The Financial Reform Bill - Good or Bad?

[Flopper]

The financial reform bill, unlike the healthcare bill has support from both parties. But to no ones surprise, there is quite a bit of disagreement on sections of the bill. The bill is not as large as the healthcare bill but is every bit as complex. Here are the major parts of the bill:

· A derivative is a financial contract whose value is derived from some other factor. Simple examples of derivatives are stock options and future contracts. Other derivatives are far more complex. A key part of the legislation would force the trading of derivatives on public exchanges where regulators could see which banks have a hand in which deals. This trading was a 450 trillion dollar market! By comparison, this is about 30 times the GNP of the United States and over a hundred times the national debt. Most of this activity was done in private deals so when markets crashed in 08, no one knew who owed what to whom. The new regulations would give regulators the same oversight they have in other publicly traded markets. Most of the debate is not whether this oversight is needed but rather how it should be accomplished.
· Another provision in the bill would allow the government to breakup failing banks gradually before they actually fail to avoid the Lehman and IAG debacles. The bill contains a 50 billion dollar fund for this purpose, but this may be dropped from the bill.
· The bill also establishes a System Risk Council where regulators would look at the total risk to the system as opposed to only looking at their specific corner of the industry. It is still being debated as to how much power this council should have.
· The bill also addresses the “too big too fail” issue by giving some banks an implicit taxpayer guarantee. This is another item that is hotly debated.
· The bill would create a Consumer Financial Projection Agency, which would monitor how banks treat their customers. This has been hotly debated also.

There may be more but this was all I could find.

Is this bill needed? If so, what should be in the bill?


http://www.twincities.com/politics/ci_14921067
Financial reform fails to tackle real issues :: CHICAGO SUN-TIMES :: Steve Huntley

 

[PatekPhilippe]

As long as the 50 billion dollar perpetual bailout fund is eliminated...it would be something I could support.

 

[Oddball]

Given the spate of bureaucracy completely unrelated swill crammed into the "health care" deform bill, I'm suspicious at the very least.

If this bill follows true-to-form of the past several bloated power legislative grabs of the Bolshevist democrat empire, which I have no reason at all to believe otherwise, I'm against it on general principles.

 

[Toro]

Its good.

The bill will make derivatives more transparent and less risky by forcing traders to put up collateral on a daily basis.

The $50 billion fund will ensure that the next time there is a big collapse - and there will be - then the banks will take the first $50 billion hit instead of the taxpayers. Without this fund, taxpayers will be on the hook for everything. Best that the banks at least have some of their own money at risk rather than relying solely on the taxpayers.

 

[Oddball]

Yeah, and how many hundreds-cum-thousands of pages of unrelated, and probably detrimental, authoritarian bilge will be wrapped around the few provisions you do like.

IOW, how much bullshit are you willing to take with your little dollop of whipped cream?

 

[elvis]

Its good.

The bill will make derivatives more transparent and less risky by forcing traders to put up collateral on a daily basis.

The $50 billion fund will ensure that the next time there is a big collapse - and there will be - then the banks will take the first $50 billion hit instead of the taxpayers. Without this fund, taxpayers will be on the hook for everything. Best that the banks at least have some of their own money at risk rather than relying solely on the taxpayers.

when you say big collapse, do you mean like 2008?

 

[Oddball]

Its good.

The bill will make derivatives more transparent and less risky by forcing traders to put up collateral on a daily basis.

The $50 billion fund will ensure that the next time there is a big collapse - and there will be - then the banks will take the first $50 billion hit instead of the taxpayers. Without this fund, taxpayers will be on the hook for everything. Best that the banks at least have some of their own money at risk rather than relying solely on the taxpayers.

That's just plain old economically ignorant.

Where do you think the banks are going to come up with the money to pay into that big (what will end up being) slush fund?

 

[elvis]

Its good.

The bill will make derivatives more transparent and less risky by forcing traders to put up collateral on a daily basis.

The $50 billion fund will ensure that the next time there is a big collapse - and there will be - then the banks will take the first $50 billion hit instead of the taxpayers. Without this fund, taxpayers will be on the hook for everything. Best that the banks at least have some of their own money at risk rather than relying solely on the taxpayers.

