Journalism in the Public Interest

From Dodd-Frank to Dud: How Financial Reform May Be Going Wrong

Some fear the grandest ambitions of the law passed last year to reform the nation’s financial system are being undermined in the rule-making process.


President Barack Obama signs the Dodd-Frank Wall Street Reform and Consumer Protection Act alongside members of Congress and his administration in Washington, D.C., on July 21, 2010. (Rod Lamkey Jr/AFP/Getty Images)

Early last year, as they weighed whether to bar banks from speculative trading with their own money, congressional staffers turned to a key regulator for advice.

The response from Julie Williams, the chief counsel of the Office of the Comptroller of the Currency, was startling, according to people familiar with the conversations. Williams insisted new rules were unnecessary since this type of trading did not play a major role in the financial meltdown.

Congressional Democrats went ahead and wrote the trading prohibition into Dodd-Frank, the sweeping overhaul of the nation's financial rules pushed through last July.

But now, behind closed doors, financial agency powerbrokers are jockeying over how to implement the law, a process turning out to be as bitterly contentious and politicized as passing Dodd-Frank in the first place.

Government officials -- including Williams and the OCC -- are inserting exemptions as they formulate rules to enforce the law. Some regulators, facing severe budget constraints, caution that they may not be able to carry out some of its key provisions. Foes of the law in Congress, and even some former friends, are voicing concern that aspects of the law could erode American competitiveness. Wall Street is mounting a determined lobbying campaign to blunt provisions it failed to defeat on the floors of the House and Senate.

To some, the emerging roadblocks reinforce a fear that Dodd-Frank, which was intended to touch on almost every aspect of the American financial system, may never provide the sweeping reform it promised.

"It was doomed at the outset and nothing can possibly salvage it. We might even have been better off without it," said Arthur Levitt, a former chairman of the Securities and Exchange Commission.

Dodd-Frank is so sprawling -- the legislation runs to more than 2,000 pages -- that the law firm Morrison & Foerster dubbed the tracker it created to monitor the implementation process "FrankNDodd."

The law laid out principles but often left it to regulators to write the actual rules. Those would be the same regulatory agencies that failed to prevent the financial crisis and that, in some cases, view the banks they oversee, not taxpayers, as their primary constituents.

Dodd-Frank requires 387 different rules from 20 different regulatory agencies. The Byzantine, tedious rulemaking process has occasionally pitted regulator against regulator and proved a bonanza for lobbyists.

"The decisions that are coming down are not promising," said Ted Kaufman, the former Democratic senator from Delaware who worked on the legislation. "The regulators are not making the hard decisions. If the Congress would not make the hard decisions, how can you expect the regulators to make them?"

Regulatory agencies also are caught between Republicans who complain they are moving too fast and Democrats who urge them to comply with the deadlines set in the law.

Congress set aggressive deadlines for regulators to make rules to enforce the law, and, unsurprisingly, they are failing to meet them. The agencies missed each of the 26 deadlines they were supposed to meet for April. So far, regulators have finalized 24 rules and missed deadlines on 28, according to the law firm Davis Polk.

Treasury officials are sanguine about the delays. "If we have to sacrifice a little bit of time to get to the right answer, that's the right thing to do," said Mary Miller, the assistant secretary for financial markets.

The law's defenders say most aspects of the implementation process are going well. Among the successes they point to: The Consumer Financial Protection Bureau, a new agency created to protect consumers from dangerous financial instruments they don't understand, is coming together, though the Obama administration has yet to appoint a person to head the agency. Rules have been agreed upon for portions of Dodd-Frank that give shareholders a say on executive pay, register municipal advisers and create a program to reward whistle-blowers.

"The first set of rules are going to be good ones," said the law's namesake, Rep. Barney Frank, D-Mass. "These regulators are on the right side."

Still, while the process is far from complete, the early signs suggest that several of Dodd-Frank's most critical elements are in danger, an outcome that could increase the chances of another financial crisis.

"I am concerned that we are not putting in place the things that we need to do to prevent this from happening again," says Kaufman.

Here are a few areas where followers of the process see the most cause for concern:

The Volcker Rule

What Dodd-Frank does: Colloquially named after Paul Volcker, the former head of the Federal Reserve who championed it, the rule bars banks from an activity known on the Street as "proprietary trading" -- making investments on their own behalf, rather than for clients.

