TPMDC Paul Volcker
Jamie Dimon
Volcker To Dimon: Just Give Up Your Banking License And We're Cool (VIDEO)
How's this for serendipity?
Just a couple weeks before Jamie Dimon announced publicly that his banking firm JPMorgan had lost a stunning $2 billion betting with depositor funds, he took to Fox News to criticize the Volcker Rule, meant to ban federally backstopped banks from engaging in proprietary trading.
Bill Moyers invited former Fed chairman Paul Volcker -- the architect of the rule -- to respond:
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)Topics: Jamie Dimon, Paul Volcker, Volcker Rule
Barack Obama
JP Morgan Scandal Raises Tough Questions For Obama Administration
Mitt Romney will probably have a harder time defending his intent to repeal the 2010 Dodd-Frank Wall Street reform law in the wake of JP Morgan's stunning disclosure that it lost at least $2 billion betting on the economy.
But it also raises important substantive questions about the effectiveness of the new financial reforms themselves, particularly the one provision specifically intended to end just this sort of trading.
On a Friday conference call with reporters, Sens. Carl Levin (D-MI) and Jeff Merkley (D-OR) criticized regulators for writing a major loophole into the so-called Volcker Rule -- meant to prevent banks from betting with depositor funds -- at the behest of financial interests.
"It is inconsistent to create this kind of a major loophole," Levin said, noting that it goes against the intent of the reforms Congress passed.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)Topics: Barack Obama, Carl Levin, Jeff Merkley , Mitt Romney, Paul Volcker, Volcker Rule, Wall Street
Barack Obama
Obama Campaign Knocks Romney In Wake Of JP Morgan Debacle
President Barack Obama and Mitt Romney
The Obama campaign is seizing on the news that financial giant JP Morgan lost billions of dollars trading derivatives with customer funds to attack Mitt Romney for wanting to repeal the 2010 law meant to curtail these kinds of risky bets.
"Rolling back Wall Street reform, as Mitt Romney proposes, would be reckless," says Obama camp spokeswoman Lis Smith in a statement to TPM. "The law promotes transparency, limits the types of risky investments that can be made with deposits insured by federal taxpayers, and prevents investment losses at one bank from threatening the whole financial system. Returning to the failed policy of letting Wall Street write their own rules would put all of us at greater risk of another financial crisis and leave us vulnerable to another taxpayer-funded bank bailout like the one shortly before President Obama took office."
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)Topics: Barack Obama, Financial Reform, Mitt Romney, Paul Volcker, Volcker Rule, Wall Street
Barack Obama
New Wall Street Scandal Threatens Romney
Mitt Romney
A surprising development on Wall Street Thursday could magnify a little-discussed but key difference between President Obama and Mitt Romney -- one with enormous consequences for public policy.
On a conference call with analysts, JP Morgan CEO Jamie Dimon announced that his firm had lost $2 billion investing in the same species of derivative that exacerbated the 2008 financial crisis.
Dimon claims the company is prepared to absorb the loss, but it puts the reputation of one of the only big firms to weather the 2008 financial crisis directly on the line.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)Topics: Barack Obama, Financial Crisis, Financial Reform, Mitt Romney, Paul Volcker, Volcker Rule, Wall Street
Roundup
TPMDC Morning Roundup
Obama To Meet House Democrats At Retreat
The Hill reports from the House Democratic Issues Conference in Maryland: "House Democrats are projecting a sense of unity with the White House, but President Obama's appearance here Friday at their annual retreat will be his first collective meeting with the caucus since lawmakers roundly rebuked his tax cut deal last month."
Obama's Day Ahead
President Obama will host a reception for Mayors at 10:15 a.m. ET. He will depart from the White House at 10:50 a.m. ET, and depart from Andrews Air Force Base at 11:05 a.m. ET, arriving at 12:10 p.m. ET in Albany, New York. He will tour the General Electric Plant in Schenectady at 12:45 p.m. ET, and deliver remarks on the economy at 1:05 p.m. ET. He will depart from Albany at 2 p.m. ET, arriving at Andrews Air Force Base at 3:05 p.m. ET, and will arrive back at the White House 3:20 p.m. ET. He will depart the White House against 6:30 p.m. ET, and attend the Democratic Issues Conference at 7:30 p.m. ET in Cambridge, Maryland. He will arrive back at the White House at 9:45 p.m. ET.
Topics: 2012 elections, Barack Obama, House '12, House Democrats, Jeffrey Immelt, Joe Biden, Paul Volcker, Roundup
Austan Goolsbee
Goolsbee To Replace Romer As White House Economics Adviser (VIDEO)
Austan Goolsbee, Chief Economist on the Economic Recovery Advisory Board
Last night, the White House leaked the news that economic adviser Austan Goolsbee will succeed Christina Romer as chair of the Council of Economic Advisers. In an administration whose economic policy is so dominated by Larry Summers, Goolsbee's most important role will likely be to present -- and perhaps spin -- those policies to the public. Goolsbee has a wry sense of humor in public and a taste for the jugular, which sets him apart from Romer, who had a light touch and delivered even the worst news with a chirpy smile.