That's just plain old economically ignorant.

Where do you think the banks are going to come up with the money to pay into that big (what will end up being) slush fund?

the discount window?

 

[Soggy in NOLA]

Its good.

The bill will make derivatives more transparent and less risky by forcing traders to put up collateral on a daily basis.

The $50 billion fund will ensure that the next time there is a big collapse - and there will be - then the banks will take the first $50 billion hit instead of the taxpayers. Without this fund, taxpayers will be on the hook for everything. Best that the banks at least have some of their own money at risk rather than relying solely on the taxpayers.

That's just plain old economically ignorant.

Where do you think the banks are going to come up with the money to pay into that big (what will end up being) slush fund?

Kinda like all the cheering tha GM paid back the loans.... with TARP money!

Oh boy... YAY!!!

All this bill will do is ENSURE risky behavior as a mechanism will now be in place to bail them out, no matter what. It's a HORRIBLE idea.

Not to mention it doesn't ppass the smell test.. especially now that it is looking more and more like the fix is in with GS.

 

[Oddball]

Its good.

The bill will make derivatives more transparent and less risky by forcing traders to put up collateral on a daily basis.

The $50 billion fund will ensure that the next time there is a big collapse - and there will be - then the banks will take the first $50 billion hit instead of the taxpayers. Without this fund, taxpayers will be on the hook for everything. Best that the banks at least have some of their own money at risk rather than relying solely on the taxpayers.

That's just plain old economically ignorant.

Where do you think the banks are going to come up with the money to pay into that big (what will end up being) slush fund?

the discount window?

HA!

Count on every fee and interest rate for you going up, buddy.

 

[elvis]

That's just plain old economically ignorant.

Where do you think the banks are going to come up with the money to pay into that big (what will end up being) slush fund?

the discount window?

HA!

Count on every fee and interest rate for you going up, buddy.

so you think it will make banks even less willing to lend?

 

[Oddball]

Oh, they'll be willing as long as you're willing to pay the points, fees and interest.

 

[elvis]

Oh, they'll be willing as long as you're willing to pay the points, fees and interest.

so, less inclined to part with it. alone the same lines, I suppose. It's just the banks are already hoarding money.

 

[Oddball]

They're not hoarding it at all. They're investing it in less risky paper than mortgages and commercial credit.

 

[elvis]

They're not hoarding it at all. They're investing it in less risky paper than mortgages and commercial credit.

what would that be? gubmint securities?

 

[Oddball]

mmmmmmmmmm could be.

 

[Toro]

Yeah, and how many hundreds-cum-thousands of pages of unrelated, and probably detrimental, authoritarian bilge will be wrapped around the few provisions you do like.

IOW, how much bullshit are you willing to take with your little dollop of whipped cream?

Feel free to post examples of "authoritarian bilge" in the bill which will overwhelm the provisions designed to avoid a repeat of the financial collapse we just went through. Because thus far, I have yet to see you post anything other than bromides.

 

[dilloduck]

I love how gambling has been cleaned up by calling it investing.

 

[Oddball]

Yeah, and how many hundreds-cum-thousands of pages of unrelated, and probably detrimental, authoritarian bilge will be wrapped around the few provisions you do like.

IOW, how much bullshit are you willing to take with your little dollop of whipped cream?

Feel free to post examples of "authoritarian bilge" in the bill which will overwhelm the provisions designed to avoid a repeat of the financial collapse we just went through. Because thus far, I have yet to see you post anything other than bromides.

Is the final version of the bill --y'know, the one that the imperial parliament will be voting on-- written?...Of course it isn't.

OTOH, there are a slew of examples of unrelated regulations, bureaucratic expansions and outright bribes that have been piled onto every bill passed and signed into law by the current regime so far.

 

[PatekPhilippe]

Oh, they'll be willing as long as you're willing to pay the points, fees and interest.

so, less inclined to part with it. alone the same lines, I suppose. It's just the banks are already hoarding money.

Considering that the dollar is nearly worthless I can understand why. On the other hand I have received no less than 8 credit card offers and offers from Banks to lend me money this week alone.