TPMDC Volcker Rule
Barack Obama
Obama Administration Walks Volcker Rule Tightrope
President Barack Obama
The Obama administration will likely tighten rules to prevent federally insured banks from speculating with their money after financial giant JP Morgan lost billions of dollars -- and continues to hemorrhage -- on a risky bet intended to pad the firm's profits.
The acknowledgment by a senior administration official Monday threatens to reopen a protracted fight between Wall Street allies and the White House over imposing new rules on big financial companies in the wake of the 2008 crisis.
The administration hasn't specified any particular steps it would like regulators to take to shore up the so-called Volcker Rule -- a bid perhaps to avoid an ugly public fight with powerful interests in an election year. But inaction -- or a too-tepid response to JP Morgan's losses -- will hurt President Obama with key allies, who want to use the debacle to further rein in Wall Street.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)Topics: Barack Obama, Carl Levin, Chamber of Commerce, Jeff Merkley , Tom Donohue, Volcker, Volcker Rule, White House
Financial Reform
Chamber CEO Backs JP Morgan And Dimon In Wake Of Huge Trading Losses
Chamber of Commerce CEO Tom Donohue says further regulation is the wrong response to news that banking giant JP Morgan lost billions of dollars speculating with depositor money. And though he allowed that the development raises legitimate questions about the size of major banks, Donohue defended JP Morgan CEO Jamie Dimon from the criticism he's received since he announced the staggering losses 10 days ago.
"Nobody's clear about the Volcker Rule," Donohue told reporters at a Monday breakfast roundtable hosted by the Christian Science Monitor. "It's 270 some pages and if you gave it to six experts on the subject, they'd come back with seven interpretations what it means [but] I do also understand why the regulators start looking at the size of some of these places that they really worry."
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)Topics: Chamber of Commerce, Financial Reform, Jamie Dimon, Tom Donohue, Volcker Rule, Wall Street
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
Politicians And Regulators Tread Lightly Around JP Morgan Debacle
Occupy Wall Street protesters outside a GOP event in Manchester, NH. January 07, 2012
The revelation that banking giant JP Morgan lost $2 billion making risky bets with depositor funds is only four days old, but early indications suggest that the financial industry's capture of American government successfully weathered the 2008 crisis, with nearly all the political and regulatory players invested in the consequences of this latest debacle treading lightly around the questions it raises.
It has, however, re-energized outside advocates of strengthening financial reform -- including a certain high-profile Senate candidate -- and left those who favor repealing the 2010 Dodd-Frank Wall Street reform law in an untenable position.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)Topics: Barack Obama, Barney Frank, Bob Corker, Carl Levin, Chris Dodd, Elizabeth Warren, Financial Reform, Mitt Romney, Scott Brown, Tim Johnson, Volcker Rule, Wall Street
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
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
Scott Brown Winning Fight For Loophole In Volcker Rule
Sen. Scott Brown (R-MA)
In the battle between Scott Brown and Russ Feingold over financial reform, Scott Brown appears to be winning.
Senate staffers tonight are hammering out the shape of the so-called Volcker rule, which would limit insured financial firms' ability to take speculative bets with their capital, or prohibit it altogether.
Brown for weeks has been seeking a carveout in the legislation--originally authored by Sens. Carl Levin (D-MI) and Jeff Merkley (D-OR)--that would allow banks to invest a portion of their profits in hedge and private equity funds. And as the 60th vote for financial reform, his demands carry a lot of weight. Enter Feingold, who opposed financial reform from the left. After discussions with, and public pressure from, pro-reform groups, Feingold has toyed with the idea of changing his vote from 'no' to 'yes', becoming the new 60th vote and robbing Brown of his leverage--if the Volcker rule survived loophole free.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (2)Topics: Add category, Financial Reform, Russ Feingold, Scott Brown, Volcker, Volcker Rule, 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
Russ Feingold
Wall Street Reform Backers Seek Feingold's Support
Russ Feingold
Progressive backers of financial reform are pushing Sen. Russ Feingold (D-WI) to reconsider his protest vote against imposing tougher rules on Wall Street.
Feingold opposed the Senate's regulatory reform bill because in his view, by lacking provisions that explicitly limit the size of major financial institutions, it didn't go far enough. But with House and Senate negotiators now ironing out the differences between their two bills, progressives see an opportunity to strengthen the final legislation...if only Feingold considers changing his vote.
Americans for Financial Reform and the Progressive Change Campaign Committee are separately pushing Feingold to reconsider his vote provided two key provisions, strengthening the bill survives. PCCC members are petitioning Feingold to say that he'll vote yes, if and only if tough derivatives regulations remain in the legislation, and negotiators add a strong version of the so-called Volcker rule to the bill.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (1)Topics: Financial Reform, PCCC, Russ Feingold, Scott Brown, Volcker, Volcker Rule
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
Blanche Lincoln
Down To The Wire: Democratic Leaders Scramble To Keep Financial Reform From Unraveling
Sen. Chris Dodd (D-CT)
What had been a fairly non-contentious debate over Wall Street reform legislation nearly came off the rails on Tuesday after Republicans--tacitly backed (or at least unimpeded) by top Democrats--used Senate rules to block votes on far-reaching, consumer-friendly amendments, portending a potential progressive revolt.
This afternoon at 2 pm, Senate Majority Leader Harry Reid will attempt to bring debate on the financial reform bill to a close, though it remains unclear whether he has the 60 votes he'll need to prevail.
A big reason for that? A number of Democrats--most vocally, Sen. Byron Dorgan (D-ND)--have threatened to vote against ending debate until their flagship amendments get a vote on the floor. But Republicans are standing in the way, saying they'll filibuster those amendments, subjecting each to a 60 vote requirement, and, more importantly, several days' worth of delay. Faced with a choice between picking a fight with Republicans over those amendments and simply moving ahead with the bill, Democratic leadership has, for now, chosen the latter.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)Topics: Blanche Lincoln, Byron Dorgan, Carl Levin, Chris Dodd, Chuck Grassley, Democrats, Derivatives , Filibuster, Financial Reform, George Voinovich, Harry Reid, Jeff Merkley , Maria Cantwell, Olympia Snowe, Republicans, Susan Collins, Volcker, Volcker Rule
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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