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January 14, 2016

Year-End News You Might Have Missed, but Should Not

Year-End News You Might Have Missed, but Should Not

First, a BIG WIN:  the handful of uniquely dangerous too-big-to-fail banks on Wall Street tried again to hijack the annual funding process and hold it hostage to their special interests, which cannot withstand the scrutiny of the light of day. They failed, as this article makes clear: 

Instead of Legislative Wins, Congress Hands Banks $7 Billion Tab
Bloomberg. By Robert Schmidt, Cheyenne Hopkins and Jesse Hamilton 

“Last December [2014], Wall Street won its biggest lobbying victory since the financial crisis when lawmakers agreed to roll back costly derivatives rules imposed on the biggest banks. This week as Congress prepares to leave Washington, the industry emerged from the legislative scramble not only empty handed, but with their collective pockets picked of some $7 billion as well.” Read more here.

Second, JPMorgan Chase, like the rest of Wall Street’s too-big-to-fail banks, just cannot stop breaking the law.  They not only threaten the financial system, jobs, homes, and savings of America’s families, but they keep ripping off their clients, including in this case even high net worth and “ultra-high net worth” clients, as reported here:

JPMorgan Admits It Didn’t Tell Clients About Conflicts
Bloomberg. By Matt Robinson & Neil Weinberg

“JPMorgan Chase & Co. will pay more than $300 million to settle U.S. allegations that it didn’t properly inform clients about what the Securities and Exchange Commission called numerous conflicts of interest in how it managed customers’ money over a half decade.” Read more here.

JPMorgan Chase’s conduct here was so egregious that it promoted not one, but two must-read editorial comments in the New York Times:

Why Investors Are Right to Be Distrustful
The New York Times. The Editorial Board

“The latest settlement between JPMorgan Chase and the Securities and Exchange Commission is a reminder of how easy it is to be fleeced and how little the S.E.C. does to protect investors.” Read more here.

A Kickback by Any Other Name, Stinks Just As Bad
The New York Times. By Teresa Tritch

“When is a kickback not a kickback? When it’s a retrocession.” Read more here.

Third, accounting can be boring, but it’s also incredibly important because it determines what investors, the markets, and the public know about companies and their financial condition. Unfortunately, the people who determine what accountants have to tell the public (in this case the accounting standards board known as FASB) sometimes seem to forget who they are supposed to be working for, as reported here: 

FASB Proposes to Curb What Companies Must Disclose
The New York Times. By Gretchen Morgenson

“Accounting rule makers are not generally known as flame-throwers. But with a new proposal, the Financial Accounting Standards Board has lobbed a miniature Molotov cocktail into the usually staid world of audit standards, upsetting investor groups and experts in the field.” Read more here.

For more information on this, you can read the comment letter Better Markets filed with FASB on this issue here.  

Fourth, in light of the unbelievable economic wreckage done to the country by the financial crash of 2008, we have long asked the question “where are the financial statesman,” i.e., someone, anyone from the executive suites of Wall Street to step up publicly, take a leadership role, accept at least partial responsibility for the egregious excesses and illegalities of finance, and champion genuine financial reform in the public interest. That simply has not happened, as Better Markets Senior Fellow Bob Jenkins set forth again here:

The long wait for a banker who is statesmanlike
Financial Times. By Robert Jenkins

“The recently appointed chief of Deutsche Bank says he would willingly work hard even if he happened to be paid less. John Cryan went on to question the entire banking bonus culture. The pronouncement was not only refreshing, it was statesmanlike.” Read more here.

Fifth, Sen. Elizabeth Warren (D-MA) continues to be a leader fighting to protect Americans’ economic security and opportunity by making sure finance works for everyone, as reported here: 

Warren sets stage to wield more influence in 2016
Politico. By Zachary Warmbrodt

“2015 showcased Warren’s knack for gaining effective, lasting influence by seizing moments of confrontation with powerful government officials and institutions.” Read more here

Sixth, as Michael Lewis showed in his terrific book “Flash Boys,” the markets are often rigged by big players against ordinary investors, destroying markets and market confidence. Remarkably, as detailed in that book, a couple of smart, brave finance entrepreneurs have come up with a market based solution to a market breakdown: it is called “Investors Exchange” or “IEX” and it is one of the most important issues for the American capital markets that the SEC will have to address this year, as discussed here: 

What Is Fair?
Themis Trading.

“If December has been All IEX All the Time, and you are a tad weary, we understand. However, please forgive us if we remain on this topic; IEX’s exchange application is the biggest market structure issue / litmus test/ any of you will see in your careers.” Read more here

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