Wall Street reform

 Posted by at 14:34  economy, Politics
Jun 252010
 

Remarks by the President on Wall Street Reform

Good morning, everybody. In a few moments I’ll depart for Canada to take part in a summit with the G8 and the G20 nations. This is the third G20 summit we’ve held since I was sworn in as President.

At our first meeting, in London, with the world in the grips of the worst financial crisis of our time, we acted boldly and swiftly to bring our economy back from the brink. At our second meeting, in Pittsburgh, with our recovery beginning to take hold, we agreed to work to pursue a balanced pattern of global growth, and repair our financial systems.

This weekend in Toronto, I hope we can build on this progress by coordinating our efforts to promote economic growth, to pursue financial reform, and to strengthen the global economy.

We need to act in concert for a simple reason: This crisis proved, and events continue to affirm that our national economies are inextricably linked. And just as economic turmoil in one place can quickly spread to another, safeguards in each of our nations can help protect all nations.

I’m gratified we’ve made great progress towards enacting these safeguards here at home. Because of the incredibly hard work of Chairman Dodd and Chairman Frank, and the strong leadership of Chairwoman Lincoln and Chairman Peterson, and the great efforts of the conferees and members of both parties — who were up very late last night — we are poised to pass the toughest financial reform since the ones we created in the aftermath of the Great Depression. Early this morning, the House and Senate reached an agreement on a set of Wall Street reforms that represents 90 percent of what I proposed when I took up this fight.

Now, let me be clear. Our economic growth and prosperity depend on a strong, robust financial sector, and I will continue to do what I can to foster and support a dynamic private sector. But we’ve all seen what happens when there’s inadequate oversight and insufficient transparency on Wall Street.

The reforms making their way through Congress will hold Wall Street accountable so we can help prevent another financial crisis like the one that we’re still recovering from.

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Republicans fold

 Posted by at 19:11  Business, economy, Republicans
Apr 282010
 

The Republicans have finally recognized the futility of putting the interests of their billionaire buddies on Wall Street ahead of Main Street America…

GOP abandons blockade of banking regulation bill

Republicans abandoned their blockade against legislation to clamp tough new controls on Wall Street Wednesday, clearing a road to likely passage for the most sweeping rewrite of financial rules since the Great Depression.

Democrats and Republicans agree the Senate will ultimately pass landmark changes aimed at preventing a recurrence of the crisis that knocked the nation’s financial system to its knees in 2008, but the battle now begins over crucial details. The House has already passed its version.

Democrats said the Republicans had given in after three days of votes to block debate, realizing they were on the losing end of a battle for public opinion. GOP lawmakers said they would now switch to trying to change the bill on the Senate floor.

Sen. Sheldon Whitehouse, D-R.I., said, “There’s been immense pressure bottled up inside the Republican caucus through these last three votes. A lot of their members have been very deeply unhappy with the direction their leadership has been taking them. Better heads prevailed.”

Democrats had threatened to hold the Senate in session all night making their case that the Republicans were stalling legislation of importance to virtually every American. The Democrats also have been laying plans to make the legislation a major issue in midterm elections this summer and fall. The Republican retreat came one day after senior executives of Wall Street giant Goldman Sachs were denounced by lawmakers from both parties at a marathon Senate hearing.

It seems that all you have to do to pound some sense into their thick heads is threaten to keep them up all night.

 

Apr 222010
 

Remarks by the President on Wall Street Reform

Now, since I last spoke here two years ago, our country has been through a terrible trial. More than 8 million people have lost their jobs. Countless small businesses have had to shut their doors. Trillions of dollars in savings have been lost — forcing seniors to put off retirement, young people to postpone college, entrepreneurs to give up on the dream of starting a company. And as a nation we were forced to take unprecedented steps to rescue the financial system and the broader economy.

And as a result of the decisions we made — some of which, let’s face it, were very unpopular — we are seeing hopeful signs. A little more than one year ago we were losing an average of 750,000 jobs each month. Today, America is adding jobs again. One year ago the economy was shrinking rapidly. Today the economy is growing. In fact, we’ve seen the fastest turnaround in growth in nearly three decades.

But you’re here and I’m here because we’ve got more work to do. Until this progress is felt not just on Wall Street but on Main Street we cannot be satisfied. Until the millions of our neighbors who are looking for work can find a job, and wages are growing at a meaningful pace, we may be able to claim a technical recovery — but we will not have truly recovered. And even as we seek to revive this economy, it’s also incumbent on us to rebuild it stronger than before. We don’t want an economy that has the same weaknesses that led to this crisis. And that means addressing some of the underlying problems that led to this turmoil and devastation in the first place.

Complete transcript following the break.

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Wrecking America

 Posted by at 16:28  economy, Politics
Jan 102010
 

Your reading assignment for this Sunday is Frank Rich’s most recent column in The New York Times. As difficult as it may be, your instructions are to read it all the way through to the end. I’ll post the first few paragraphs here. You will need to click on the headline within the quote to read the remainder.

The Other Plot to Wreck America

THERE may not be a person in America without a strong opinion about what coulda, shoulda been done to prevent the underwear bomber from boarding that Christmas flight to Detroit. In the years since 9/11, we’ve all become counterterrorists. But in the 16 months since that other calamity in downtown New York — the crash precipitated by the 9/15 failure of Lehman Brothers — most of us are still ignorant about what Warren Buffett called the “financial weapons of mass destruction” that wrecked our economy. Fluent as we are in Al Qaeda and body scanners, when it comes to synthetic C.D.O.’s and credit-default swaps, not so much.

