White House seems happy to fight on this issue, believing it has public anger at Wall Street on its side. Dodd vowed to have financial reform “adopted this year,” and the Banking Committee plans to mark up the measure next week. But not surprisingly, corporate lobbyists and Senate Republicans have quickly mobilized to weaken the bill, calling its attempts to shield consumers from abusive practices “draconian.”

MAIN STREET OVER WALL STREET: “The financial crisis has resulted in more than 8 million American workers losing their jobs, trillions in household wealth being wiped out and hundreds of thousands of small businesses without the credit they need to grow,” Obama said this week. Dodd’s bill takes important steps to prevent and moderate future crises and protect consumers. In addition to more oversight and regulation of major financial financial institutions and “an early warning system for systemic risk,” the bill creates a $50 billion “resolution fund” — paid upfront by the largest firms — “for the orderly liquidation of a company that is collapsing,” so taxpayers won’t be left footing the bill. The Dodd bill would also help keep firms from becoming “too big to fail” by barring financial firms from owning more than 10 percent of the assets in the financial system, creating stricter capital and leverage caps, and using the fee that funds the resolution fund to keep banks smaller. The bill would also allow, but not mandate, regulators to implement the “Volcker rule” — which would “limit the size and scope of bank activities” through a ban on proprietary trading. Dodd’s proposed consumer protection bureau would be housed within the Fed, which has been heavily criticized for its past regulatory failures and for a culture that is seen as apathetic or even antagonistic to the concerns of consumer protection. But while a stand-alone agency like the one in the House bill is preferable, Dodd’s bureau seems to be sufficiently autonomous within the Fed. Longtime consumer protection advocate Elizabeth Warren listed four criteria for an effective consumer protection regulator, including an independent director, budget authority, rule-making authority, and enforcement powers. Dodd’s bureau largely meets these tests. Warren offered cautious praise for the bill, saying, “Chairman Dodd took an important step today by advancing new laws to prevent the next crisis.” Ed Mierzwinski, of the U.S. Public Interest Research Group, also “praised Dodd” for creating the agency with a strong enough “‘firewall’ against potential efforts to weaken it.”

LOBBYING ‘BLITZ’: “Just hours” after Dodd announced the bill, financial industry lobbyists began to mobilize in opposition and looked for allies on Capitol Hill to advance their goals. The U.S. Chamber of Commerce announced that it plans to spend another $3 million on ads and astroturf efforts aimed at Banking Committee members to fight the bill. “One of the lobbyists’ top targets” is the consumer protection bureau, which the Chamber’s David Hirschmann called a “giant new bureaucracy” that would have “unlimited powers” to hurt small businesses. In reality, the bureau will have enforcement authority only on banks with more than $10 billion in assets. Other banks would be overseen by their current regulators. Other “industry representatives” have begun writing amendments “that would strengthen checks on the new regulator.” Credit union lobbyists want the $10 billion threshold bumped up to $50 billion in order to exempt their business, while the Financial Services Roundtable is opposed to a separate consumer bureau, even if it is housed within the Fed. The Roundtable and several bankers associations also opposed letting states write their own additional regulations to protect their residents. Meanwhile the insurance lobby opposes a provision that would require their industry to pay into the resolution fund. Insurers claim the provision will lead “consumers and investors to unfairly conclude that the property-casualty sector is unstable and unreliable.” The American International Group (AIG) debacle, however, has already left little doubt of the sector’s instability. And the Financial Services Forum, an association of CEOs at 18 large financial firms, came out strongly against the inclusion of the “Volker rule.” They claim it will “arbitrarily” ban certain activities, ignoring the fact that the activity in question — proprietary trading — “precipitated the credit crisis.”

‘FRIENDLY SENATORS’: It’s been clear for some time that lobbyists have already found some “friendly senators” who are willing to advance their goals. Dodd tried for months to negotiate with Republican members on his committee, but when he announced the bill Monday at a press conference, he was standing alone. Dodd first proposed a bill last November, and since then has gone through two rounds of negotiations. The first, with the banking committee’s ranking member, Sen. Richard Shelby (R-AL), ended at an “impasse,” and the second, with Sen. Bob Corker (R-TN), ended last week after Dodd decided that the process was taking too long and it was time to move forward. The biggest sticking point in the negotiations had been whether or not to create a Consumer Financial Protection Agency (CFPA) and where it should be housed (if anywhere). Dodd’s initial proposal created a completely independent CFPA, but after the negotiations, he conceded to create the bureau within the Fed. Despite this large concession — and several others Dodd retained even after ending negotiations — not a single Republican has been willing to sign on. Corker called Dodd’s proposal “a huge improvement,” but nevertheless said the “bill almost certainly would not get his and other Republicans’ support.” Shelby said Republicans agree with 85 to 90 percent of the Dodd bill, but still said he would not support it. Sen. David Vitter (R-LA), who also sits on the Banking Committee, had harsher words, falsely claiming, “This bill does nothing to change the expectations in the market that some firms are too big to fail.” Republicans are calling for the slowing the process down, claiming that if they receive more time to “review the language,” bipartisanship is still possible. But the experience of the health care debate — and the four months of intensive negotiations that led nowhere on financial reform — suggest this is likely an empty promise. Dodd and his fellow Democrats should be wary of making any more concessions, especially on the consumer protection bureau. The way the bureau is set up, if “any of its key features are watered down, even a tiny bit, it will quickly become a bad proposal,”

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Informazioni su Giuseppe Ferrari

Nato a Modena, vive e lavora a Milano praticamente da sempre. Sposato con due figlie. Laureato in sociologia e sociologo mancato (questo blog è la mia rivincita tardiva ed incerta). Imprenditore nel settore della stampa dell'imballaggio flessibile.
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