Goolsbee previously served as Staff Director and Chief Economist of the President's Recovery Advisory Board. He's advocated for letting the Bush tax cuts for the rich expire, and, as a close ally of Paul Volcker, for tougher regulations on financial institutions.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)Topics: Austan Goolsbee, Barack Obama, Christina Romer, Economy, Paul Volcker, Stimulus, White House
Financial Reform
Obama Administration Sided With Scott Brown On Wall Street Bill Loophole
President Obama and State Sen. Scott Brown (R-MA)
As the final Wall Street negotiations came to a close last week, the Obama administration quietly sided with Sen. Scott Brown (R-MA) against most Democrats in support of a loophole in one of the key provisions of the financial reform bill.
Several Democratic Hill aides tell TPMDC that the Treasury Department, which wielded tremendous influence over the shape of the legislation, changed its position on the Volcker rule during the final deliberations, endorsing an exemption that will allow banks to invest in outside hedge funds.
"Treasury's official position went from opposed to [the loophole] to supportive," one aide says. "They may have [even] overshot Brown's desires by a bit."
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)Topics: Barney Frank, Carl Levin, Chris Dodd, Financial Reform, Jeff Merkley , Paul Volcker, Scott Brown, Treasury, Volcker, Volcker Rule, Wall Street, White House
Blanche Lincoln
Dems Fight Each Other Over Major Wall Street Reform Measures
Speaker Nancy Pelosi (D-CA) and Senator Blanche Lincoln (D-AR)
They're close to a deal, they're not close to a deal, they're talking, they're not talking.
The final Wall Street reform negotiations have been beset by delays as key members hash out compromises on the two outstanding (and deeply consequential) aspects of financial regulatory reform.
First there's the so-called Volcker rule. Then there's the question of derivative regulations. The more difficult fight is over the latter, so let's deal with it first.
House Democrats with close ties to big banks have threatened to bolt from the whole bill over proposed new derivatives rules in the Senate bill. If passed they would require major financial firms to dissociate from their derivative trading desks. Certain New Democrats and members of the New York delegation wants that particular measure scrapped. That sounds complicated, but the basic idea is to forbid federally insured firms from taking the sorts of risky gambles that could cause them to collapse.
Topics: Blanche Lincoln, Bob Corker, Democrats, Derivatives , Nancy Pelosi, New Democrats, Paul Volcker, Volcker, Volcker Rule, Wall Street
Wall Street
Wall Street's Big Day: House And Senate Weigh Gutting Key Financial Reform Proposals
Sen. Chris Dodd (D-CT) and Rep. Barney Frank (D-MA)
Today is a pivotal day for Wall Street. Billions of dollars and a tremendous amount of risky trading are on the line in what are perhaps the final hours of negotiations over financial reform.
House and Senate conferees will soon determine whether two of the most important pieces of the legislation are as robust as reformers say they need to be, or whether big banks and other industries prevail in their push for loopholes, carve outs, and other exemptions.
Yesterday, House participants in the conference committee laid down an offer--a package of proposed tweaks--to the far-reaching section of the Senate bill dealing with derivative regulations. They seek a host of goodies for end-users (businesses and industries that trade in derivatives to hedge their risk) who want to be exempt from new transparency rules. But they don't propose any changes to the most controversial part of the bill: a provision, authored by Sen. Blanche Lincoln (D-AR) that would require mega-financial firms to break off their derivatives trading desks, and house them in affiliated businesses, where they won't be federally insured against failure.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)Topics: Blanche Lincoln, Carl Levin, Derivatives , Financial Reform, Jeff Merkley , Paul Volcker, Scott Brown, Volcker, Volcker Rule, Wall Street
Financial Reform
Feingold: I Will Not Support Weak Wall Street Reform
Sen. Russell Feingold (D-WI)
Democrats are in hot pursuit of Russ Feingold's vote for Wall Street reform. But in a statement sent my way this afternoon, Feingold says he's told the White House and key congressional leaders that he's still a no unless the bill gets significantly stronger.
"During debate on the financial regulatory reform bill, I made it clear that I would only support a strong bill that can prevent another financial crisis," Feingold's statement reads. "Neither the House bill nor the Senate bill pass that test."
