Volcker Rule : So it never again needs another taxpayer-funded bailout to save BANK !

Extrait de: The Volcker Rule and Wall Street's Pliant Media Plant, Raymond J. Learsy, Huff Post, 02/15/2012

There he goes again. Wall Street is fighting tooth and nail to emasculate the Dodd-Frank Bill, focusing its artillery on the Volcker Rule, namely those sections calling for the elimination of proprietary trading by banking institutions. In case you may have forgotten, it was the unbridled proprietary trading bundled with sham housing instruments and derivatives and out right speculation that brought us to the near collapse of the financial system in 2008.

According to yesterday's The New York Times, Wall Street made its broadest assault yet against new regulation on Monday, taking aim at a rule that has come to define the battle over how to police banks in the aftermath of the financial crisis. And there, joining the fray was that forever pliant Wall Street apologist, New York Times columnist and CNBC talking head, Andrew Ross Sorkin, weighing in with a less than feeble endorsement of the Volcker Rule ("in the long term it makes a lot of sense") while impugning it in the length and breadth of his column.

To underscore the downside of adopting the Volcker Rule he cites that paragon of banking virtue and responsible husbanding of a banking charter, Jamie Dimon, Chairman of JPMorgan Chase. Dimon, the very epitome of the type of banker the Volcker rule is meant to protect us, the public, from. With Dimon at its helm, proprietary trading, and all it embodies with its casino mentality, has become perhaps the key aspirational profit center and motivator of his institution  Is JPMorgan a Bank or a Government Funded Casino? .

Sorkin goes on to enlist comments of critics of the Volcker Rule, highlighting their argumentation that removing big banks from making their own bets will remove liquidity from the system, thereby driving up costs. He then brushes aside Volcker's defense "The restrictions on proprietary trading by commercial banks legislated by the Dodd Frank Act are not likely to have an effect on liquidity inconsistent with the public interest." Volcker's comments continue to say that there should not be a presumption that "ever more liquidity brings a public benefit."

Then Sorkin goes on to dismissively counter Volcker's position, "Yet Mr. Volcker doesn't offer any explanation for why it won't, except to argue that less liquidity might tamp down speculative trading."

Oil and Finance The Epic CorruptionOne would think that Mr. Sorkin, with his extensive CV and daily exposure to the workings of the market needn't have had to dig very deeply to cite the extensive proprietary trading banks the likes of JPMorgan, Morgan Stanley, and Goldman Sachs have undertaken, speculating in a vast range of commodities such as crude oil, copper etc. and financial instruments.

In crude oil alone their proprietary trading has helped bring about ever higher gasoline and heating oil prices at the public's cost and to the banks' benefit. A feat achieved by chartering massive VLCC crude oil tankers (200,000 Dead weight Tons or more), filling them with millions of barrels of oil at a cost of hundreds of millions if not billions of dollars. Then keeping the tankers at sea for months at a time to speculate on the prospect of ever higher oil prices yet. In doing so, by taking oil off the market in the front months, they cause the spot price of oil to rise, and for all of us to pay more for petroleum based products such as gasoline, diesel fuel, heating oil, etc.

As "banks", they have access to the Fed Window and its diminutive interest rates. Money lent to banks as banks, with an implied responsibility to use those funds to assist the economy by lending to businesses and householders, perhaps even renegotiating mortgages, and generally being agents of economic growth. Certainly not taking money out of the system, to speculate on oil and other commodities while simultaneously having their speculative initiatives result in ever higher prices to be paid for by the consuming public. And why not, if their speculative positions blow up, there is the government and the ole boys club at the Treasury and the Fed to bail them out.

But then again this is not the first time, among other issues, that Mr. Sorkin has come to the defense of Wall Street interests in the guise of knowledgeable commentator. There was also the paean to Goldman Sachs One Crowd Still Loyal To Goldman Sachs NYTimes.

To put the icing on the cake, Sorkin in yesterday's column, quotes Jamie Dimon, "Paul Volcker, by his own admission has said he doesn't understand capital markets. He has proven that to me.

Spoken like a veritable croupier angered by a paying house guest
who doesn't want to play at his gaming table.

Extrait de: Regulators weigh massive public input on 'Volcker rule', Los Angeles Times, By Nathaniel Popper, February 15, 2012

The SEC has received about 15,000 comments on the proposed 'Volcker rule,' which would stop banks from using their own money to trade for profit rather than fulfilling a client's order.

Regulators are confronting some 15,000 public letters attempting to influence the final shape of one of the most controversial elements of the 2010 financial reform bill.

Five regulatory agencies have until July to complete a new rule that would ban proprietary trading at Wall Street firms, a move that some believe would make the U.S. financial system safer. The rule named after former Federal Reserve Chairman Paul Volcker would stop banks from using their own money to trade for profit rather than fulfilling a client's order.

Banks, trading firms and critics of the financial industry have inundated regulators with letters and meetings before this week's deadline for public comment on the so-called Volcker rule. Trading operations have been among the most profitable divisions of the nation's largest banks in recent years, and the financial industry has spared no expense in fighting new restrictions.

