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Old 04-11-2010, 06:30 PM   #141
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I know Julie Dickson. Ernest lady. The rules she refers to were indeed important but only a start in the process. Other point is that there are very few banks in Canada. Really only 6 big enough to worry about. The senior execs at each are on first name basis with the top regulators.
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Old 04-12-2010, 10:50 AM   #142
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Other point is that there are very few banks in Canada. Really only 6 big enough to worry about.
Which turns the whole "Too big to fail" notion on its head. Canadian banks are much larger (relative to GDP) than U.S. banks. And yet they didn't have as many issues . . . this time.

It gets back to the "will to regulate", which the U.S. generally lacks. Judd Gregg was on CNBC this AM worrying mightily about how impending financial regulation will stifle the industry and hurt its competitiveness.

I fear we're doomed to repeat this all over again.
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Old 04-12-2010, 11:38 AM   #143
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Which turns the whole "Too big to fail" notion on its head. Canadian banks are much larger (relative to GDP) than U.S. banks. And yet they didn't have as many issues . . . this time.

It gets back to the "will to regulate", which the U.S. generally lacks. Judd Gregg was on CNBC this AM worrying mightily about how impending financial regulation will stifle the industry and hurt its competitiveness.

I fear we're doomed to repeat this all over again.
If Canada is so great how come they don't have an immigration problem?
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Old 04-12-2010, 11:54 AM   #144
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If Canada is so great how come they don't have an immigration problem?
People are migrating to the U.S. because of our banking regulations?
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Old 04-12-2010, 11:58 AM   #145
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People are migrating to the U.S. because of our banking regulations?
Just threw that in there............comparing Canada to the US is the ultimate in apples and oranges. Canda has 23 million people and 6 major banks...........how is that comparable?
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Old 04-12-2010, 12:00 PM   #146
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Just threw that in there............comparing Canada to the US is the ultimate in apples and oranges. Canda has 23 million people and 6 major banks...........how is that comparable?
You'll have to explain why the size of the country makes it not comparable. Both have developed economies with developed financial institutions. I'm not sure why its apples and oranges.
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Old 04-12-2010, 07:04 PM   #147
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First of all we have 32 million people. Our banks are better managed and regulated(based on my first hand experience). We do have immigration issues but deal with them very differently than the US. We let those that meet our criteria in. About 250,000 are let in each year-a much higher percentage (I believe) than the US. This is not without some controversy but generally is well supported by the majority.
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Old 04-14-2010, 07:41 AM   #148
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Banks Falter on Rules Fight (WSJ)

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Senate Democrats, resisting a last-ditch lobbying push from big Wall Street firms, are moving toward a sweeping revamp of financial regulation that would squeeze banks' lucrative derivatives-trading business.

Wall Street giants Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Morgan Stanley had been pressing hard in recent days to dilute provisions of the bill that would change the rules for derivatives trading. But the Obama administration, which has made this one of its priorities for the financial-regulatory bill, has pushed back hard and appears to be succeeding. That's drawing Republican complaints that the pending rewrite of the rules of finance will put the economy at risk.
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Goldman, J.P. Morgan and Morgan Stanley have at least one common objective: To thwart or dilute proposals that would push trading in most derivatives onto exchanges or to "clearinghouses," which are middleman institutions set up to handle big transactions between banks.

Their main concern: Trading on exchanges or via clearinghouses could reveal more details about the pricing and structure of the deals, potentially benefiting rivals and clients, and in the process eating into profits.
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Old 04-14-2010, 09:02 AM   #149
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First of all we have 32 million people. Our banks are better managed and regulated(based on my first hand experience). We do have immigration issues but deal with them very differently than the US. We let those that meet our criteria in. About 250,000 are let in each year-a much higher percentage (I believe) than the US. This is not without some controversy but generally is well supported by the majority.
The USA has over ten times the GDP and 10 times the population of Canada. It is easier to manage a smaller economy than a larger one. California alone has a bigger GDP than Canada. It's not the same........