I have spoken to Senate leaders, the Obama administration, and members of the conference committee and made my concerns well known. I opposed deregulating Wall Street and eliminating the protections of the Glass-Steagall Act, a position which put me at odds with many in Washington who supported the very policies that contributed to the financial crisis, and who now support these bills that simply don't get the job done. Without including stronger reforms, we're simply whistling past the graveyard.PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)
Topics: Carl Levin, Financial Reform, Jeff Merkley , Paul Volcker, Russ Feingold, Scott Brown, Wall Street
Wall Street
Levin Presses Dems To Buck Big Bank Push For Wall Street Reform Loophole
Sen. Carl Levin (D-MI)
In a last-ditch effort to block Wall Street lobbyists from securing another major loophole in financial reform legislation, one of the authors of the so-called Volcker rule is publicly and privately pressuring top negotiators to buck the banks and keep the proposed new rules as strict as possible. He's also casting doubt on those who say the bill won't pass if they don't do as the bankers say.
"There's people [on the conference committee] who favor it," Sen. Carl Levin (D-MI) told TPMDC yesterday evening in a brief interview. "I hope they're not going to accept it."
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)Topics: Carl Levin, Financial Reform, Jeff Merkley , Paul Volcker, Scott Brown, Volcker, Volcker Rule, Wall Street
Financial Reform
Behind Closed Doors Four Key Democrats Maneuver To Weaken Financial Reform
(Clockwise from top left) Reps. Dennis Moore (D-KS), Gregory Meeks (D-NY), Luis Gutierrez (D-IL), Mel Watt (D-NC)
Several House Democrats with close ties to the financial industry, including four members of the conference committee hashing out the final bill, are pushing to weaken the Wall Street reform legislation in the conference committee.
The 68-member New Democrat Coalition has been circulating drafts of a letter outlining their position on financial regulatory reform, proposing to significantly scale back regulations on derivative trading, and open up exceptions to the so-called Volcker rule, which limits financial firms' ability to speculate with their profits.
One draft of that letter, obtained by TPM, can be read here. Their position on derivatives provoked the ire of Americans for Financial Reform, the largest pro-regulation coalition in the country, which responded yesterday with a letter of their own.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)Topics: Bear Sterns, Dennis Moore, Derivatives , Financial Reform, Gregory Meeks, Luis Gutierrez, Mel Watt, Paul Volcker, Scott Brown, Volcker Rule, Wall Street
Financial Reform
Volcker Softens His Opposition To Tough Derivative Regulations
Sen. Blanche Lincoln (D-AR)
One of President Obama's most influential advisers has softened his position on derivative reform, suggesting for the first time that he might be amenable to Sen. Blanche Lincoln's plan to force major financial institutions to spin off their lucrative swaps desks. The development comes as members of Congress who back Lincoln's plan push to preserve it as part of Wall Street reform legislation. But aides on the Hill who back the plan remain skeptical.
According to the Financial Times, former Fed chairman Paul Volcker has opened somewhat to the Lincoln plan, provided it not ban banks from hedging their own risk, or that of their customers, by trading in derivatives.
Just a month ago, though, Volcker, who chairs Obama's Economic Recovery Advisory Board, had a fairly cut and dry view: "I am...aware of, and share, concerns about the extensive reach of Senator Lincoln's proposed amendment," Volcker wrote in a letter to Senate Banking Committee Chairman Chris Dodd. "[M]y sense is that the understandable concerns about commercial bank trading in derivatives are reasonably dealth with in...your reform bill as presently drafted."
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)Topics: Barack Obama, Blanche Lincoln, Chris Dodd, Derivatives , Financial Reform, House of Representatives, Paul Volcker, Senate, Wall Street
Financial Reform
Progressives Drive Hard Bargain On Wall Street Bill
Sen. Ted Kaufman (D-DE)
At just about every stage of the Senate financial reform process, the changes to the bill have trended towards the left--and that may well be borne out again if Democrats successfully add provision to the bill that will, among other things, ban big banks from using their own capital to engage in market speculation.
The provision is called the Volcker Rule--named after former Fed Chair Paul Volcker who now heads the President Obama's Economic Recovery Advisory Board. Currently, two Democratic senators--Carl Levin (D-MI) and Jeff Merkley (D-OR)--are pushing to add the rule to the Wall Street reform legislation and have built up quite a head of steam. That development was not a sure thing even a few days ago but with the political climate so anti-Wall Street even progressives' failures can turn into successes, which is what sort of happened with the Volcker Rule.
Last week, Sens. Sherrod Brown (D-OH) and Ted Kauffman (D-DE) pushed hard to get their very progressive 'too big to fail' amendment passed. Even though it failed it helped pave the way to enshrining the Volcker rule in the bill.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)Topics: Audit the Fed, Blanche Lincoln, Chris Dodd, Democrats, Federal Reserve, Financial Reform, Jeff Merkley , Paul Volcker, Republicans, Senate, Sherrod Brown, Ted Kaufman, Volcker Rule
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