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August 7, 2014

Financial Reform Newsletter August 6, 2014

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Shocking but true: All 11 of Wall Street’s biggest too-big-to-fail banks just flunked a key test, proving that they still pose a huge, needless and unacceptable risk to US taxpayers, the financial system and the economy as a whole:  Wall Street’s biggest 11 banks are supposed to have “resolution plans” also called (living wills) so that they can file for bankruptcy like every other business in the US without crashing the financial system or requiring bailouts.  As we detailed here, no one should be surprised that not 1 of those banks provided a workable “resolution” plan; they don’t want to go bankrupt; they want to be as big a threat as possible so that they will get bailed out by taxpayers and the government again next time. That is wrong and the FDIC and the Fed called them out on it(and FDIC Director Tom Hoenig in particular). The Wall Street banks’ grossly deficient plans here are really just part of their ongoing efforts to kill, weaken or evade the financial reform law, which is all about protecting taxpayers from Wall Street’s recklessness and preventing future bailouts. 

 Who cares about your retirement? Better Markets does and that’s why it blasted industry’s latest effort to fool Congress with a bogus “survey” opposing the Labor Dept’s efforts to eliminate undisclosed conflicts of interest by those providing advice to hard-working Americans trying to save for retirement: In our push to ensure that the millions of American families who invest their hard-earned money get the best possible advice from their advisors, without hidden conflicts of interest, we sent a letter to each member of the United States Senate and House, urging them to see through Wall Street’s latest attempt to stop this important effort. We called on Congress to“encourage the DOL to move forward with rulemaking to protect the millions of Americans who need sound financial advice that serves their best  interest to plan for a survivable-let alone decent-retirement. Tens of millions of Americans’ retirement security is at stake.”

 

Last week, the Government Accountability Office (GAO) issued a report on Wall Street’s “too big to fail” banks: The GAO analysis, which was requested by U.S. Senators Sherrod Brown (D-Oh) and David Vitter (R-LA), was unfortunately poorly and incompletely done, as detailed by Professors Ed Kane and Anat Admati at a Senate hearing last week.  Also, New York Times columnist  Gretchen Morgenson’s nicely presented the key issues in her piece “Big Banks Still at Risk“.

 Too often regulators are (properly) criticized for falling short, but there are also many fighting hard against great odds to do the right thing: We wrote about one last week:  Kara Stein, a Commissioner at the Securities and Exchange Commission (SEC), deserves an enormous round of collective thanks from taxpayers, investors, homeowners and those saving for retirement and/or college for taking a tough stand against Wall Street-backed efforts to water down and kill financial reform.  Here’s our blog post about her. 


 
A must-read from Better Markets’ Senior Fellow, Robert Jenkins: “That bankers behaved badly in the run-up to melt-down is old news. That corporate culture was a culprit is now consensus. But before considering what should be done, let us recall the magnitude of what financiers did.”  Read Bob’s full column here.

 

 Better Markets in the News:

 ThinkAdvisor.com: DOL Fiduciary Survey ‘Bogus,’ Advocate Warns – July 29, 2014

 Articles of Interest:

 NYTimes: After long fight, Judge Rakoff Reluctantly Approves Citigroup Deal  – August 5, 2014

 Bloomberg: ‘Flash Boys’ and the speed of lies  – August 3, 2014

 PoliticoPro: Financial Services Influence: Follow the money– August 4, 2014

 WSJ: JPM said possible losses related to litigation could be $4.6B  – August 4, 2014

 NY Times: U.S. starts civil inquiry of subprime car lending  – August 4, 2014

 Financial Times: AIG settles bailout-era lawsuit for $960M – August 4, 2014

 The Economist: An interview with Obama – August 2, 2014

 
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