For the “that didn’t take long category”: the financial industry is already trying to weaken the just passed Volcker Rule. Less than a dozen community banks are at risk from what are called TruPS securities
, which they aren’t allowed to own under the Volcker Rule banning banks from buying, trading or holding high risk, usually complex bets for themselves (as opposed to doing what they are supposed to do: service customers’ needs). Unsurprisingly, Wall Street and its allies immediately began a drumbeat against the Volcker Rule and the regulators
, overstating and misrepresenting the scope and implications of this issue. As is too often the case, many in the media uncritically just repeated whatever claims the industry and its allies in Congress and elsewhere said. However, the regulators ignored the demands which were really seeking a big, broad loophole and issued a targeted change to the Volcker Rule
which addressed the very small TruPSs issue. By issuing this narrow fix for the few community banks affected, it appears that regulators are serious about maintaining a strong Volcker Rule without opening loopholes that will make it easy for big banks to evade it
. Just as we watch Wall Street for inappropriate risky behavior that threatens taxpayers and Main Street, Better Markets will continue to watch the regulators and politicians
to make sure that they don’t cave in to Wall Street pressure and do the wrong thing.
Only the Federal Reserve Board can’t figure out that taxpayer backed too-big-to-fail banks have no business owning, storing, transporting and trading physical commodities like oil, gas, electricity, aluminum and wheat.
As detailed in several incriminating stories
in recent months, Wall Street has been manipulating the price of silver, gold and aluminum, among other commodities,
for some time. Just one example was JP Morgan Chase paying a fine of $410 million for manipulating the electricity markets in California
and the Midwest (and where a senior officer was accused of giving “false and misleading testimony”
under oath). Yet, the Federal Reserve still isn’t sure if the taxpayer backed big banks should own, store, transport and trade physical commodities
. You would think they could see how grossly inappropriate it is for taxpayers to back such commercial activities that have nothing to do with the businesses the banks are supposed to be in and provide no benefit to anyone other than executives who get bigger bonuses. Thankfully, Senator Sherrod Brown
has been investigating this issue
and will again bring these matters under scrutiny in a Senate Banking Subcommittee hearing today
. Unfortunately, the Fed issued a request for comments on potential remedies
yesterday, which appears to be little more than a delaying tactic. While we are all for more information, the Fed has known about this issue for years, has studied it carefully and has all the information it needs to act. The issue is whether it is going to do the right thing and act now to protect taxpayers or Wall Street bonuses – it really is that simple.
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