The reason for the rule: During the credit bubble, highly leveraged investment banks speculated heavily in mortgage-backed securities. When those securities went bad, banks like Merrill Lynch and Citigroup were crippled. A report by the United States Senate Permanent Subcommittee on Investigations detailed how proprietary trading "led to dramatic losses in the case of Deutsche Bank and undisclosed conflicts of interest in the case of Goldman Sachs."

To comply with the law, Morgan Stanley and Goldman Sachs and other banks have jettisoned their internal hedge funds and private equity firms.

Stumbling blocks: Regulators are haggling about complicated, but vitally important, definitions.

The OCC is pushing for banks to have wider latitude in making trades to balance and manage their assets and liabilities. Dodd-Frank specifies Treasury securities as suitable for this purpose; the OCC has suggested in private negotiating sessions with fellow regulators that banks be allowed to invest in other securities as well, according to people familiar with the talks.

As currently written, the Volcker rule allows banks to trade in securities for existing clients but blocks them from doing so for future clients. The OCC has advocated lifting that restriction in the negotiating sessions, according to people familiar with the conversations.

Critics fear that adding the provisions sought by the OCC would mean banks could make almost any trade and claim an exemption, rendering the rule meaningless.

Last year, Volcker himself reached out to Acting Comptroller of the Currency John Walsh to express worry that Julie Williams, the agency counsel, was trying to weaken the rule. Walsh took umbrage at the suggestion, according to a person familiar with the conversation.

Julie Williams, chief counsel of the OCC (Photo courtesy of the OCC)Frank said he and other lawmakers were so concerned about Williams, who has held her position since 1994 and has served as the acting comptroller twice, that they inserted a provision in the financial reform legislation that strips her job of civil-service status. "I disagree with her very strongly," Frank said.

The provision was stripped out in the bill's conference committee.

OCC officials would not comment specifically about the agency's efforts in regard to the Volcker rule. The agency didn't respond to detailed questions about Williams' role and declined to make her available.

"We're working on an interagency basis to implement the Dodd-Frank Act in a way that is faithful to congressional intent," an OCC spokesman said. "It would not be appropriate to discuss confidential interagency deliberations regarding the formulation of pending rulemaking."


What Dodd-Frank does: Aiming to remake this multitrillion-dollar shadow arena into a transparent, regulated market, the law calls for most derivatives to be traded on exchanges.

Reason for the rules: Congress had prevented regulation of derivatives, which involve side bets on anything from currencies to commodities to corporate bonds, which exacerbated the losses at AIG and other banks during the financial crisis.

Stumbling blocks: Bringing order to the unregulated derivatives market has turned into one of the most difficult challenges in Dodd-Frank implementation. The rulemaking process has sparked a barrage of opposition, even from previously supportive legislators.

In late April, the Treasury Department proposed that some foreign exchange derivatives be exempted from the requirement that derivatives trade on exchanges. This could allow many transactions in the derivatives market to remain out of easy sight of participants, possibly encouraging banks to structure noncurrency trades to fit the definition of a foreign exchange swap in order to qualify for the exemption.

Treasury Department officials defend the exemption, which isn't final. "Just to say everything should be painted with the same brush is not effective," said Miller, the assistant secretary for financial markets. This part of the market "worked very well through the financial crisis."

On May 17, New York lawmakers -- including Democratic Sens. Charles Schumer and Kirsten Gillibrand, who voted for the original law -- wrote a letter to regulators and the Federal Reserve warning that aspects of the new derivatives rules impose "significant competitive disadvantages" on U.S. banks.

Another area where regulators have lagged is in the creation of data repositories mandated by the law. These repositories are supposed to make the industry less opaque to regulators and, thus, easier to oversee.

Though Dodd-Frank requires that most derivatives trade on exchanges there is an exception: Trades can also be conducted on another platform, known as a "Swap Execution Facility." Watchdogs worry that such facilities wouldn't make information on the prices at which some investors were offering to buy and sell, known as bids and offers, available to all participants. Nevertheless, the Securities and Exchange Commission has issued an initial rule, subject to finalization, that such facilities can conduct derivatives trades if they have the capacity to show participants that information, not that they do so.

