Salon.com > Dodd-Frank law

Wall Street wins again as court tosses key bank reform

Mon, 01 Oct 2012 16:30:00 +0000

Change is always hard. But when the thing you are trying to change has a pocketbook as deep as the Marianas Trench, change is almost impossible. That's the lesson delivered Friday afternoon by U.S. District Court Judge Robert L. Wilkins, when he rejected a key part of the Dodd-Frank bank reform law.

The regulation in question had to do with limiting the ability of traders to speculate in commodity derivatives. Specifically, the law empowered the Commodities Futures Trading Commission to set "position limits" that would put a cap on the number of bets a trader could place on key commodities like oil, corn, milk and sugar. Critics have long argued that Wall Street speculation in such commodities distorts their pricing, causing considerable hardship to industries and individuals who actually consume the end product, rather than simply bet on price fluctuations. When gas prices spike, so goes the argument, at least part of the reason why is hedge fund speculation. So on one side of this court case, you had entities like Delta Airlines, whose profitability gets hammered when hedge fund bets drive the price of jet fuel futures higher, and on the other you had the usual suspects: JPMorgan, Goldman Sachs and Morgan Stanley.

Romney’s Jamie Dimon problem

Fri, 11 May 2012 18:00:00 +0000

Here is the most important sentence in Jamie Dimon's Thursday afternoon conference call discussing JPMorgan's colossal trading screw-up: "Just because we’re stupid doesn’t mean everybody else was.”

If you're looking for the most easy-to-understand breakdown of how JPMorgan managed to lose $2 billion, read Marketplace reporter Heidi Moore's fabulous explainer. Readers who fancy themselves financially sophisticated can ponder DealBreaker's Matt Levine's analysis. If all you want is a guide to the critics "flaying" Dimon's hide, check out the New York Times' DealBook.

But for our purposes right now, all you need to concern yourselves with is Dimon's monumentally disingenuous self-castigation. Because Dimon is not stupid. Under his tenure, JPMorgan has been the best-run of the big banks. So Dimon's self-criticism gets it all backward. The fact that JPMorgan was so very stupid is so very scary because we can rest assured that just about everybody else is doing things even more idiotic.

Why I sought to modify Dodd-Frank

Tue, 06 Dec 2011 16:00:00 +0000

I know that writers, even good ones, sometimes address questions like, "Why do liberals aid the 1 percent?" to the general blogosphere rather than to the subject about whom they are about to theorize. That way they can imagine the answer that best feeds their postulate. However, as one of the liberals referenced in Gary Weiss' Salon article but never asked, I'd like to to respond to the question after the supposed "fact."

My opposition to the Senate-added swaps “push-out” provision, Section 716, was based solely on the fact that it was wholly at odds with two central tenets of the Dodd-Frank Act, reducing systemic risk and increasing derivative market-transparency, and not, as Weiss inaccurately states, on some conjured out of whole cloth allegiance to the so-called “1 percent.” Of course, if Salon had bothered to ask me why I opposed Section 716, then the story would not have been necessary at all. But, of course, that was the point.

The myth of Barney Frank

Wed, 30 Nov 2011 13:00:00 +0000

I was sorry to see Barney Frank retire. He’s a good guy. He meant well. That’s what my mother used to say about a well-intentioned but ineffectual person, like maybe the butcher who threw in an extra piece of meat that wasn’t chewable.“He means well,” she’d say.

Or, like the nice kid who used to get beaten up by bullies, Frank was always unafraid to go on Fox News and mix it up with Bill O’Reilly. The right hated him, pushing the trope that “Fannie and Freddie” were the cause of the 2008 financial crisis, not the banks. Or the Community Reinvestment Act, not the banks. Always the government, never the banks. The criticisms stung, even though baloney like the CRA yarn had been refuted “up, down and sideways,” as Paul Krugman once pointed out.