This should surprise no one:
Big banks have already begun poking the holes in Obama’s new rules—holes they expect their banks to pass through basically unchanged.
The president promised this morning to work with Congress to ensure that no bank or financial institution that contains a bank will own, invest in or sponsor a hedge fund or a private equity fund, or proprietary trading operations unrelated to serving customers for its own profit.
But sources at three banks tell us that they are already finding ways to own, investment in and sponsor hedge funds and private equity funds. Even prop trading seems safe.
This stuff is not going to stop until Blankfein is in Gitmo and Jamie Dimon is sharing a cell with the unabomber.
cervantes
That’s Unabomber. Just sayin’.
Econwatcher
Obama cannot do what needs to be done while Geithner is still on board. Part of Geithner’s agenda will always be CYA for the shenanigans at the end of 2008, when he was at the NY Fed. He has a conflict of interest, and he has to go, for starters.
It’s very belated, and it’s going to appear belated. But if Obama wants to save his presidency, he has to go full bore against GS and the other banks, and he has to put Republicans in the position of defending them.
I’m afraid it just isn’t in his DNA, though. He’s a pleaser.
dr. bloor
@Econwatcher:
I don’t know about “pleaser,” but he’s certainly stuck in Legislative Branch mode. He really doesn’t seem to get the “Executive” thing.
Col. Klink
And the GOP will aid and abet them, and talk radio will describe them as heroes, and the angry Teabaggers will ignore them completely even as Wall Street loots their life’s savings. Good times! Good times!
BrklynLibrul
Agree, John. I’ve been saying for months that Obama needs to bag a few scalps, draw some blood, and make a few key players terrified of him.
Nah. Gah. Happen. Hillary in ’12?
Dave Fud
@Econwatcher: He’d better learn how to stop being a pleaser or he really will be the black Jimmy Carter.
Cleaning up W Bush’s mess is really ugly, and so far, to the average joe, he has talked a lot and done very little. To be clear, we know that he has done amazing things that are quietly rolling back the worst of the corporatist excesses in Bush’s government, but those aren’t really headlining news.
There’s only so long that you can clean the mess with brooms before you get out a fire hose, and then bulldozers. One year later, he’d best get a key to a bulldozer and forget getting anyone to pick up brooms.
BC
Well, the Democrats needed to go full bore on some type of accountability moment in January 2009 to get the narrative that the Republicans broke the country. Instead, with this no looking back but going forward, they have lost control of the narrative and have taken ownership of the problem – meaning they are responsible for it having happened, of course, with no concomitant commitment of bipartisanship agreement on how to solve the problem. Republicans are happy to just dream up new ways to put the onus on the Democrats and sit on their hands – they WANT the country to be in bad shape for the next 3 years so they can get back into power and do it all over again. Democrats seem to think that everyone will remember what happened when the Republicans are out with the narrative that the poor people and ACORN are responsible for the economy being in poor shape. Upside down on your mortgage? It’s because of Freddie Mac and Fanny Mae. Can’t get a loan to keep your business afloat? It’s because all those low income people were able to get loans because of CRE (or some such) that required the banks to give money to them just because they were low income. So unless Democrats can get control of the narrative and the shorthand the media uses, they are toast. As is the country – but you knew that.
Leelee for Obama
Weren’t we just discussing the idea that the Constitution actually calls for Legislative Mode and the Executive isn’t the main power? Most of us, if not all, consistently hated Bush/Cheney and the Imperial Executive, did we not? It is as frustrating to me as it is for everyone else that a single special election could have caused so much trouble, but, it seems that Brown is a monkey in the wrench. IF the filibuster could be done away with except in cases of war and similar important issues, then the problems MIGHT, and I mean MIGHT dissipate. Considering the SCOTUS ruling yesterday, Democracy is beginning to look like an experiment that isn’t working these days. God, I’m tired.
Col. Klink
First, Obama has stopped what was almost undeniably going to be the Great Depression part II. Had Obama came to power six months later the nation would be in a ditch right now that would take a decade to get out of.