"It seems like some of the regulators accepted the argument from many market participants that they should be able to continue business as usual," said Heather Slavkin, the senior legal and policy adviser for the AFL-CIO's Office of Investment. Some regulators have said that they "don't want to disrupt current market practice -- but hold on a second. The purpose of Dodd-Frank was to change market practices."

Credit Rating Agencies

What Dodd-Frank does: Creates a new regulatory structure to oversee credit ratings agencies.

Reason for the rule: Credit rating agencies were compromised by their relationships with their paying customers -- investment banks -- and issued unduly optimistic ratings on mortgage-backed securities. When the ratings proved erroneous, investors who had relied on them suffered billions of dollars in losses.

Stumbling blocks: The SEC has yet to fully staff a new office to oversee credit rating agencies. Instead, for budgetary reasons, it has opted to add personnel to existing offices to perform examinations on the rating agencies.

The SEC has created a special part of its website just to list elements of Dodd-Frank that "were deferred due to budget uncertainty, and are currently being reassessed in light of the [Fiscal Year] 2011 budget."

The SEC also has indefinitely tabled a provision that holds credit rating agencies legally liable for their ratings if they are included in securities offering documents.

The full credit rating agency reform envisioned under Dodd-Frank is turning out to be difficult to put into practice. Credit ratings have been hardwired into legislation governing everything from pension funds to municipal bonds. The law calls for more disclosure on how ratings are created, stricter supervision of the agencies by regulators and the scrubbing of legislation or rules that mandate them. But credit ratings are integral to so many investment products that it may take some time to strip from applicable laws the requirement that they be used and find suitable replacements. "[Congress] should have done the work on the front end," says Barbara Roper, director of investor protection for the Consumer Federation of America.

Resolution Authority

What Dodd-Frank does: Gives regulators the power to seize and unwind "too big to fail" financial institutions that are on the brink of failure.

Reason for the rule: Regulators hope to avoid another economically disruptive situation like the collapse of Lehman Brothers, where government officials contend their only option was to put the company into bankruptcy.

Stumbling blocks: Some wonder if Congress ordered regulators to do more than they could feasibly and legally accomplish.

Take Citigroup. It has more than 260,000 employees, operations in 160 countries and jurisdictions, over 200 million clients, and more than 170 subsidiaries worldwide. It's the poster child for the classic "too big to fail" institution. Unwinding a company the size and complexity of Citigroup in a way that preserves value and does not harm the economy may well be impossible.

"How do you put together resolution authority for these banks that have $2 trillion in assets? How do you do it across country lines?" Kaufman said.

Frank and Treasury Department officials acknowledge the potential difficulty in successfully winding down these huge institutions, but they argue that there is no other alternative.

"It's not easy, but it's not optional," Miller said.

Correction (6/8): This story incorrectly stated that the Dodd-Frank law had stripped the position of chief counsel at the Office of the Comptroller of the Currency of its civil service status protection, based on erroneous information provided by Rep. Barney Frank. The provision was included in the House bill, but was excluded in the final version of the law.

After reading this analysis banks are not being required to go back to being conservative boring banks but will continue to gamble with OPM and be traders not bankers. Taxpayers will need to hold our collective ankles again when the “too big to fail banks” come back for a second round of bailouts and rest assured we will once again be asked to “honor” their pre-arranged bonus pools. Someone needs to inform Ms. Williams that she works for the betterment and protection of the US people and not banks in spite of their super citizen status granted recently by SCOTUS otherwise she can exit and go work for these banks she so willingly protects.

what a surprise. i am shocked, shocked that such a thing could happen.

Too bad our regulators are still looking out for the interests of those they oversee.

It would be interesting to have a follow-up after the Dodd-Frank rules and regs have been implemented and a year or so later to discover how many senior and mid-level regulators have gone onto Citi, DB, GS, MS, etc.

Most liberal economists had suggested that if it is too big to fail it is too big to exist.  I agreed with them then and still do. Too bad our Congress and President doesn’t also agree.  It is a national security concern of higher importance than Al-Queda.

The Grim Reaper

June 3, 2011, 12:50 p.m.

Anyone who understands Washington knows the Dodd-Frank Bill was not reform but instead bribery that allowed corrupt Wall Street to further rig the rules of the game in their favor. 

