President Obama’s Weekly Adress: 5/15/10 Wall Street Reform & Main Street

The President explains how Wall Street Reform will not only end bailouts and bring accountability for big banks, but empower consumers, shareholders and community banks.

The White House Blog.

The 10 Most Wanted Lobbyist Loopholes
Posted by Dan Pfeiffer on May 04, 2010 at 07:00 AM EDT

Loopholes are a lobbyist’s best friend.

As debate on the Wall Street Reform bill returns today to the floor of the Senate, lobbyists are working overtime to insert loopholes and special provisions into the bill. Back in March, Treasury Secretary Geithner made clear to the audience at the American Enterprise Institute the threat we face at this stage of the game:

“…watch this process closely, for it will be a test of our capacity as a nation to deal with complex and consequential problems. When you see amendments designed to weaken the basic protections of reform; when you see amendments to exempt certain types of financial firms or financial instruments from rules; ask why we should be protecting those private interests at the expense of the public interest.”

So to kick off this week of amendments and help you follow along, please take a look at the Top Ten Most Wanted Lobbyist Loopholes:

1. Ok, Consumer Protection Rules are Fine… Just Don’t Enforce Them. The current bill would apply the same rules to providers of consumer financial services or products, whether the provider is a bank or a non-bank financial provider. The bill would also allow State Attorneys General to enforce those rules. Lobbyists are pushing hard to amend the bill so that Attorneys General lose their enforcement authority. Why does that matter? Because the Bureau would only supervise larger market participants. Without state AG enforcement authority, the citizens of their states will have much less protection against illegal conduct. If you want to weaken consumer protections, that’s one way to do it.
2. Letting Non-Banks Play by a Weaker Set of Rules. We know this is coming, so keep an eye out: attempts to give car dealers that make car loans and other major providers of financial services a big exemption from the consumer protection rules. Now be aware: some people try to scare small businesses by saying that the consumer financial protection bureau will regulate main street businesses like orthodontists and florists. That is not true. But if a car dealer makes loans, or if a big department store sets up a financial services center, it’s doing what banks and credit unions do, and it should play by the same rules.
3. If You Can’t Kill Consumer Protection Now, Starve it to Death Later. One of the keys to effective consumer protection is having a consumer financial protection bureau that is independent. And one of the keys to independence is having an independent source of funding. So be prepared for attempts to take away the bureau’s source of funds. And also watch out for broader attempts to restrict the bureau’s independence or chip away at its ability to establish clear rules of the road for a fair and transparent consumer financial marketplace.
4. Preventing States from Protecting Their Own Citizens. Under the current bill, the Bureau of Consumer Financial Protection would set minimum standards for the consumer finance market, but states would still be allowed to adopt additional protections. In other words, federal consumer protections would set a floor, not a ceiling. There’s likely to be a fight about that provision. Citing the doctrine of “preemption,” big banks will try to take away states’ ability to supplement federal consumer protections. Why is this a problem? Because state officials are often the first to learn of new abuses and new problems in the marketplace, and we should not get rid of that canary in the coal mine. Federal law can overrule or “preempt” state law when a state law would significantly interfere with national banks’ business of banking, but states should otherwise have the right to protect their citizens as they see fit.
5. Removing the Derivatives Trading Requirement to Protect Wall Street Profits. Under the current bill, standard derivatives would have to be traded on exchanges or other electronic trading platforms. Expect amendments to eliminate this trading requirement. Why? Because not everyone likes transparency. Today, the big derivatives dealers make big profits by charging end-users extra spreads and hidden fees, and they don’t want that to change.
6. Stretching the Derivatives “End-User” Exemption into a Hedge Fund Loophole. Under the current bill, there is a narrow exemption from the derivatives clearing and trading requirement for commercial firms that are not financial companies, not major participants in the derivatives market, and that are using derivatives to hedge their real risks – not taking one-way bets like AIG. Be on the lookout for attempts to stretch this exemption into a loophole – for example, by saying that the exemption should apply hedge funds and other financial companies.
7. Creating an “AIG Loophole.” Under the current bill, the Financial Services Oversight Council would have the ability to designate a very large “non-bank” financial company – like AIG, for example – for tougher supervision by the Federal Reserve. Since one of the key principles of financial reform is that firms should be regulated according to the risks they pose, not according to their corporate form, this is an important provision. But rest assured, there are large “non-banks” out there who would rather not be scrutinized quite so closely.
8. Who Needs to Know What’s Happening at Insurance Companies? Insurance is regulated by the states, not the federal government – and this bill doesn’t change that. But this bill would give the Treasury Department the ability to collect information from insurance companies so that it can help identify emerging risks before they blow up the financial system – like AIG. After so many insurance companies got into so much trouble that they needed government support to survive, you’d think that would be a no-brainer. But not everyone agrees. Keep an eye out for loopholes that would protect insurance companies from a number of provisions in the bill – including even basic information gathering.
9. Letting Firms Make Loans Without Skin in the Game. A key lesson of the crisis is that firms in the mortgage business should have a stake in the loans they sell or securitize. Skin in the game gives strong incentives to make good quality loans. Mortgage industry lobbyists are pushing hard to kill this idea. It’s cheaper for mortgage lenders and Wall Street to be in the mortgage business if they don’t have to worry about the borrower’s ability to pay – but it’s a lot more costly for Americans to perpetuate the same system that helped cause the housing crash.
10. Preserving “Too Big to Fail” While Pretending to Kill It. The key to preventing future bailouts is to end the problem of “Too Big to Fail.” And the only way to do that is to make sure that we can shut down big financial firms in a swift, orderly way if they’re on the brink of failure. Of course, not everyone wants to see “Too Big to Fail” disappear, since it lets the biggest firms borrow money at lower cost and avoid the consequences of excessive risk-taking. But no one wants to be caught defending the status quo. So defenders of the status quo are using a sleight of hand: pushing to make the resolution process so unwieldy that it can never work. By proposing amendments that look tough but that make the resolution process unworkable, opponents of reform will try to save “Too Big to Fail” while pretending to kill it.