Hillary in 12, yeah, that’s gonna be a different result, Obama has half the Clinton team working for him.
Obama’s taking on Wall Street alone is a fool’s errand. He can’t win that fight! They’ll make him look like he’s morphed into Robert Mugabe and he’s coming for their farms and white daughters. And of course the whole of the Right, angry teabaggers included will all rally to Wall Street’s aid. No, the President ain’t doing this and he’d be a fool to try to do anything other than curb the worst excesses. If pressure is going to come to Wall Street it’s going to have to come from ordinary citizens and progressive interests groups, but good luck with because with angry Red America Wall Street can do no wrong. They’ve been programmed to believe that and their reminded of that every day on Rush and Fox News and nothing is going to change their minds.
debbie
Between the Supreme Court ruling and business behaving like the Mafia, this country is more of an oligarchy than a democracy.
Joe
I don’t think I’ve ever been so despondent over the future of our country. I was really hoping to see some progress on the issues that so desperately need to be resolved after clearing out Bush/Cheney and their lackeys.
But now? We have a Congress controlled by Democrats that are too cowardly and divided amongst themselves to do anything other than figure out new ways to hand money over to their corporate overlords. They have no problem doing that. The Supreme Court unleashes the flood of corporate political ads that will rage over us next Fall. Justice Department task force recommends that 50 prisoners at Gitmo be held indefinitely. It’s all so depressing.
Hope and Change. I once had Hope, but Change is nowhere to be found.
arguingwithsignposts
I suppose this should not be surprising. Corporations with lots of lawyers and accountants have always found ways to skirt the rules. How many are paying for cleaning up all the toxic chemical spills they’ve spread around the globe?
The banks just seem to be more brazen about it. These f**kers have no conscience at all. It was funny listening to Blankfein and Dimon and the other rich old white dudes testify before Congress the other day about how they made mistakes, and misjudged. They even thought there should be some more regulation, or so they said.
Meanwhile, they are pulling the panel van up to the back door to take another pile of money out of the U.S. economy.
The Grand Panjandrum
This will only get worse now that the Supreme Court appointed by Bush have lead a 5-4 in gutting 100 years of campaign finance reform. (BTW, had he not been elected the decision would have been 6-3 the other way.) Just wait until the money from those corporate “people”, funneled through the Chamber of Commerce and other cover organizations start running ads in your district. It’s going to be a cacophonous clusterfuck. And the timid, sniveling little weasels in Congress will be trembling in their diapers.
Davis X. Machina
Man, I hate the Yankees, too, but Federal supermax is harsh. What did Johnny Damon ever do to our banking system?
Hamlet
I think a lot of these new rules are missing the point.
For the most part, the big standard banks were not the cause of our problems. They were actually a stabilizing influence. JPMorgan was able to buy WaMu and probably saved the FDIC a lot of money. Likewise, Bank of America bought two of the bad players ( Countrywide and Merril Lynch). Wells Fargo bought Wachovia.
The only real troublesome big traditional bank was Citygroup.
Most of the problems came from AIG and the non-regulated entities like Countrywide, and the investment banks.
I don’t think we need new rules preventing banks from having hedge funds, or having private equity divisions, etc. None of that caused our problems.
Fundamentally, our problems came from too much leverage, having an “insurance” company make promises it couldn’t keep (see too much leverage), and making loans with inadequate underwriting.
I think the most useful reforms would focus on limiting leverage, regulating derivatives so that we can prevent another AIG, re-instating the old-style underwriting requirements for home loans, and coming up with a system to allow larger institutions to enter bankruptcy in a relatively smooth manner.
Davis X. Machina
Yeah true enough, but “Bring Back Glass-Steagall” fits on a bumpersticker.
Guster
So after three months of wanking about people who want to exact a price, we’ve decided that price-exacting is a good thing?