Washington is a cesspool of the best moral opacity that money can buy.  The United States political process is as corrupted by money as any I can imagine.  Our democracy has been so subverted that nothing a politician says or does can be trusted to be anything other than motive for greed and personal gain.  We need an extra-judicial Nuremberg set of trials to investigate and try American politicians for High Crimes and Misdemeanors or Treason.  For selling out our country.  And to then restore our democratic self-rule to the people and buttress our restoration of the rule of law. 

There is no doubt a special place in hell for politicians.

I now understand this legislation even less!!!!!!

NOTHING HAS CHANGED.  The Wall Street/Banksters/Government CASINO is alive and well, with the idiots in power greasing palms, taking bribes, and rolling in our money…while we keep pitching our tents…thanks so much, Obama Mobsters…

Please go to livinglies(dot)wordpress(dot)com for the TRUTH…and don’t let them STEAL YOUR HOUSE.

@ Pete Hockley:

PLEASE see the Academy Award winning Documentary movie “INSIDE JOB”——TWICE—-THEN you will understand the depths of the DEPRAVITY of our wonderful government…

George B. Hug

June 3, 2011, 1:42 p.m.

Why even have a Congress if the laws that they pass are not obeyed or completely circumvented? Congress has become totally irrelevant because the entire corporate political system has been bought and paid for by the ruling class. The congressional charade merely showcases their complicity in the subversion of our democracy.

The criminality has so corrupted the system that soon no one will be obeying any laws. This economic anarchy of the Kleptocrats has infected the social contract to the extent that the trust of all civil institutions has been severely eroded, and can only lead to the complete breakdown of law & order.

I could not agree more with the authors contention that…

“We need an extra-judicial Nuremberg set of trials to investigate and try American politicians for High Crimes and Misdemeanors or Treason.”

and then bring on the Guillotines.

I’m not a religious person but “Lord help the person on main street”.

This is an expose about the corrupt elite in Washington. Business as usual.

Nothing left for main street but an old fashioned revolt.

The real question to ask is: “Why would any reasonable person expect anything different?”  All govts end up being nothing more than facilitators for concentrated wealth.  That’s confirmed in the historical record.  No matter how pure the original intent, no matter how many safeguards are built in, eventually the ethically challenged, the greedy and self-motivated rise to power at the expense of everyone else.  It is my belief that not long after this happens one of two things will occur.  Either a messy and protracted, multinational war breaks out or the society crumbles from inner rot and decay.  Any bets?

We will, and are, rot from within and war will occur.

Dick Brandlon

June 3, 2011, 5:29 p.m.

I don’t see why there is the least bit of surprise here. Any efforts to reform or weaken banks, oil, insurance, pharmaceutical or almost any large corporate entity will not pass. Why? Because voting for any kind of reigns on the corporate power structure by Congress is a conflict of interest.

The Grim Reaper

June 3, 2011, 6:30 p.m.

The elites have recreated many of the dynamics which led to World War’s I and II to some of the comments above.  In fact, there was a mass desertion in the French army during WWI as the average man realized it was a war of interests served by oligarchs and elites.  French officers ended up threatening to kill deserters to stop an entire meltdown that at one time purportedly included tens of thousands of men.  Ditto with WWII where American corporate and banking interests helped the Nazis rebuild Germany by investing heavily in the ravaged economy.  That is, until the Nazis started nationalizing economic interests and started the march of war.  And today, American bankers and corporations invest heavily in a communist country that too holds none of our democratic ideals.  What happens if China turns belligerent?  Our best hope to avoid future conflict may be the enlightenment of society that refuses to fight the wars of a corrupt elite.  I could easily envision a future America where the foot soldier refuses to fight the wars that are a result of massive fraud and corruption.

Bank Investor

June 3, 2011, 7:24 p.m.

I hope Dodd-Frank is scrapped. It puts America at a competitive disadvantage and is essentially a drain on America’s taxpayers. Blind liberals fail to see that additional regulation means additional costs, both to the corporation AND to the taxpayer. Regulation will ultimately hinder growth and turn America into a third world nation.

America is already a third-world nation precisely because Glass-Steagall was scrapped and we are now unregulated.