Dan Pfeiffer is White House Communications Director

Obama Calls for ‘Common Sense’ on Executive Pay

From the NY Times, just moments ago.

WASHINGTON — President Obama announced on Wednesday a salary cap of $500,000 for top executives at companies that receive the largest amounts of money under the $700 billion federal bailout, calling the step an expression not only of fairness but of “basic common sense.”

“We all need to take responsibility,” the president said, in discussing the compensation restrictions, which include an exception for restricted stock. He also used the occasion to prompt Congress once again to act on his separate economic stimulus program, whose cost could approach $1 trillion.

Mr. Obama repeated his comments that some Wall Street executives had shown “the height of irresponsibility” when millions of nonwealthy Americans were bearing the burden of Wall Street’s failures.

The people are sick and tired, Mr. Obama said, of seeing Wall Street executives come to the government “hat in hand when they were in trouble, even as they paid themselves customary lavish bonuses.”

“This is America, we don’t disparage wealth,” the president said. “We don’t begrudge anybody for achieving success. And we certainly believe that success should be rewarded.”

But Americans definitely begrudge “executives being rewarded for failure,” especially if their earning are subsidized by taxpayers, “many of whom are having a tough time themselves,” he said.

Treasury Secretary Timothy F. Geithner, appeared with the president to announce the restrictions, which do not require Congressional approval. “The economic crisis was caused in part by a loss of confidence in our financial institutions, and it was made worse by a loss of faith in the quality of judgments made by some executives and some boards of directors,” Mr. Geithner said.

There is a general feeling among not-so-rich Americans, he said, that they are bearing a greater burden because of the financial crisis than those who helped to create it. Mr. Geithner said he would devote “every ounce of energy” to restore public trust in financial institutions — the bedrock of the country’s credit system.

The $500,000 salary cap will be stricter for those companies getting “exceptional assistance” from the Treasury Department. “Exceptional assistance” companies wanting to pay executives more than $500,000 will have to do so by using stock that cannot be sold or liquidated until the government money is paid back.

Read more >>> Here

>Obama Calls for ‘Common Sense’ on Executive Pay

>

From the NY Times, just moments ago.

WASHINGTON — President Obama announced on Wednesday a salary cap of $500,000 for top executives at companies that receive the largest amounts of money under the $700 billion federal bailout, calling the step an expression not only of fairness but of “basic common sense.”

“We all need to take responsibility,” the president said, in discussing the compensation restrictions, which include an exception for restricted stock. He also used the occasion to prompt Congress once again to act on his separate economic stimulus program, whose cost could approach $1 trillion.

Mr. Obama repeated his comments that some Wall Street executives had shown “the height of irresponsibility” when millions of nonwealthy Americans were bearing the burden of Wall Street’s failures.

The people are sick and tired, Mr. Obama said, of seeing Wall Street executives come to the government “hat in hand when they were in trouble, even as they paid themselves customary lavish bonuses.”

“This is America, we don’t disparage wealth,” the president said. “We don’t begrudge anybody for achieving success. And we certainly believe that success should be rewarded.”

But Americans definitely begrudge “executives being rewarded for failure,” especially if their earning are subsidized by taxpayers, “many of whom are having a tough time themselves,” he said.

Treasury Secretary Timothy F. Geithner, appeared with the president to announce the restrictions, which do not require Congressional approval. “The economic crisis was caused in part by a loss of confidence in our financial institutions, and it was made worse by a loss of faith in the quality of judgments made by some executives and some boards of directors,” Mr. Geithner said.

There is a general feeling among not-so-rich Americans, he said, that they are bearing a greater burden because of the financial crisis than those who helped to create it. Mr. Geithner said he would devote “every ounce of energy” to restore public trust in financial institutions — the bedrock of the country’s credit system.

The $500,000 salary cap will be stricter for those companies getting “exceptional assistance” from the Treasury Department. “Exceptional assistance” companies wanting to pay executives more than $500,000 will have to do so by using stock that cannot be sold or liquidated until the government money is paid back.