But critics of the banks say that risky speculative trading was one of the factors that fueled the mortgage bubble and needs to be curtailed. Financial firms have also faced anger for betting against their own clients in pursuit of profit.

Likewise, the reluctance on the part of banks to extend credit to manufacturers is not because they lack capital, but because they find it more profitable to invest in speculation, that is, in buying and selling of assets and/or securities such as bonds, stocks, commodities, real estate, currencies, and the like -- destabilizing activities that tend to create asset price bubbles, inevitably followed by bursts.

Parasites discovered long time ago that it is easier to suck the existing blood out of the body of living organisms than producing it from scratch. (1)

"The controversy over the Volcker rule is mud wrestling at its finest," said Michael Robinson, the former head of public affairs at the SEC who now works at Levick Strategic Communications. "There's a lot of money at stake and there is a lot of prestige at stake."

The passion on both sides of the issue — and the big money that is at stake — are evident in the 14,490 public comments that the SEC had received and posted on its website as of Tuesday. Thousands of those were from private individuals expressing their support for cracking down on Wall Street's risky trading practices.

For banks, the debate comes at a particularly sensitive moment. The last few months have been filled with news of layoffs and pay cuts on Wall Street as banks grapple with a raft of newly proposed regulations and continued economic turmoil in Europe.

This market is a black hole and is like the Wild West of trading. 

The biggest U.S. banks have some $231 trillion in derivative exposure as of December of 2010. Global GDP is roughly $58 trillion!

US Bank Derivative exposure

These kind of absurd bets, many that do cancel each other out, largely show how out of control and leveraged our financial system has become.  When you have people on Wall Street day trading and speculating making half a million dollars a year in their twenties betting on people being foreclosed on, you need to ask yourself what is the true purpose of our banking system?  At the moment it is largely a theft on the American public.

The financial system’s main mission should be to allocate capital to areas of greatest growth in the real world economy. (2)

The proposed Volcker rule puts a number of new limitations on the financial industry. Big banks would be able to own only small stakes in private equity and hedge funds and they would have to do away with any trading desks that trade solely for the profit of the bank.

Several financial firms, including Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc., have already shut down the most obvious proprietary trading desks, but there are still big questions about how broadly the practice will be defined.

For example, market experts say that it is obviously proprietary trading when a bank buys 100 Italian bonds and holds them for a year, waiting for the value to go up. But what about when a bank buys 100 Italian bonds and holds them for five days until a customer shows up?

Banks and some of their customers have argued that the current proposal defines proprietary trading too broadly, potentially leading to lower trading volumes and higher costs for customers.

"The proposed rule would have serious, adverse effects on our ability to manage our risks and address the needs of our clients, and on market liquidity and economic growth," the chief risk officer at JPMorgan Chase & Co., Barry Zubrow, wrote in a 67-page letter submitted Monday.

One of the biggest institutional investors, the California Public Employees' Retirement System, acknowledged in its own letter that costs might rise, but noted that it would be an "acceptable cost for reducing risk in the financial system."

John Reed, the former chief executive of Citibank who once oversaw many of the trading operations now under discussion, said in his letter supporting the proposals that losses at proprietary trading desks during 2007 and 2009 had "quickly decimated the availability of credit and seriously damaged the U.S and global economy."

The most visible opponent of the banks has been Volcker himself, who first proposed the restrictions. He submitted his five-page letter to the SEC on Monday addressing concerns that the rule would drive up the price of buying and selling assets through the banks and make the markets less liquid.

"My short answer to each of these objections is: 'not so,'" he wrote.

Proprietary trading, Volcker said, is "at odds with the basic objectives of financial reforms: to reduce excessive risk, to reinforce prudential supervision, and to assure the continuity of essential services."

Many public comments have said that if anything, the rules don't go far enough, in part because of the influence that bank lobbying has already had. Two senators who originally pushed for the rule, Carl Levin (D-Mich.) and Jeff Merkley (D-Ore.), now say the rule does not go far enough. And a group called Occupy the SEC wrote a 325-page letter explaining the need for much stricter rules than those being proposed.

"The banking lobby exerted inordinate influence on Congress and succeeded in diluting the statute, despite the catastrophic failures that bank policies have produced and continue to produce," the group's letter says.

The new financial rules are set to go into effect this summer, whether or not regulators are finished. But that is unlikely to be the end of the story.

"You are going to see a lot of controversy on this going forward," Robinson said. "This is the kind of thing you can easily see ending up in court.

Le Canada s’oppose !

Et bien sûr, notre gouvernement s’oppose, il trouve cela normal qu’on maintienne encore un oligopole de 7 banques qui font plus de 24 milliards de profits, quand le fédéral fait plus de 30 milliards de déficits.

Et ceci ne comprend même pas l’évasion fiscale.

Établir de nouvelles taxes pour les banques.

Selon le gouvernement fédéral, les Canadiens ont déposé 146 G$ dans des paradis fiscaux en 2009. En 2003, le chiffre était limité à 83 G$.

Au début des années 2000, la Vérificatrice générale du Canada estimait que l'amnistie accordée aux investisseurs canadiens à la Barbade faisait en sorte que 1,5 G$ échappaient au fisc.

