Monday, September 28, 2009


In last week’s blog, I called on federal regulators and others to get tough with the miscreant lenders and financial services companies, which have not been serving the markets or even performing their reciprocal responsibilities in exchange for the billions in federal TARP money they received from Treasury and the Fed.

Well, hurrah for federal district judge Jed Rakoff, of New York, who balked at the paltry $33 million fine given by the SEC to the Bank of America, for letting BoA’s newly acquired investment bank, Merrill Lynch, pay billions in employee bonuses. Rakoff said that $33 million wasn’t nearly enough and while that lowly amount may have satisfied the securities regulator and the bank, it did nothing for the public or BoA’s shareholders. (Note to SEC: BoA received some $45 Billion in TARP funds. They probably could have handled a larger fine.)
Get ‘em Judge Rakoff and take a lesson Mary Schapiro!

Maybe that’s the answer to all of the proposed financial regulatory change. Let’s just get the regulators out of it and let federal judges—with their life time tenures—handle these matters and maybe some robed stalwarts will emerge to stand up to the ”bad guys” on behalf of the consuming public.

That would be an interesting test to see if the public preferred new financial regulatory regimes or judges around the country handing out these “who broke what laws” decisions?

With all due respect to Dewey “Pigmeat” Markham and Rowan and Martin’s “Laugh In,” “Here come the Judge,” may be America’s new cry for corporate justice!!I

In the meantime, Rep. Barney Frank (D-Mass.) and the House Financial Services Committee soon will shape a major financial regulatory reform package.

Frank initiated the activity last week--trying to win some GOP votes and hold some Committee Democrats, too--by announcing several major changes to the Administration’s proposal to create a consumer finance protection agency.

One question I would ask the Committee Democrats, “Why water down your bill? How can you go wrong –in the public’s eye--if you produce a bill which the large commercial banks oppose?”

It doesn’t matter how much you appease the big banks with the legislation, the banks still will try and kill it.

It is not in the bankers DNA to support anything called “the consumer financial protection agency,” without changes that gut the intent. So why are you trying so hard to romance them? You won the 2008 elections with big numbers. Use them.

Nobody’s going to leave this town unsullied or pristine. Do you want to be remembered as a lamb or a wolf, someone who toadied for the financial interests or someone who stood up and snarled at the big banks?

Ask your constituents that question?

While you’re designing this agency, change the “advisory board” feature, since it contains every agency whiose ox gets jurisdictionally gored.

Your provision is a recipe for marginal and diluted action or just continuous internecine warfare as the Advisory Board would seek to protect lost agency turf, as the CFPA tries to build consensus.

Every regulator in town already defers to the Fed, what’s this new one going to do when their Fed advisory board member cries “No” about some agency proposal?

If you are going to give a consumer agency serious power, then give them to it. Or you risk doing just what the banks say you are, “building another layer of regulatory bureaucracy that will slow down business and not provide much protection to anyone,” save those who get tenure in the new shop.

By the way, the people hammering Mr. Frank to change this bill generally are those who don’t think the banks did anything wrong during the recent 401(K)-crushing financial tsunami.

What is wrong with demanding that all lenders covered by this new regulator offer an understandable set of “plain vanilla products” to those not as knowledgeable and sophisticated as the Congress and its staffs? Why can’t the public be offered a loan we comprehend and which won’t jump up and bite us in the wallet, a year after we get it?

Why is Capitol Hill afraid of offending the banks?

If the Hill stands up to the depositories and the Obama Administration financial regulators do too, what are the banks going to do, become credit unions, start selling fried chicken, or used cars?? Call their bluff, here and elsewhere.

The Congress, the Treasury, and the Fed need to wear their “big boy pads” whenever they engage the banks or big financial service companies in the Capitol’s version of “regulatory and political football.”

That will get more positive results than if the Congress starts channeling Neville Chamberlain.

Maloni 9-28-2009


Gzonic said...

Pigmeat said, "I don't want no lies and I don't want no alibis. Here comes the judge." You tell 'em Bill.

Bill Maloni said...

Sorry for the delay, but--for me, right now--more judges decisions on financial service miscreants and fewer regulatory calls.