DF Compliance Person

June 3, 2011, 10:44 p.m.

I’m working on implementing Dodd-Frank Title VII at a large financial institution. 

I can’t speak to the other parts of Dodd-Frank, but as far as derivatives go, this article is quite slanted.  The CFTC (which is a new regulator of many derivatives) has charged out of the gate and issued a truckload of proposed regulations (see here:  The CFTC will miss a bunch of its statutory deadlines, but not because of regulatory capture, but because there is so much that has to be done that it can’t get it all done in time.  I think the CFTC is slowing down a little bit because it has realized that in certain areas it needs to understand how the market works better (the CFTC hasn’t previously worked in this industry) to make sure it doesn’t make any mistakes. 

The three criticisms of Dodd-Frank are dubious, at best.

First, FX.  The FX market performed fine during the financial crisis.  The problem wasn’t with FX, but with other forms of derivatives (namely CDS).  And, the Treasury’s exemption only applies to mandatory clearing, not the other parts of Dodd-Frank and it only applies to trades that involve delivery of hard currency, so there’s no room for speculation to go unaffected.  In fact, there is a sophisticated system for ensuring settlement (CLS Bank) in FX already, which means it is already even lower-risk.

Second, data repositories.  While the rulemaking is delayed, it is widely expected that a large number of vendors, from middleware to trade capture systems to clearinghouses or clearing agents, will provide reporting capability.  This will happen, it’s just a matter of figuring out who will do the work. 

Third, SEFs.  SEFs will come into play (there is a long line of companies getting ready to unveil their offerings), so electronic trading will grow dramatically as a result of Dodd-Frank. The specifics of how they work is arguably not important, though, because telephone or instant-message based execution didn’t cause the financial crisis.

The best remedies, from a derivatives point of view, of the financial crisis would be clearing of derivative trades and expanded margining.  Clearing is happening in a big way.  The clearinghouses are all competing for market share and are expanding their product set and that will (by law) increase the number of derivative trades that are cleared. 

For margining, the regulators have proposed very onerous (arguably significantly anti-competitive, because they are making it more expensive for small commercial companies to manage their risks) regulations. 

Just my two cents.

anthony greene

June 4, 2011, 1:14 a.m.

Liberalism continues to be bane on the advancement of fiscal fidelity.

Labor is nothing more then a commodity, to be bought and sold like pork bellies and corn.
Pork bellies do not have the right to unionize, or collect entitlements. Labor exists only to enrich the entitled classes.

James B Storer

June 4, 2011, 12:25 p.m.

This is a fine ProPublica report that delves nicely into the current predicament concerning this sordid matter.  We all feel great empathy for the comments of those suffering almost unbelievable illegal financial loss.  The several comments of Will Harper and The Grim Reaper sketch, in straightforward manner, the financial dealings culminating in WW1 and WW11 that are mirrored in today’s situation.  These truths, of course, are not well taught in school (regardless who runs the system), as the victor writes the history, right or wrong.
  Their comments point up the ultimate truth that ignorance, apathy, and denial regarding our past results in our past rearing up and biting us in the butt.  The condition today is worse, as the Supreme Court has pretty well replaced the legislature, presidency, and our Constitution with corporatism.  Thinking internationally, we seem to be deliberately placing ourselves, financially, into third “world” status.
Skartishu, Granby MO



from livinglies(dot)wordpress(dot)com site (by Neil Garfield):


“...the asset on the books of the securitizers related to mortgage “interests” is an illusion. And the failure of the auditors to make a statement regarding the questionable nature of these assets is actionable. But more importantly, the assets claimed on the securitizers balance sheets constitutes a large portion of their total assets. Wipe those out and the bank is suddenly smaller and out of compliance with the reserve requirements of the Federal Reserve and any other agency regulating the activities of a lending institution. Unless they suddenly repatriate the hidden fees from the mortgage meltdown which I estimate to be around $2 trillion, the bank is in the state of undeclared failure. And if they do repatriate the money all at once, they will have a lot of questions to answer including why they needed a bailout…”


@anthony greene-“fiscal fidelity” nor Liberalism has anything to do with having to accept the theft of property.
@James B. Storer-Please continue to reflect on these troubling issues. I find your views to be impartial and somewhat of a lesson of history.
@carie-Keep posting articles etc. People will hopefully read and make their own decisions.May God bless all!

