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In Minneapolis, a Pattern of Misconduct Toward Protesters
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Legal and criminal justice experts said a ruling by a federal judge last
week revealed conduct by immigration agents that evokes the civil rights
era.
47 minutes ago
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============ The problem was that clearinghouses, by sharing risk in this way, also concentrate it. If several members fail simultaneously, the clearinghouse itself may be rendered insolvent and have to be bailed out. This reform, such as it is, may end up only creating yet more too-big-to-fail institutions. Whether this is a step forward only time will tell.
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The remaining changes focused on filling the regulatory gaps revealed by the crisis. Dodd-Frank created a Federal Insurance Office in the Treasury to monitor the insurance industry and hopefully head off future AIGs. It created an Office of Credit Ratings in the SEC to oversee the rating agencies. It required the Federal Reserve to conduct annual stress tests of bank holding companies with $50 billion or more of total assets. It expanded the regulatory perimeter by requiring hedge funds to register with the SEC and revoking the exemption enjoyed by investment advisors with fewer than fifteen clients. Though these were useful steps, they were far from revolutionary.
Then there is what Dodd-Frank failed to do. It did not eliminate too-big-to-fail, either by breaking up the banks or by prohibiting them, Glass-Steagall style, from making risky investments. Instead, the six biggest banks—JPMorgan, Goldman Sachs, Bank of America, Citigroup, Wells Fargo, and Morgan Stanley—were allowed to grow 37 percent larger by the end of 2013 than in 2008–09, at the height of the crisis. Although Dodd-Frank gave the FDIC orderly liquidation authority—that is, the power to impose losses on a failed institution’s shareholders and creditors—simply bestowing that power doesn’t mean that the agency will be prepared to use it, especially if the result will be market disruptions and contagion to other financial institutions. The fact of large financial institutions operating across borders means that orderly resolution will require close cooperation between courts and regulators in a number of countries, in order to avoid a disorderly scramble for assets like what followed the failure of Lehman Brothers. Simply bestowing orderly resolution authority on a U.S. agency does nothing to advance this.
A related provision of Dodd-Frank requires more than one hundred large financial institutions to provide the regulators with “living wills” describing how their affairs will be wound up in the event of failure. In the first such wills submitted in 2012, the banks described hopefully how their various divisions might be smoothly sold off to competitors. But those plans said nothing about who might buy the operations of a failed megabank in a crisis. They gave few grounds for confidence that regulators would be willing to euthanize a big bank given uncertainty about the consequences. Officials talked a good game about ending too big to fail. The reality was different.
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lopokjjh
How the Wall Street weasels won: Elizabeth Warren, Paul Krugman and the 1 percent’s desperate battle to save themselves http://www.salon.com/2015/01/04/how_the_wall_street_weasels_won_elizabeth_warren_paul_krugman_and_the_1_percents_desperate_battle_to_save_themselves/ via @Salon
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