Rolling Stone writer Matt Taibbi has an inside account of war with Wall Street in the battle to get financial reforms through Congress.
Picture the Restoring American Financial Stability Act as a vast conflict being fought on multiple fronts, with the tiny but enormously influential Wall Street lobby on one side and pretty much everyone else on the planet on the other. To be precise, think World War II – with some battles won by long marches and brutal campaigns of attrition, others by blitzkrieg attacks, still more decided by espionage and clandestine movements. Time after time, at the last moment, the Wall Street axis has turned seemingly lost positions into surprise victories or, at worst, bitterly fought stalemates. The only way to accurately convey the scale of Wall Street's ingenious comeback is to sketch out all the crazy, last-minute shifts on each of the war's four major fronts.
It's a minute by minute blow, along with arcane Senate procedural rules on how lobbyists get their way as bills wind through Congress. Some of these methods have been pointed out on this site. One piece of detail on the Lincoln amendment for derivatives
Then reform advocates started reading the fine print of the Lincoln deal, and realized that all those Wall Street lobbyists had really been earning their money.
Lehman Brothers, is suing J.P. Morgan Chase. ehman is now an estate holdings from bankruptcy. Seems J.P. Morgan wanted some cash, right before Lehman went down, as much as they could get it seems. Damn them.
EP is deviating just a tad from economics and delving into the wild world of underwater engineering and environment disaster. This is what people want to talk about, this is what is on their minds.
We're in horror. We're helpless, dependent upon continual press releases and attempts while real solutions to stop the leak are dismissed.
The next attempt is a top kill, which is to push drilling mud and cement into the leak hole. This latest attempt is high risk and could make the leaks worse. Realize this is 5,000 feet deep in the water, with corresponding water pressure in addition to a massive gushing oil plume. The damaged blowout preventer is 5 stories high. Blasting fluids with high pressure, twice as dense as the surrounding water, has the potential to create another hole if the blowout preventer has weakness in the metal or other interactions. Ugh, my sympathies to the engineers. This has never been tried in water.
The CBO has a new report on those nasty, toxic mortgage backed securities the Federal Reserve bought, along with a host of other crud from the financial meltdown.
The Hills is reporting the Senate Conferees for the Financial reform bill committee conference have been chosen.
They are:
Chris Dodd (D-Conn.) will be joined by committee members Sens. Tim Johnson (D-S.D.), Jack Reed (D-R.I.), Charles Schumer (D-N.Y.), Richard Shelby (R-Ala.), Bob Corker (R-Tenn.), Mike Crapo (R-Idaho) and Judd Gregg (R-N.H.).
Senate Agriculture Committee Chairwoman Blanche Lincoln (D-Ark.) will be joined by panel members Sens. Patrick Leahy (D-Vt.), Tom Harkin (D-Iowa) and Saxby Chambliss (R-Ga.).
House Speaker Nancy Pelosi (D-Calif.) that Rep. Carolyn Maloney (D-N.Y.), chairwoman of the Joint Economic Committee and a senior member on the financial panel, be named a conferee alongside the six subcommittee chairs.
The subcommittee chairmen are Democratic Reps. Paul Kanjorski (Pa.), Mel Watt (N.C.), Luis Gutierrez (Ill.), Maxine Waters (Calif.), Gregory Meeks (N.Y.) and Dennis Moore (Kan.)
According to a study by a Swiss rating agency, Independent Credit View, the global banking system is particularly undercapitalized, to the tune of $1.5 trillion dollars. 58 banks where compared for Q4 2009 capital on hand to needs in Q4 2011 and Bloomberg got their hands on it. Look at these two percentages of Irish banks:
This is a market purely on life support, sustained by the federal government. Having FHA do this much volume is a sign of a very sick system.
Remember when we pointed out the entire residential real estate market is a ticking time bomb, propped up by the government?
Seems the FHA, which is guaranteeing more loans than Freddie Mac and Fannie Mae, thinks so too.
The FHA, which backs loans with down payments as low as 3.5 percent, insured $52.5 billion of home-purchase mortgages in the first quarter, compared with $46 billion of purchases of the debt by Fannie Mae and Freddie Mac, according to data compiled by Washington-based Potomac Partners.
The FHA and Fannie Mae and Freddie Mac, which regulators seized in 2008, have been financing more than 90 percent of U.S. home lending after a retreat by banks and the collapse of the market for mortgage bonds without government-backed guarantees.
The above quote is in the midst of a feel good existing home sales report:, which increased 7.6% for the month.
Over the weekend a Spanish bank, Cajasur, was seized. This is a large Spanish bank with $23.9 billion or 0.6% of Spain's assets.
Now the IMF is gunning for Spain and it looks like they are after.....their pension system and wages. From the IMF press release:
A dysfunctional labor market, the deflating property bubble, a large fiscal deficit, heavy private sector and external indebtedness, anemic productivity growth, weak competitiveness, and a banking sector with pockets of weakness. Ambitious fiscal consolidation is underway, recently reinforced and front-loaded. This needs to be complemented with growth-enhancing structural reforms, building on the progress made on product markets and the housing sector, especially overhauling the labor market. A bold pension reform, along the lines proposed by the government, should be quickly adopted. Consolidation and reform of the banking system needs to be accelerated.
The EU is also calling for Spain to modify it's pension system by raising the retirement age and scaling the benefits. The IMF is zeroing in on Spain's labor markets. So why exactly are they doing this and why are workers supposed to be stuck with the housing bubble and derivatives bill as sovereign nations become mired in debt?
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