Regulators Weaken Dodd-Frank Draft Regs, *Allow More Risk* (ProPublica)

[chill_wind]

Meanwhile, against the backdrop of Occupy Wall Street... we see them laboring quietly but ever so feverishly for their own self-interests as always. Always.

Regulators Weaken Dodd-Frank Draft Regs, Allow More Risk

by Marian Wang
Sep. 22, 2011


The regulatory agencies in charge of finalizing some of the most controversial rules mandated by the financial reform law are leaning toward making them looser and more favorable to banks and other traders, according to recent reports in the financial press.

As we noted in June, federal regulators were still puzzling over how restrictive the ban on proprietary trading—banks trading on their own behalf—should be, given that banks are still allowed to hedge against risks. The Office of the Comptroller of the Currency has argued for banks to be given more leeway in what types of trades would be permitted as hedges under the rule, but critics charge that banks could use the opportunity to take more risks rather than hedge against them.

A draft version of the so-called “Volcker rule” suggests that the ban has been significantly watered down. Here’s the Wall Street Journal:

(The language) opens the door for banks to make all manner of bets on the market, observers said, because a bank might define the risk to its portfolio broadly, such as the risk of a U.S. recession.

If the language is confirmed in the final rule, expected by late October, it would be a victory for Wall Street firms that have lobbied to relax the ban on proprietary trading.

more:

http://www.propublica.org/blog/item/regulators-loosen-limits-on-risk-in-latest-drafts-of-dodd-frank-rules

[Autumn]

1. Pseudo financial reform to go along with pseudo health

care reform. What a waste of time and effort.

[TheKentuckian]

2. Reform led by folks who's first priority is to change nothing in the existing order

are frauds by definition, regardless of their intent.

[chill_wind]

3. June: A Dodd-Frank Bill's Volcker Rule a Win for Big Banks

Dodd-Frank Bill's Volcker Rule a Win for Big Banks
By Daniel Indiviglio

Jun 25 2010, 1:48 PM ET Comment

Late last night, a revised version of the Volcker rule was passed by Congress' conference committee. It was watered down significantly from its original conception, championed by former Federal Reserve Chairman Paul Volcker. It allows banks to invest up to 3% of their tier 1 capital in private equity and hedge funds, but they cannot own more than a 3% ownership stake in any private equity group or hedge fund. The 3% capital threshold is a big enough loophole that most big banks won't have to curb their proprietary trading much, if at all. Moreover, the 3% ownership limit might even make banks riskier.


(snip)


No International Coordination

During conference, Republicans attempted to pass an amendment which would have required more international coordination before these new rules were adopted by U.S. banks. In particular, it would have required a majority of the G-20 nations go along before the rules take effect. Although some countries have indicated that they're open to Volcker rules of their own, there have been no firm commitments. Democrats rejected the amendment, seemingly unworried that American competitiveness could be threatened if other nations don't develop similar regulatory schemes.

It's hard to see how this conception of the Volcker rule does much of anything for financial stability, assuming you believe that a well-constructed Volcker rule would have. Banks can continue to engage in prop trading at approximately the same magnitude as they have in the past. But now, they may be even riskier with less skin in the game and/or more in-house trading.

http://www.theatlantic.com/business/archive/2010/06/dodd-frank-bills-volcker-rule-a-win-for-big-banks/58747/

[Bozita]

4. The Lehman examiner says we still haven't learned.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x2013684

[chill_wind]

5. Thanks for the link Bozita.

:thumbsup:

[Bozita]

6. You are welcome.

[amborin]

7. KR and it was super weak to begin with....

[Bozita]

8. kick