Simple.No FDIC for banks who also gamble with the depositors the casino they created by buying the Congress of the US.

And may I also say:

YOUR HOUSE “LOAN” IS UNSECURED DEBT—-AS A RESULT OF THE “MORTGAGE-BASED” SECURITIES FRAUD…a “servicer” is trying to steal your house with no TRUE, LEGAL proof of ownership…

I kid you not—-start doing your own detective work…‘cause it ‘aint gonna be on the 6 o’clock News…

GOOGLE: Brian Davies verses Deutsche Bank from California Court.  READ THE DOCUMENTS.

The truth shall set you free…

@ Grim Reaper, the sole remaining prosecutor of Nuremberg trials has spent years writing , lecturing around the world about the need for this
The US will not agree to it, (against any American) even though it has created it & has used it in other countries .See

We are repeating history again. Two hundred years ago 1811, our founders battled the banks just as we battle them today

The history of mankind has been and continues to be afflicted by three scourges; lustful conquerers, priestly aristocracies and, the money powers. 

“The most insidious and most dangerous form of power that has yet appeared to threaten the material well-being of the race; which now holds every civilized and semi-civilized people in its merciless grasp; which is appropriating to itself the productive energies of the world; which is subordinating the press, the pulpit, and the statesmen of the day to its ambitious ends; which openly boasts of its nefarious methods in the courts, legislatures, and other parliamentary bodies of nations, is the modern money power.

One of the first measures enacted by Congress following ther Revolutionary War, which received the aid and sanction of Hamilton was the act of Congress adopted February 25, 1791, chartering the Bank of the United States.

This bank, therefore, was a monopoly sustained by the credit and the revenues of the United States. It had the solo power of issuing legal tender paper money, and its actual capital was trebled in its earning capacity by loaning its circulating notes at interest, and by having the control of the government revenues.

This was the first appearance of an ORGANIZED MONEY POWER in the United States.

In 1811, Congress refused to re-charter the bank, and as it had during its brief career obtained the mastery over the entire business of the country by its loans of circulating notes and the public revenues, and had built up a system of credit in the commercial centers, to intimidate Congress and the people, it made a concerted contraction of the currency and brought on the great panic of 18ll.

United States Senator Benton, in a speech in the senate during the administration of Jackson, thus graphically states the manner in which the bank contrived to manufacture public sentiment in its favor. He says: -

“All the machinery of alarm and distress was in as full activity at that time as at present, and with the same identical effects- town meetings, memorials, resolutions, deputations to congress, alarming speeches in congress. The price of all property was shown to be depressed. Hemp sunk in Philadelphia from $350 to $250 per ton; flour sunk from $ll.00 per barrel to $7.75; all real estate fell thirty per cent.; five hundred houses were suspended in their erection; the rent of money rose to one and a half per month on the best paper; confidence destroyed; manufactories stopped; workmen dismissed and the ruin of the country confidently predicted.” 

In 1812 occurred the second war with England, and the bank threw its whole influence against the United States during that great struggle.

During the continuance of this war, the United States issued its treasury notes with full legal tender power, and they were gladly received by the people.

Albert Gallatin, for twelve years Secretary of the Treasury, and one of the ablest statesmen of the day, thus bears valuable testimony to the efficiency of government paper money in carrying the United States through that war. He says: -

“The paper money carried the United States through the most arduous and perilous stages of the war, and though operating as a most unequal tax, it cannot be denied that it saved the country.”

In a letter to John Tyler, May 28, 1816, Jefferson says:-

“The system of banking we have both equally and ever reprobated. I contemplate it as a blot left in all our constitutions which, if not covered, will end in their destruction, which is already hit by the gamblers in corruption, and is sweeping away in its progress the fortunes and morals of our citizens. Funding I consider as limited rightfully to a redemption of the debt within the lives of a majority of the generation contracting it; every generation coming equally by the laws of the Creator of the world to the free possession of the earth He made for their subsistence unencumbered by their predecessors.

And I sincerely believe with you that banking institutions are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.”

