Goldman Sachs Gets Break on Derivatives Regulation


download (7)

 

Rather than delaying reform of derivatives for banks that are backed by federal deposit insurance (thus making the taxpayer liable for paying for investment banking risks), why not take away the commercial part of these investment banks?  Investment banks make the risky bets and investment banks should pay for their own risks without any help from taxpayer insurance.

Better yet, outlaw altogether all derivatives that are based on speculation!  The financial crisis of 2008 was directly a result of the use of toxic derivatives instruments called CDOs.

JPMorgan to BofA Get Delay on Rule Isolating Derivatives

JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. (GS) and Bank of America Corp. won a delay of Dodd-Frank Act requirements that they wall off some derivatives trades from bank units backed by federal deposit insurance.

Commercial banks including the Wall Street firms may get as long as an additional two years — until July 2015 — to comply with the rules, the Office of the Comptroller of the Currency said in a notice yesterday. The so-called pushout provision was included in the 2010 financial-regulation law as a way to limit taxpayer support for risky derivatives trades.

Enlarge image

JPMorgan & Chase Co.’s headquarters in New York. Photographer: Peter Foley/Bloomberg

Sponsored Links

Buy a link

The Commodity Futures Trading Commission and other regulators need to complete swap rules to allow “federal depository institutions to make well-informed determinations concerning business restructurings that may be necessary,” the OCC said in the notice. Dodd-Frank requires that equity, some commodity and non-cleared credit derivatives be moved into separate affiliates without federal assistance.

Regulators including Federal Reserve Chairman Ben S. Bernanke had opposed the provision, saying it would drive derivatives to less-regulated entities. In February, the House Financial Services Committee approved with bipartisan support legislation that would let banks keep commodity and equity derivatives in insured units by removing part of the rule.

The OCC is prepared to “consider favorably” requests for transition, the regulator said in the six-page notice. The agency said delays could be extended for a third year based on consultations with other regulators.

OCC Report

JPMorgan had 99 percent of its $72 trillion in notional swaps trades in its commercial bank in the third quarter of 2012, according to the OCC’s quarterly derivatives report. Bank of America had 68 percent of its $64 trillion in its commercial bank, according to the report.

Banks including Citigroup Inc. (C) will be given as long as two years beyond the July 16 deadline to move their swaps businesses, the OCC said. They must submit written requests describing how a transition period would reduce harmful effects on mortgage lending, job creation and capital formation. The requests, which must be submitted by Jan. 31, also must weigh how the transition period would affect insured depositors.

Other Regulators

The Federal Deposit Insurance Corp. expects to release rules or guidance in coordination with other regulators that apply to different types of banks, Andrew Gray, the agency’s spokesman, said today in an e-mail. None of the 65 firms that registered as swap dealers with the CFTC by the end of last year are directly overseen by the FDIC, Gray said.

The Federal Reserve has primary oversight of swap dealers that have registered with CFTC including Bank of New York Mellon Corp. and Goldman Sachs Bank USA. The pushout provision’s impact on uninsured U.S. branches and agencies of foreign banks is also unresolved by the OCC’s guidance and lack of guidance from the FDIC and the Fed.

The uninsured branches of foreign banks should be given the same treatment as U.S. insured depository banks, Sally Miller, CEO of the Institute of International Bankers, said in an e-mail today. “It is imperative that this disparity of treatment be addressed quickly,” said Miller, whose organization represents banks including Credit Suisse AG (CSGN) and Deutsche Bank AG.

Eric Kollig, a Fed spokesman, declined to comment on the Fed’s approach to the issue.

‘Pretty Amazing’

“The procrastination of both regulators and the banks on this portion of Dodd-Frank has been pretty amazing,” Marcus Stanley, policy director for Americans for Financial Reform, a coalition including the AFL-CIO labor federation, said yesterday in a telephone interview. “The swaps-pushout provision is a really important part and something that absolutely should be a central part of the regulatory framework.”

Blanche Lincoln, an Arkansas Democrat who led the Senate Agriculture Committee during talks leading to Dodd-Frank, sponsored the original provision in 2010. It applied to more more types of derivatives before it was scaled back amid objections from Bernanke and former FDIC Chairman Sheila Bair.

“I never myself thought it made a great deal of sense,” Barney Frank, the Massachusetts Democrat who helped draft the Dodd-Frank law and whose last day in Congress was yesterday, said on Feb. 16 when he backed changes to the pushout provision.

