Financial Reform Newsletter
February 26, 2014
New Fed rules will protect U.S. taxpayers and the global financial system. Last week, the Federal Reserve passed strong new rules requiring U.S. operations of the very largest foreign banks to comply with the same capital standards as U.S. banks. The rules create a level playing field, prevent foreign banks from shopping around for the weakest rules, and create a more stable global financial system. While the EU criticized the Fed for a rule that will impact a few large European banks, the Wall Street Journal argued that the vote “could be a race to the top of the regulatory tree,” with the EU following with its own strong rules. The Fed’s vote was a win-win that will help prevent another global financial crisis and ensure that U.S. taxpayers never again have to bail out foreign banks.
Better Markets on FOX Business: Dennis Kelleher appeared on FOX Business News’ “Cavuto” to discuss Better Markets’ lawsuit to stop the DOJ’s secret deal with JP Morgan Chase.
Eliminating hidden conflicts of interest in investment advice. Financial professionals
should offer investment advice tailored to the best interests of each individual worker’s or retiree’s financial needs goals. Unfortunately, financial advisors at Wall Street brokerages are allowed to offer and profit from investment advice that is riddled with hidden conflicts of interest and not in the best interests of their clients. This week, Better Markets sent a letter to Department of Labor Secretary Tom Perez detailing why it is so important for financial advisors to act in their client’s best interest and rebutting the industry’s baseless arguments against it. The choice is an easy one: a strong clear rule prohibiting conflicts of interest will ensure that retirees and workers get investment advice that fits their own needs, not the profit motive of their advisor.
Fed Transcripts: It Could Happen Again. The Federal Reserve’s release of the 2008 FOMC meeting transcripts last week revealed how they never saw the crash and collapse coming. Once it hit, however, the Fed reacted quickly and decisively to stop the total collapse of the banking system and a second Great Depression: bailouts, rescue programs, zero interest rates, cheap loans to Wall Street, and trillions in bond purchases called “quantitative easing.” This “whatever-it-takes” approach ensured that Wall Street would recover quickly. Unfortunately, while some of that helped America’s families, retirees and taxpayers, no one took a “whatever-it-takes” approach to their recovery. They continue to suffer the devastating effects of the worst financial crash since 1929, which will cost this country more than $13 trillion. Making matters worse, just five years since the crash, Wall Street’s too-big and too-dangerous-to-fail banks are bigger and more dangerous than ever. And, they continue to wage war on the most sensible financial reforms that are essential to protect the American people from another catastrophic crash. The transcripts show there is still much more to do to end too-big-to-fail and protect U.S. taxpayers from having to bailout Wall Street again in the future.
ICYMI: ‘The Watchdog that Didn’t Bark’ & CPI’s Polk Award. The Better Markets Blog has posts on two recent media stories you may have missed: “The Watchdog that Didn’t Bark,” a new book by Dean Starkman, is a must-read. Starkman studies the history of the financial news media and analyzes why it failed to report on the 2008 financial crash before it was too late. “After the Meltdown,” the Center for Public Integrity’s series on the too few, if any, consequences for Wall Street CEOs responsible for the 2008 financial crash, recently won the George Polk Award for Journalism. The Polk Awards have been called “one of only a couple of journalism prizes that means anything.” Starkman’s book and CPI’s work center on the importance of investigative journalism, and the fourth estate’s increasingly rare but vitally important role in holding public individuals and institutions accountable.
Some recent Better Markets media coverage:
For Settlements, Companies Sketch Contours of a Black Box: The New York Times by Peter J. Henning 2/18/2014
Declawing Speed Traders Is Goal of Stock Market Revamp Proposal: Bloomberg by Sam Mamudi 2/20/2014
Why Suit Against JPM’s $13B Settlement Faces Uphill Battle: American Banker by Brian Collins 2/19/2014
Two Steps Forward and One Step Back for the Federal Reserve: The New York Times by 2/20/2014
Fed Adopts Foreign-Bank Rule as World Finance Fragments: Bloomberg by Yalman Onaran 2/18/2014
Can We Escape Bank Regulation by Lawsuit: Huffington Post by HuffPost 2/20/2014
Justice Department Sued over JPMorgan Deal: Fox Business 2/21/2014
Some other things that might interest you:
U.S and Britain Join Forces in Bank Misbehavior Cases: The New York Times by Matthew Goldstein and Ben Protess 2/24/2014
Financial Regulators Are Still Flying Blind: Bloomberg 2/19/2014
If HFT Is Here to Stay It Needs to Be Regulated: Financial Times by Paul Murphy 2/23/2014
A New Light on Regulators in the Dark: The New York Times by Gretchen Morgenson 2/22/2014
European Banks Are Cooking Up a Nice Regulatory Arbitrage: Bloomberg by Matt Levine 2/21/2014
February 26, 2014
Financial Reform Newsletter – February 26, 2014