Your banks are probably better run, but I wonder if that would be the case if they had the VOLUME the US banks dealt with............
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Old 04-15-2010, 06:16 AM   #150
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Banks Decry Basel Mandates on Cash, Capital in Regulation Fight
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Old 04-15-2010, 06:20 AM   #151
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So we have both a House and a Senate financial reform bill. Black and white proposals. So far not a single Republican Senator has agreed to back the legislation.

Does anyone know what the complaints about the bill are, and more importantly, what alternatives are being sought? Said another way, does anyone have any idea what would constitute a bi-partisan compromise?
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Old 04-15-2010, 06:41 AM   #152
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Said another way, does anyone have any idea what would constitute a bi-partisan compromise?
Bi-partisanship- coming in November to a polling place near you...
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Old 04-15-2010, 07:08 AM   #153
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Does anyone know what the complaints about the bill are, and more importantly, what alternatives are being sought? Said another way, does anyone have any idea what would constitute a bi-partisan compromise?
Sure, Mitch McConnell has been clear about that. He believes nothing will work until big banks are allowed to fail. He says the bills would provide for perpetual bail outs. Of course the bills do that by requiring the institutions to front money (a la FDIC) to deal with potential crisis. And then they require that crisis causing banks actually be allowed to fail and be taken over with the stockholders screwed and the managers fired before the funds collected are used to address the crisis if needed. I don't know of any alternatives but I assume there are some.
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Old 04-15-2010, 07:21 AM   #154
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So we have both a House and a Senate financial reform bill. Black and white proposals. So far not a single Republican Senator has agreed to back the legislation.

Does anyone know what the complaints about the bill are, and more importantly, what alternatives are being sought? Said another way, does anyone have any idea what would constitute a bi-partisan compromise?
If a measure has Obama's footprint on it, then the other side is against it, unless the measure deals with Iraq or Afghanistan where the prior Administration was all over that. I'm partially joking but half serious about that -- it certainly feels that way when you get this: Senate rejects plan to create commission on federal deficit - washingtonpost.com

Republican Senator Corker was on GMA this morning, and part of the current angst against the Bill by the Republican leadership, centers on specific points that he personally negotiated with Democratic Senators Warner and Dodd -- the Consumer Financial Protection Agency and additional regulatory ovesight over derivatives (the WMDs of arcane financial products according to Warren Buffett). Corker said that it would take 5 minutes to resolve the issues and that he would be "stunned" if a bi-partisian Bill didn't get enacted.

On PBS's NewsHour last night, it was reported that the major issue from the Republican side is that the Bill is a "bail-out bill" and doesn't adequately deal with too-big-to-fail. Having navigated a bit in the too-big-to-fail waters a bit myself, I find this almost a laughable criticism of the Bill. From what I'm hearing, the current criticism is that the Bill ensures future tax-payer bail-outs by creating a industry financed fund, by creating systemic resolution authority and by somehow signaling to creditors that the implicit guarantee of the US stands behind certain companies that would now be taxed and regulated additionally.
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Old 04-15-2010, 10:02 AM   #155
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On PBS's NewsHour last night, it was reported that the major issue from the Republican side is that the Bill is a "bail-out bill" and doesn't adequately deal with too-big-to-fail. Having navigated a bit in the too-big-to-fail waters a bit myself, I find this almost a laughable criticism of the Bill. From what I'm hearing, the current criticism is that the Bill ensures future tax-payer bail-outs by creating a industry financed fund, by creating systemic resolution authority and by somehow signaling to creditors that the implicit guarantee of the US stands behind certain companies that would now be taxed and regulated additionally.
Sounds like FDIC for investment banks. I would submit that this fails to address "too big to fail" if the industry-financed fund doesn't collect enough to remain secure when major investment banks melt down. For example, would the taxpayers be on the hook to "make them whole" if the fund ran out of money?

Also -- is the "premium" paid into the fund a function of the amount of risky behavior the bank is engaging in? If it's not, you'll have the responsible, conservatively managed entities subsidizing the recklessness of the others. Banks that made few risky loans and maintained very solid reserves shouldn't have to pay as much as those playing fast and loose, just as "good drivers" shouldn't pay as much for auto insurance as someone with a couple tickets and a DUI on their record. I think a LOT of people are tired of seeing reckless behavior subsidized by those engaging in responsible behavior over the last couple years.