Read more >>> Here

President Obama’s Weekly Address: 1/31/09

In his weekly address, President Barack Obama announced that Treasury Secretary Timothy Geithner is preparing a new strategy for reviving our financial system, and urged the swift passage of an American Recovery and Reinvestment Plan.

President Obama’s Weekly Address: 1/31/09

In his weekly address, President Barack Obama announced that Treasury Secretary Timothy Geithner is preparing a new strategy for reviving our financial system, and urged the swift passage of an American Recovery and Reinvestment Plan.

Why An A**Hole is Always in Charge.

Greg Palast, one of my favorite writers, is the co-author of Steal Back Your Vote, a comic book co-authored with Robert F. Kennedy Jr. Palast is also an investigative reports on BBC Television’s Newsnight and in Rolling Stone Magazine.

Palast wrote the following article for SuicideGirls.com in which he expressed his outrage and dismay over former Merril Lynch head honcho John Thain, who was able to sell a worthless Merril Lynch to Bank of America for $50 Billion and then when Bank of America realized that Merril was in worst trouble than what they thought, Thain was able to wrestle another $20 Billion from the U.S Treasury to cover that loss.

As outrageous as that may sound it was nothing in comparison to Thain’s audacity in spending $1 million refurbishing his office, which included spending $35,000 on a toilet and then demanding a $30 million bonus from Merril Lynch for his efforts.

Here is some of what Greg Palast had to say:

John Thain is the guy that looks like a Clark Kent doll you saw grinning from page one of your paper Friday morning. Thain was just fired by Bank of America because the square-jawed executive demanded a $30 million bonus after losing $5 billion in just three months at the bank’s Merrill Lynch unit. In addition, Thain spent over a million dollars redecorating his office while, at the same time, the U.S. Treasury was bailing out his company with billions in aid. Thain’s office re-do included the installation of a $35,000 toilet bowl.

Thain was robbed. He shouldn’t have been fired; he should have gotten a $60 million bonus — and Obama should immediately hire him as Secretary of the Treasury in place of that tax-dodging lightweight that’s been nominated, Timothy Geithner.

Here’s the facts, ma’am.

Thain was CEO of Merrill Lynch, the big brokerage firm. On a good day, Merrill is worth zero. A week before it was about to go out of business, Thain sold this busted bag of financial feces to Bank of America for $50 BILLION.

I’d say that’s worth a bonus.

But it gets better. When the bag broke and another $5 billion in losses were discovered at Merrill, Thain went to the U.S. Treasury and got ANOTHER $20 BILLION to cover Bank of America’s bad financial bet — from us, the taxpayers.

Now that certainly deserves a bonus. And let’s face it, a butthole that big needs a $35,000 toilet….

Finish reading what Greg had to say >>>Here

 

>Why An A**Hole is Always in Charge.

>

Greg Palast, one of my favorite writers, is the co-author of Steal Back Your Vote, a comic book co-authored with Robert F. Kennedy Jr. Palast is also an investigative reports on BBC Television’s Newsnight and in Rolling Stone Magazine.

Palast wrote the following article for SuicideGirls.com in which he expressed his outrage and dismay over former Merril Lynch head honcho John Thain, who was able to sell a worthless Merril Lynch to Bank of America for $50 Billion and then when Bank of America realized that Merril was in worst trouble than what they thought, Thain was able to wrestle another $20 Billion from the U.S Treasury to cover that loss.

As outrageous as that may sound it was nothing in comparison to Thain’s audacity in spending $1 million refurbishing his office, which included spending $35,000 on a toilet and then demanding a $30 million bonus from Merril Lynch for his efforts.

Here is some of what Greg Palast had to say:

John Thain is the guy that looks like a Clark Kent doll you saw grinning from page one of your paper Friday morning. Thain was just fired by Bank of America because the square-jawed executive demanded a $30 million bonus after losing $5 billion in just three months at the bank’s Merrill Lynch unit. In addition, Thain spent over a million dollars redecorating his office while, at the same time, the U.S. Treasury was bailing out his company with billions in aid. Thain’s office re-do included the installation of a $35,000 toilet bowl.

Thain was robbed. He shouldn’t have been fired; he should have gotten a $60 million bonus — and Obama should immediately hire him as Secretary of the Treasury in place of that tax-dodging lightweight that’s been nominated, Timothy Geithner.

Here’s the facts, ma’am.

Thain was CEO of Merrill Lynch, the big brokerage firm. On a good day, Merrill is worth zero. A week before it was about to go out of business, Thain sold this busted bag of financial feces to Bank of America for $50 BILLION.

I’d say that’s worth a bonus.

But it gets better. When the bag broke and another $5 billion in losses were discovered at Merrill, Thain went to the U.S. Treasury and got ANOTHER $20 BILLION to cover Bank of America’s bad financial bet — from us, the taxpayers.

Now that certainly deserves a bonus. And let’s face it, a butthole that big needs a $35,000 toilet….

Finish reading what Greg had to say >>>Here