What we don’t know will hurt us, and quite possibly on a more devastating scale than any Qaeda attack. Americans must be told the full story of how Wall Street gamed and inflated the housing bubble, made out like bandits, and then left millions of households in ruin. Without that reckoning, there will be no public clamor for serious reform of a financial system that was as cunningly breached as airline security at the Amsterdam airport. And without reform, another massive attack on our economic security is guaranteed. Now that it can count on government bailouts, Wall Street has more incentive than ever to pump up its risks — secure that it can keep the bonanzas while we get stuck with the losses.

The window for change is rapidly closing. Health care, Afghanistan and the terrorism panic may have exhausted Washington’s already limited capacity for heavy lifting, especially in an election year. The White House’s chief economic hand, Lawrence Summers, has repeatedly announced that “everybody agrees that the recession is over” — which is technically true from an economist’s perspective and certainly true on Wall Street, where bailed-out banks are reporting record profits and bonuses. The contrary voices of Americans who have lost pay, jobs, homes and savings are either patronized or drowned out entirely by a political system where the banking lobby rules in both parties and the revolving door between finance and government never stops spinning.

(The emphasis is mine.)

The bankers and the banks who employ them are destroying America at a much faster pace than Al Qaeda could even dream of. Their greed and hubris know no limits. We cannot and should not be counting on our politicians to stop them. This is something we are going to have to take care of ourselves. Move Your Money. Do it today.
 

Executive pay cuts

 Posted by at 21:32  Business, Politics
Oct 212009
 

Finally…

U.S. to cut pay for bailed-out bosses

NEW YORK — The Obama administration plans to order companies that have received exceptionally large amounts of bailout money from the government to slash compensation for their highest-paid executives by about half on average, according to people familiar with the long-awaited decision.

The cuts will affect 25 of the most highly paid executives at each of five major financial companies and two automakers, according to the sources, who spoke on the condition of anonymity because the plan has not been made public. Cash salaries will be cut by about 90 percent compared with last year, they said.

The administration will also curtail many corporate perks, including the use of corporate jets for personal travel, chauffeured drivers and country club fee reimbursement, people familiar with the matter have said. Individual perks worth more than $25,000 have received particular scrutiny.

The compensation of these people should not even be an issue. They should be looking for new jobs.

Many on the right are screaming that these pay cuts are wrong because these highly paid executives will now seek “greener fields,” leaving these companies without their leadership. That’s actually laughable. If there were any greener fields available to these idiots, they would already be grazing in them.

P.S. Does this mean I have to trade my Bentley in for a Mercedes?

2010 Bentley Continental GT
2010 Bentley Continental GT

 

Cautious optimism

 Posted by at 18:31  Business, economy, Politics
Mar 232009
 

I am going to choose to be cautiously optimistic about today’s news. I am not a big fan of the “Public Private Investment Plan” (I’d much rather see some people going to prison for the mess they have deliberately created), but if it works I’ll quickly become its number one booster. The Wall Street types seem to like it…

U.S. Markets Soar on Treasury’s Plan for Banks

A last-minute surge sent stock markets up about 7 percent today following the Treasury Department’s announcement of a new plan to help banks cleanse their balance sheets of toxic assets.

The blue-chip Dow Jones industrial average was up 6.8 percent, or 497 points, to 7776, while the broader Standard & Poor’s 500-stock index rose 7.1 percent, or 54 points, to 823. The tech-heavy Nasdaq jumped 6.8 percent, or 99 points, to 1556.

The gains amount to a vote of confidence by investors in the program to purchase toxic assets, known as the Public Private Investment Plan. It calls for the government to partner with private investors to buy between $500 billion and $1 trillion in troubled real estate-related loans and securities that have poisoned financial institutions and destroyed investor confidence. Those assets will then be auctioned to the highest bidder, removing them from banks’ balance sheets…

Investors also got an unexpected boost from news this morning that existing home rose sales 5.1 percent to a seasonally adjusted rate of 4.72 million in February compared to the previous month. Many analysts had expected the rate would fall. Still, home sales are still down about 5 percent from a year ago as prices continue to tumble throughout the country, but particularly in the west.

I have to wonder if some of the conservatives who were so quick to assign the blame to President Obama and Secretary Geithner when the markets were falling are going to be as quick to give them credit if the markets continue to rise. I have not seen nor heard many congratulatory messages from the right side of the aisle thus far today. Perhaps they, like me, are choosing to be cautiously optimistic. You think?

Update: Krugman doesn’t like it.
 

Feb 042009
 

Change:

Obama Calls for ‘Common Sense’ on Executive Pay

WASHINGTON — President Obama announced on Wednesday a salary cap of $500,000 for top executives at companies that receive the largest amounts of money under the $700 billion federal bailout, calling the step an expression not only of fairness but of “basic common sense.”

“We all need to take responsibility,” the president said, in discussing the compensation restrictions, which include an exception for restricted stock. He also used the occasion to prompt Congress once again to act on his separate economic stimulus program, whose cost could approach $1 trillion.

Mr. Obama repeated his comments that some Wall Street executives had shown “the height of irresponsibility” when millions of nonwealthy Americans were bearing the burden of Wall Street’s failures.

The people are sick and tired, Mr. Obama said, of seeing Wall Street executives come to the government “hat in hand when they were in trouble, even as they paid themselves customary lavish bonuses.”

“This is America, we don’t disparage wealth,” the president said. “We don’t begrudge anybody for achieving success. And we certainly believe that success should be rewarded.”

But Americans definitely begrudge “executives being rewarded for failure,” especially if their earning are subsidized by taxpayers, “many of whom are having a tough time themselves,” he said.

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I think five hundred grand a year is a rather generous salary for running a business into the ground, don’t you? Honestly, would you have much difficulty surviving on five hundred thousand dollars per year (a little over $240/hour)? The president himself makes four hundred thousand. Why should anybody in this country make more money than our Chief Executive?

The complete text of President Obama’s remarks is below the fold.

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