Other than those specific concerns, I think it's a pretty good idea. I would like to hear that these two issues are addressed, though.
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Old 04-15-2010, 10:17 AM   #156
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Sounds like FDIC for investment banks. I would submit that this fails to address "too big to fail" if the industry-financed fund doesn't collect enough to remain secure when major investment banks melt down. For example, would the taxpayers be on the hook to "make them whole" if the fund ran out of money?

Also -- is the "premium" paid into the fund a function of the amount of risky behavior the bank is engaging in? If it's not, you'll have the responsible, conservatively managed entities subsidizing the recklessness of the others. Banks that made few risky loans and maintained very solid reserves shouldn't have to pay as much as those playing fast and loose, just as "good drivers" shouldn't pay as much for auto insurance as someone with a couple tickets and a DUI on their record. I think a LOT of people are tired of seeing reckless behavior subsidized by those engaging in responsible behavior over the last couple years.

Other than those specific concerns, I think it's a pretty good idea. I would like to hear that these two issues are addressed, though.
Those are valid concerns but if the institutions are required to go bankrupt and stockholders and managers lose before the "bail out" takes place there will be a substantial incentive to be cautious.
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Old 04-15-2010, 02:27 PM   #157
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I've addressed the substance of the criticism about "bail outs" at length in previous posts. It is a nice talking point to say that you're "against bailouts" but it is a far harder thing to come up with an effective and realistic policy to prevent them. I guess what I'd like to know is what is the specific policy that Republicans are advocating in the absence of the current legislation? What would make them happy? What would they do if they controlled the government?
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Old 04-15-2010, 04:47 PM   #158
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Sounds like FDIC for investment banks. I would submit that this fails to address "too big to fail" if the industry-financed fund doesn't collect enough to remain secure when major investment banks melt down. For example, would the taxpayers be on the hook to "make them whole" if the fund ran out of money?

Also -- is the "premium" paid into the fund a function of the amount of risky behavior the bank is engaging in? If it's not, you'll have the responsible, conservatively managed entities subsidizing the recklessness of the others. Banks that made few risky loans and maintained very solid reserves shouldn't have to pay as much as those playing fast and loose, just as "good drivers" shouldn't pay as much for auto insurance as someone with a couple tickets and a DUI on their record. I think a LOT of people are tired of seeing reckless behavior subsidized by those engaging in responsible behavior over the last couple years.

Other than those specific concerns, I think it's a pretty good idea. I would like to hear that these two issues are addressed, though.
It's does address the issue, if you concede as many, including Paul Volker, that there are a few "outliers" that are simply too important to fail that must be resolved slowly and carefully in a controlled resolution setting -- and not through the current, ill-suited mechanism of Bankruptcy liquidation proceedings. Op-Ed Contributor - How to Reform Our Financial System - NYTimes.com

This is essentially the same model currently used by the FDIC, where taxpayers are always potentially on the hook for federally insured banks, if the FDIC Fund runs out of money.

Taxpayers will always potentially be on the hook for too big to fail outliers, but the key is to prevent the outliers from getting to the stage where the industry-financed fund could be exhausted; this can occur by increasing capitalization and leverage requirements and increased supervision. I think the WAMU case is a good example, a $307 billion institution "resolved" by the FDIC by a negotiated sale with JP Morgan Chase, with WAMU shareholders and unsecured bondholders wiped out.

Regarding premium, there are well-worn risk-based premium and capital requirements that international bank supervisors, Central Banks, and international deposit insurers have used for several years now, including the FDIC.
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Old 04-15-2010, 04:59 PM   #159
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The USA has over ten times the GDP and 10 times the population of Canada. It is easier to manage a smaller economy than a larger one. California alone has a bigger GDP than Canada. It's not the same........

Your banks are probably better run, but I wonder if that would be the case if they had the VOLUME the US banks dealt with............
Maybe. But our banks are pretty big and sophisticated. The largest has a market cap of $85 billion (you pick the currency they are now equal), employs almost 100,000 people worldwide and about 20million customers worldwide. What kind of "volume' were you thinking about?
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Old 04-16-2010, 11:51 AM   #160
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