Wall Street Thrives Even with Financial Rules Protecting Consumers, Investors, Home Owners andHardworking Main Street Families

When the Dodd-Frank financial protection law was passed in 2010 — and virtually nonstop since then — the financial industry and its political allies have claimed that it would kill banks’ revenue, profits and ability to lend.  Yet, year-after-year those baseless claims have been proved objectively false.  Nevertheless, they persist to this day, underpinning many of the arguments pushing de-regulation. 

The latest proof came on Monday, when the New York State Comptroller Thomas P. DiNapoli released his annual survey of securities industry profits and New York City bonuses.  The numbers are eye-popping and demonstrate that Wall Street is not genuinely burdened by the financial protection law or rules.  Here are some highlights from the survey:

• Wall Street profits soared 42% over 2016 (when profits increased 21%) and reached the highest level since 2010;
• The 2017 bonus pool for securities industry employees who work in New York City rose by 17 percent, which comes on top of a 15% increase for 2016;
• The average bonus paid to workers in New York City’s securities industry also increased by 17% to $184,220;

Importantly, this grossly understates how well the securities and financial industry is doing.  Total compensation is actually much higher because the survey only focuses on broker-dealer at the member firms of the New York Stock Exchange.  In addition, the estimates do not include stock options or other forms of deferred compensation for which taxes have not been withheld.  Additionally, with the massive tax cuts enacted last December and effective beginning in 2018, banks’ revenue, profitability and bonuses are all expected to jump even more in the coming years. 

Mr. DiNapoli’s conclusion is indisputable:  “The large increase in profitability over the past two years demonstrates that the industry can prosper with the regulations and consumer protections adopted after the financial crisis.”

These are a few of the related articles of interest:

• FT: “Wall Street bonuses rise 17% to pre-crisis levels”
• Washington Post: “With regulations eased, Wall Street bonuses rebound”
• WSJ: “Wall Street Bankers Get Biggest Raise in Four Years”
• Politico NY: “Wall Street profits, bonuses climb, New York comptroller report finds”
• The Hill: “Wall Street bonuses rise 17 percent in 2017” 

Cutting the Funding for the Derivatives Cops on the Wall Street Beat Is Laying the Groundwork for Another Financial Crash

The Commodity Futures Trading Commission (CFTC) is the cop responsible for policing Wall Street’s biggest derivatives dealers, which are also the most dangerous too-big-to-fail Wall Street banks.  Chronic annual underfunding of the CFTC is indefensible, but actually cutting its budget — as was just done — is despicable. 

Unregulated, high risk and opaque derivatives were at the core of causing and spreading the devastating 2008 financial crash.  To prevent that from happening again, regulation, transparency and competition in the derivatives markets were required.  The Dodd-Frank financial protection law assigned those weighty responsibilities to the CFTC, but they have been prevented from doing that due to a pathetic lack of resources.  No one benefits from this other than the oligopoly of Wall Street derivatives dealers who are protecting their profits at the expense of everyone else in America.

In any rational world or a world where decisions are based on merit or risk-assessment, the CFTC’s annual budget would be more than double what it is today.  We again applaud CFTC Chairman Giancarlo for courageously fighting for a very modest increase in the CFTC budget.  Yet, even that was too much for the Wall Street derivatives dealers’ club.  This is a brazen slap in the face to the American people by Wall Street’s biggest banks and their Congressional allies.

The Senate Deregulation Bill (S. 2155) Is Being Sold as a Community Bank Bill, But the Headlines Tell the Truth

• “Big Banks Get a Big Win in Senate Rollback Bill” Wall Street Journal, Andrew Ackerman
• “10 years after financial crisis, Senate prepares to roll back banking rules” Washington Post, Erica Werner and Damian Paletta
• “Bank Earnings Are Soaring, But Congress Wants to Gut Post-Crisis Safeguards” The Intercept, Gary Rivlin and Susan Antilla
• “Senate advances plan to weaken Dodd-Frank banking rules on bipartisan vote” Washington Post, Erica Werner and Renae Merle
• “Congress rides to the rescue of thriving bankers” Politico Pro, Victoria Guida
• “Once a bailout recipient, this profitable midsize bank may soon win relief from banking rules” Washington Post, Renae Merle
• “A Decade After Bear’s Collapse, the Seeds of Instability Are Germinating Again” Wall Street Journal, Greg Ip
• “What deregulation bill offers US banks” Financial Times, Barney Jopson
• “Big Wall Street Banks See Chance to Weaken Post-Crisis Rule” New York Times, Emily Flitter, Kenneth P. Vogel and Alan Rappeport
• “Mitch McConnell’s big gift to the banks” CNN, Jennifer Taub