« Rational Irrationality | Main | Political Consequences As Gulf Oil Slick Spreads. »

So it now looks like President Obama and the Democrats and Mitch McConnell - leader of the Republicans in the Senate, are finally about to have their "Come to Jesus" moment to strike an accord and pass a Financial Reform package.:

Republican Senator Richard Shelby of Alabama said he and the measure's Democratic author, Banking Committee Chairman Christopher Dodd of Connecticut, are close to an agreement on the legislation.

"I believe that we're going to get us a bipartisan bill," Shelby told reporters yesterday in Washington. "We're probably conceptually together on 85 percent" of the bill.

But will this bill really, actually help prevent the next financial crises? There are plenty of smart folks who beg to differ, including Erica Payne of The Agenda Project:

Legislation currently under consideration in the Senate would not have prevented the crisis we just had. As such, it is unlikely to prevent a future crisis.

They want you to sign the petition here, and contact your representative demanding real financial reform, which should include the following:

1. Eliminates a perpetual system of government sponsored corporate bailouts financed by the government or private industry.

2. Increase minimum capital requirements for banks to no less than 8%. Apply additional risk-weighted capital requirements for: a) risk concentration, b) significant interconnectedness with other financial institutions and c) illiquidity which assumes a decline in collateral values. Create standard metrics for these variables.

3. Require on balance sheet reporting of all liabilities with disclosure of related material information including all contingent claims (including but not limited to swaps, SIVs and VIEs). Provide a private right of action for failure to comply and for knowingly aiding and abetting securities fraud.

4. Require all standardized derivatives to be traded over exchanges and central clearinghouses with pricing transparent to market participants include a strong presumption that most existing OTC transactions would be standardized. Require all inter-bank and inter-dealer contingent claims (including but not limited to derivative and swap transactions) that cannot be standardized to be reported on a daily basis to a regulated transparent clearinghouse. Mandate significant and consistent margin and regulatory requirements across standardized and OTC contingent claim transactions.

5. Create standardized Pooling and Servicing Agreements and mandate the timely availability of electronically usable loan level information for asset backed securities, covered bond and similarly structured transactions prior to sale. Provide a private right of action and personal liability for sponsors of securitized underwritings.

6. Establish a timeline for the resolution of Fannie Mae and Freddie Mac.

7. Mandate that credit rating agencies be subject to the same legal standards as other market participants.

8. Mandate a separation of the roles of Chairman of the Board and CEO for regulated financial institutions.

In addition, Andy Kroll of MotherJones has a watch list of five areas we need to look for in this financial reform package coming soon to a bank near you:

1) Shining a Light on Shadow Banking

2) The Ratings Agencies' Conflict of Interest Problem

3) CEOs vs. Shareholders

4) The Broker Loophole

5) Skin in the Game

Read the details here.

Name (required)
Email
Website
Remember personal info? Yes   No
Comments

home | music | democracy | earth | money | projects | about | contact

Site design by Matthew Fries | © 2003-23 Consilience Productions. All Rights Reserved.
Consilience Productions, Inc. is a 501(c)(3) non-profit organization.
All contributions are fully tax deductible.