Les banques font partie des coupables dans ce dossier.

In contrast, the Harper government engaged in intense lobbying to prevent world leaders from agreeing on introducing new taxes on banks at the Toronto G20 Summit last June.

A leading bank analyst has estimated that Canada’s top banks will have $40 billion in excess cash by the end of 2012. This amount is equivalent to the sum of all federal and provincial government deficits currently projected for the 2012–13 year, (3).

Ou l’élément le plus ridicule, c’est la SCHL, où c’est le peuple qui prend le risque, mais ce sont les banques qui font le profit, c’est tellement ridicule, je ne connais aucun endroit dans le monde que c’est le peuple qui garantit les prêts immobiliers, mais les banques font le profit.

Banques canadiennes–politiciens - beau copinage!

En avril dernier, l'encours du crédit à l'habitation (prêts hypothécaires, marges hypothécaires) atteignait les 1057 milliards de dollars.

On apprenait cette semaine que le portefeuille d'assurance hypothécaire de la SCHL atteindrait cette année un niveau record de 533 milliards de dollars. C'est 83% de plus qu'en 2006.

C'est donc dire que la moitié du volume des emprunts hypothécaires a été consentie à des gens particulièrement endettés. (4).

Extrait de: Canada raising alarm over Volcker rule, bill curry, Globe and Mail, Feb. 13, 2012

Ottawa is ramping up political pressure on Washington over the so-called Volcker rule on banking reforms, warning the changes will hurt snowbirds, severely affect Canada’s debt markets and create unnecessary reporting headaches for Canadian banks.

As finance ministers of the Group of 20 nations prepare to gather later this month in Mexico to take stock on the progress of global banking reforms brought in after the financial crisis of 2008, new rules that take effect later this year in the United States are drawing concern across the globe.

Canada, the European Union and Japan are among the countries raising alarms that Washington’s new banking laws reach too far, interfering in transactions that have minimal connections to the U.S. economy.

For instance, Canada warns that the draft rules would force Canadian banks to seek the approval of U.S. regulators if their mutual fund clients include snowbirds who temporarily live in the United States.

Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney wrote strongly worded letters to their U.S. counterparts Monday, urging Washington to reconsider before the new policies take effect this July.

“The draft rule could have serious unintended consequences for Canadian bank-sponsored mutual funds, hampering their ability to provide services to their Canadian clients,” Mr. Flaherty writes. Mr. Carney warned the change might impair liquidity in markets for Canadian government debt and curb Canadian banks’ risk-management activities, undermining efforts to strengthen the country’s financial system.

At issue is the Volcker rule, which is a central provision of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, a sweeping set of financial reforms brought in after the 2008 financial crisis. The law is intended to tighten regulation of the U.S. banking sector so it never again needs another taxpayer-funded bailout. The Volcker rule aims to clearly divide proprietary trading – the higher-risk investment activities of banks aimed at boosting corporate profits – with traditional banking services.

The letters from Mr. Flaherty and Mr. Carney were part of a deluge of formal letters submitted by governments and industry lobbyists to U.S. regulators Monday, the deadline for comment on the issue.

Tout à fait compréhensible, des politiciens corrompus par le milieu de la finance,
ils risquent d’avoir moins d’enveloppe brune à la prochaine élection.

Pushing back against these warnings was Paul Volcker himself. Mr. Volcker, the former U.S. Federal Reserve Board chairman, directly challenged the arguments put forward by Canada and others.

In an opinion piece posted Monday afternoon on the Financial Times website, Mr. Volcker suggested national regulators should be able to work out common approaches to dealing with such complex legislation. Yet he argued the concerns should not distract from the main point of the legislation, which is to ensure risky financial behaviour is not backstopped by government protection for bank deposits.

“Let us not be swayed by the smokescreen of lobbyists dedicated to protecting the interests of some highly compensated traders and their risk-prone banks,” he wrote.

“In addressing liquidity, can it really be of concern that some of the largest banks in Europe, in Japan, in China and indeed in Canada cannot maintain effective markets in their own sovereign debt? U.S. chartered commercial banks could remain participants ‘making markets’ for their customers wherever they are,” he wrote. “Let’s get serious.”

Douglas Landy, a former staff attorney at the New York Federal Reserve, who is now representing Canadian and other non-U.S. banks in their battle over the Volcker rule, says U.S. lawmakers are simply overreaching into the affairs of other countries.

“What we’re saying is it’s fair game to deal with things that really happen in the United States – U.S. banks and the U.S. arms of Canadian banks are definitely going to be covered by it – but leave the stuff that takes place outside the United States alone,” he said, pointing to the example of a Toronto bank managing mutual funds for a Canadian senior spending the winter in Florida. “The fact that the investor happens to be in the United States, either temporarily or for a few months, really is kind of besides the point,” he said. “It’s really hard to say if something went wrong with that trade, there would be a threat to the U.S. financial system.

Bien sur, nos banques oublient de dire qu’ils ont des succursales
aux Bahamas aux Bermudes, et blah, blah …