Ken Bentsen, executive vice president of public policy and advocacy at the Securities Industry and Financial Markets Association, said Congress should still seek changes.

“We continue to believe that the underlying swaps push out provision is bad policy,” Bentsen said yesterday in an e-mail, noting that regulators haven’t proposed how the provision would work. “Given this uncertainty, it is impractical to require compliance by July 2013,” he said.

To contact the reporter on this story: Silla Brush in Washington at sbrush@bloomberg.net

via Goldman Sachs: Information, Comments, Opinions and Facts: Goldman Sachs Gets Break on Derivatives Regulation.

via Goldman Sachs: Information, Comments, Opinions and Facts: Goldman Sachs Gets Break on Derivatives Regulation.

Advertisements

About Old Boy

Love the past and the future but live in the present

Posted on March 3, 2013, in buisiness, Government, USA, Wealth and tagged , , , , , , , , . Bookmark the permalink. 3 Comments.

  1. I was suggested this blog through my cousin. I’m now not sure whether or not this post is written by means of him as no one else realize such distinct about my difficulty. You are wonderful! Thanks!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

The Comic Vault

Unlock your inner geek and step inside!

sandsoftime10

A peep into Megha's mind

Education Motivation Inspiration

Warm welcome! This is more than an exploration. Discovery of new ideas and new ways of being.

EXPLORING FOR KNOWLEDGE.

REASONING IS THE FOUNDATION.

Perfect-Style-Knower

"Vulgarity is born in the perverse gaze of one who judges it so!"

THE BOOKS THAT TIME FORGOT.

Reviewing books that time has passed by.

Peach6972's Re🤗Blog🥀

lonly n depress😢🐘make my day 🌷⚘

outofwak (artworldwar)

we are all empty circles, through which the creative power of the universe passes through, whether we like it or not..

Why'd Multiple Sclerosis pick me

My Life with Multiple SCLEROSIS

Windows on Worlds

Because you speak to me in words and I look at you with feelings

Crackdown Review

A place to search something like movie, anime, novel, manga, etc. reviews

Dave's Corner of the Universe

Where strange fact and stranger fiction collide

Trust and Believe in the Unseen

Live with Light of Faith

#FILMose

Crítica para quem gosta de Cinema.

Gaston Bessette, Photographie

La passion de la photo-Photographs as a passion

hands in the garden

short poems, for short attention spans.

Empowered

Everyday

Iain Kelly

Fiction Writing

The Müscleheaded Blog

"Nothing Exceeds Like Superfluous Jejunity "

After the Final Curtain

"People buy tickets to theatres, not movies." -- Marcus Loew

cracked rear viewer

Fresh takes on retro pop culture

indiescifi451.wordpress.com/

science fiction autopsy. movie reviews, books, quotes, posters. no trash. no bullshit.

Roadtirement

"Retired and traveling"

Thereisnocavalry

Creativity, ideas, art, literature, design, film, screenplays, poetry

The diary of a Blacksheep

#diary #love #life and other #twistedthings

Mystic Land

Let's mend the broken

HEALTHY LIFESTYLE

I CAN'T CONTROL EVERYTHING IN MY LIFE, BUT I CAN CONTROL WHAT I PUT IN MY BODY.😎🍓🍍🍇🍑🍐🍉🍈🍏🍊🍋🍅🍎🍌🍠🍢🍥

Saranya

Normal thoughts but unique view

David, earth planet , knopfler and a humble man

Amante libros, música y viajes A bookworm and lover of tunes and wayfarer

Web Dietitian

Debunking myths and uncovering the truth on food and nutrition by a Registered Dietitian

inpuntadipiedinaturalmente

dai rimedi naturali fatti in casa alla riflessologia

thepracticalhistorian

Your guide to practically true history.

MadhviMuses

Read Books, Chase Butterflies, Eat Breakfasts,Love Life!

La Rioja and the world seen from my guardaviñas

Sharing ideas. Photos, travels, music, History, stories,...

The Visualizer

Reinforcing creativity with tech

Manić Teodora

Jer ono u šta ljudi poveruju, to će vremenom i postati.❤ Because in what people belive, that's who they will become as the time passes by. ❤

Ultimatetravel

I haven’t been everywhere, but it’s on my list.

Yes, I Know

The movies wouldn't lie to me... would they?

%d bloggers like this: