7 Reasons to Be Skeptical About Financial Reform

[JBeukema]

2. The Bill Doesn't Deal With Fannie, Freddie, Credit Runs, or Leverage. Fannie and Freddie played a huge role in helping to overheat the U.S. mortgage market. Until those agencies experience some fundamental change in policy and procedures, it's hard to see how another housing disaster won't occur again in the future. There's no attempt at any reform for these companies in either of Congress' financial regulation proposals.

7 Reasons to Be Skeptical About Financial Reform - Business - The Atlantic

 

[sparky]

#5 has been of interest to me for some time, as CDS were something not capatalized individually in isolation seperate from public banking. To dole out shakey mortages is one thing, but to use them to colateralize institutional fiscals is exactly what Glass Steagal , and it's modern counterpart the Volcker rule sought to end


Staement released from the INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION, INC.

At year-end 2009, the notional value of derivatives held by US commercial banks totaled $213 trillion according to the OCC. Assuming 10% of this amount reflects corporate end-user activity, and that the initial margin requirement would be 1% (a typical level) of the notional amount, then US companies would face a $213 billion collateral requirement.

Note the scare tactic of cost relation vs. the bill here amounts to only 1% risk



US Companies May Face US $1 Trillion in Additional Capital and LiquidityRequirements As a Result of Financial Regulatory Reform, According to ISDA Research

btw, this is all over the net JB....>

On the negative side, there is little in this legislation that will fundamentally change the way that Wall Street does business. The rules on derivative trading will still allow the bulk of derivatives to be traded directly out of banks rather than separately capitalized divisions of the holding company. The Volcker rule was substantially weakened by a provision that will still allow banks to risk substantial sums in proprietary trading.

Statement on Wall Street Reform Bill | Press Releases