Comrade E.B. Misfit
This stuff is not going to stop until Blankfein is in Gitmo and Jamie Dimon is sharing a cell with the unibomber.
Why not go for “sharing a grave with Timothy McVeigh”? Those guys are economic terrorists and they arguably deserve the same fate as McVeigh.
Edward G. Talbot
For starters, they could call McCain’s bluff and bring back Glass-Steagall. It would even be bipartisan.
Barry
Econwatcher
“Obama cannot do what needs to be done while Geithner is still on board. Part of Geithner’s agenda will always be CYA for the shenanigans at the end of 2008, when he was at the NY Fed. He has a conflict of interest, and he has to go, for starters.”
There’s a motto that I have now – when a new group comes in at the top of any organization, the existing crooks either (a) leave and hope nobody pursues, (b) sweep everything under rug/destroy evidence, and then strive to make sure that no investigation is done (or real clean-up which might require knowing what happened), or (c) involve the new guys as soon as possible, in hopes of getting them dirty and committed.
(b) and (c) make it much harder to deal with the mess, and Obama has been actually working to support those two options.
I’m wondering – does he realize that the interests of people like Geithner’s would be best served by a castrated, one-term joke of an administration by Obama?
Barry
BrklynLibrul
“Agree, John. I’ve been saying for months that Obama needs to bag a few scalps, draw some blood, and make a few key players terrified of him.
Nah. Gah. Happen. Hillary in ‘12?”
No, just as “Ted Kennedy in ’80” was dead at birth. If the incumbent president can’t get the nomination, then that party has zero chance of reelection. If the incumbent president has an actual chance of not getting the nomination, then he isn’t going to be reelected.
For the next 4 or 8 years, the Democratic Party lives or dies with and by Obama.
Comrade Dread
Fixed.
No matter what you do, you are going to have a large percentage of the population who will reflexively and unquestioningly defend these banks’ right to do whatever they please and reaping obscene profits, even if it means destroying the rest of us.
I’m not a raging liberal or Bolshevik, but when I calmly point out to conservatives that Wall St. has been screwing us over and requires regulation, all I get in reply is what a communist I am and how minorities and illegal immigrants caused the housing crisis.
Doesn’t matter that I refer them to authoritative studies showing that is not the case. Doesn’t matter that all economists will admit that market failure is possible. Doesn’t matter that even Adam Smith stated that some rules were needed to govern things.
Nope. Rush said it’s the damn minorities that done screwed us over and brought down the poor, oppressed bankers that the government made give out loans to people with no documentation, verification, or credit checks to brown folks.
Ppass the f***ing bottle, John. I need to be at around +3 to get through this news cycle.
Sloegin
JP, BoA, Wells Fargo were *ordered* to buy up the bad players by the Fed. They didn’t do so out of self-interest or concern for the country. These ‘stabilizing influences’ were participating in the same games as the ‘bad players’, they just didn’t lose as badly as the rest.
The difference between Goldman and Lehman? The headcount of playas in the Fed from one institution vs. the other. Crony capitalism at its best. One got saved, the other didn’t.
Limiting or eliminating leverage and derivatives is a start; the only way to enable smooth bankruptcy with Uncle Sam covering FDIC obligations and preventing further blowups in a chain-reaction is turning these megacorps into just corps.
Elephants can only be eaten one bite at a time.
Hamlet
I call bull.
BoA initially made it’s bid for Countrywide long before the the crisis started.
Wells Fargo actually bid over the top of a FDIC arranged Citygroup bid to buy Wachovia (saving the FDIC quite a bit of money).
The Fed wasn’t forcing these companies to buy up the weak players (with the possible exception of Merill Lynch). If they had been, they would have made someone buy Lehman.
The strong players stuck closer to decent underwriting standards than the weak players.
“JP, BoA, Wells Fargo were ordered to buy up the bad players by the Fed. They didn’t do so out of self-interest or concern for the country. These ‘stabilizing influences’ were participating in the same games as the ‘bad players’, they just didn’t lose as badly as the rest.”