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April 24, 2014

Financial Reform Newsletter- April 23, 2014


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Financial Reform Newsletter

April 23, 2014

Current Newsletter (Past Newsletters):

ICYMI: “Better Markets stands out for its major impact,” said New York Times columnist Simon Johnson.  He reviewed the state of financial reform and stated:


“Of all the civil society organizations seeking to promote financial stability, Dennis Kelleher‘s Better Markets stands out for its major impact through a relentless surge of arguments, comment letters and research. Its report on the cost of the crisis made clear beyond any reasonable doubt that the crisis had profound negative consequences for millions of people.”


Read the entire column, “The End of our Financial Illusions,” here.


Senator Warren knows a Fighting Chance for American families means fixing finance. This week marks the release of Senator Elizabeth Warren’s (D-Mass) new memoir, A Fighting Chance, which chronicles her childhood experiences growing up poor in Oklahoma, her congressional and senatorial campaigns, and her perspective on the 2008 financial crisis.  As a formidable champion of financial reform, Senator Warren was instrumental in establishing the Consumer Financial Protection Bureau and she continues to tackle the too-big-to-fail problems plaguing our financial system.  Her insightful analysis of big banks and her tireless advocacy of the middle class have helped steer the country through the worst financial crash since 1929 and the worst economy since the Great Depression.  “This is the work America needs to take on, the work of making certain we strengthen the middle class,” Senator Warren said in a recent interview. While everyone won’t agree with all of her views and prescriptions, everyone should agree with her firm belief that “this country should not be run for the biggest corporations and largest financial institutions.”  That’s the overarching message of her new memoir.


More must reads. While Senator Warren’s book is getting a lot of attention, two other books are also worth your time:  Bloomberg’s Bob Ivry‘s The Seven Sins of Wall Street: Big Banks, Their Washington Lackeys and the Next Financial Crisis and Matt Taibbi’s The Divide: American Injustice in the Age of the Wealth Gap.  Again, no one will agree with everything they say and observe, but these are important, thought-provoking books that should get a wide audience. 


Geithner’s big memoir coming.  Although not being released to the public until May 12th, the rollout of former Treasury Secretary Tim Geithner’s coming memoir is in full swing, with lots of favorable teasing.  It will undoubtedly get massive attention when it actually launches.  In preparation for reading and evaluating that book, you might want to go back and re-read a few essential books for balance:  The Escape Artists by Noam Schreiber, Confidence Men by Ron Suskind, Bull by the Horns by Shelia Bair, Bailout by Neil Barosky and The Payoff by Jeff Connaughton. 


It’s past time taxpayer-backed too-big-to-fail Wall Street banks get out of the commodity business.  Better Markets recently submitted a comment letter urging the Federal Reserve Board to end the risks posed by the physical commodity activities of the too-big-to-fail banks.  Since the passage of the ultimate deregulation bill in 1999 (Gramm-Leach-Bliley Act), the Federal Reserve Board’s inexplicably and indefensibly lenient policy has enabled unacceptable risky commodities activities, including allowing big banks like JP Morgan Chase and Goldman Sachs to maneuver the markets to their advantage.  These blatant conflicts of interest and the potential risk for market manipulation must be ended to ensure that markets function properly and that Americans get fair market prices on everyday purchases such as oil, gas, wheat, aluminum and coffee. 


Look Out: DOJ is about to announce its next big secret subprime settlement.  As you know, Better Markets sued DOJ for its unprecedented, unilateral secret settlement granting JP Morgan Chase complete blanket civil immunity for years of fraudulent illegal conduct that contributed to the subprime bubble that caused the financial crash of 2008.  That deal was cut behind closed doors without transparency, accountability or oversight.  We sued because no one in the U.S. should have that much unchecked power.  And, as predicted, DOJ is using that indefensible secret settlement process as a template to do it again:  Bank of America is currently in settlement talks with the Justice Department over its role in the subprime mortgage crisis that led to the 2008 financial crisis and has already worked out a $9.3 billion settlement deal with the Federal Housing Finance Agency. 


If the pattern holds, we can expect to see:

  • No senior executives held accountable;
  • No criminal prosecutions of anyone;
  • No personal fines or penalties;
  • No outside, independent review of DOJ’s secret settlement agreement, including no court review; and
  • No full, detailed disclosure of the multi-year massive illegal, if not criminal, conduct that contributed to the subprime mortgage crisis, which triggered the 2008 financial crash and economic catastrophe that will cost the American people more than $12.8 trillion.

Better Markets in the News:

 The End of Our Financial Illusions: The New York Times by Simon Johnson 4/17/2014

Banking Troubles, but Not a Word about Fraud Claims: The New York Times by Margaret Sullivan 4/21/2014

Regulators’ attempts to hold back the financial tide are futile: Financial Times by Robert Jenkins 4/16/2014

Fed faces tough choices in commodities push: POLITICO Pro by Zachary Warmbrodt 4/17/2014

Other Articles of Interest: 

BofA, NYSE, Brokerages Sued Over High-Frequency Trading: Bloomberg by Van Voris 4/19/2014

Citigroup’s Leaders say company is still too complex: Reuters by David Henry 4/22/2014

U.S. insider trading cases face test at appeals court: Reuters by Nate Raymond 4/21/2014

US regulators to monitor London over-the-counter swaps: Financial Times by Philip Stafford 4/20/2014

Banks Cling to Bundles Holding Risk: The New York Times by Gretchen Morgenson 4/19/2014

Yellen Says Fed Committed to Policies to Support Recovery: Bloomberg by Craig Torres 4/16/2014

Big Banks Ramp Up Business Lending:  The Wall Street Journal



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