In a letter of March 2, 1815, written by Jefferson to the celebrated French author, Say, he said: -

“The government is now issuing treasury notes for circulation, bottomed on solid funds and bearing interest. The banking confederacy and the merchants bound to them by their debts will endeavor to crush the credit of these notes; but the country is eager for them as something they can trust to, and so soon as a convenient quantity of them can get into circulation the bank notes die.”“

History of Banking Fraud: The Coming Battle By M. W. WALBERT

William J McKibbin

June 5, 2011, 8:16 a.m.

The US is being overrun by “too big to fail” banks, unionized Federal and state workers, and the automobile industries—are any of these industries the future (?)—I doubt it—herein likes the paradox of the US economy—past or future…

the law is doing exactly what it was intended to do. have so many loop holes, and regulations that would be decided later that it could be watered down and the parties could declare victory while doing nothing. the real fault lies at the hands of obama who has worked against real reform all along and hasn’t used the bully pulpit to draw attention to what is going on behind closed doors

Robert, thanks for the history lesson. Not sure who said it but it is a reminder that “history repeats itself”.

As the power brokers move us ever closer to the “new world order” as Presidents have used in their speeches, as quoted “things are not looking up”.

I honestly believe the only way to fix, change the course, is a good old American revolution. It, revolution, will happen unless there is global war that beats the populace in acting. If a global war is avoided I would be honored to see the American people rise and demand change. While I disagree some of the Tea Party’s recent actions at least they are trying. Of course now they have been infiltrated by the power elite.


Sorry, here,s the author and the entire article can be found here,

M. W. WALBERT,  1899

The response from Julie Williams, the chief counsel of the Office of the Comptroller of the Currency, was startling, according to people familiar with the conversations. Williams insisted new rules were unnecessary since this type of trading did not play a major role in the financial meltdown.

Elliot Spitzer opposed her views back in 2008 when he wrote,
“Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

Throughout our battles with the OCC and the banks, the mantra of the banks and their defenders was that efforts to curb predatory lending would deny access to credit to the very consumers the states were trying to protect.

But the curbs we sought on predatory and unfair lending would have in no way jeopardized access to the legitimate credit market for appropriately priced loans. Instead, they would have stopped the scourge of predatory lending practices that have resulted in countless thousands of consumers losing their homes and put our economy in a precarious position.”

Williams, a Clinton Administration lawyer, needs to have a heart to heart with Elizabeth Warren.

I look to what is going on in the Middle East for inspiration.  The American middle class is still desperately clinging to hope that things will get better, but as noted here, the real cause of our problems is rampant corporatism which remains firmly in control of our government and moves its capital around the world at will.

The comments echo what George Carlin tried to warn us of…
“Who Really Controls America”

This article, unusually, did not go far enough.  The Frank-Dodd Bill, as passed, contained numerous exemptions for the so-called “Volcker Rule” and derivatives trading, some of which were broached in this article.  The derivatives reform is a complete joke, as Congress saw fit to place 101 ways to exempt derivatives trades if the trade was done on account of an “end-user”.  This exemption was placed in, purportedly, because of the grumblings of airlines and commodities producers, who take on derivatives swaps trades to ensure a stable price for the commodity they will produce or purchase.  However, the Frank-Dodd Bill allows Goldman and Company to continue to engage in these trades as long as the commodity or derivative being bought has an “end-user” on one side of the trade.  This very spurious definition allows for Goldman and Company to do an end-run around prohibited trading by simply removing their trades by one: do a derivative on the derivative. 

Of course, this was the central problem with the Financial Collapse.  The Frank-Dodd bill could have been all of three pages: 1) all derivatives to be subject to the Securities and Exchange Acts and required to be registered, 2) no proprietary trading allowed for Commercial Retail Banks or Bank Holding Companies who have access to the Fed window, and 3) reinstatement of the Glass-Stegall Act.  I would personally like to see a 4) no investment banks are allowed to have their stock traded publicly, but that may not be possible.  Even as we speak, Goldman and Company are using the Fed’s 0% interest to move their losses form their balance sheets to the US Taxpayer’s balance sheet via borrowing from the Fed to buy up US Treasuries.

Finally, I take a great deal of issue with the comments at the end of the article, which seems to imply that “too big to fail” is “too big to unwind”.  But, of course, that is what we have anti-trust laws for, and, certainly, the way to unwind these institutions first would be to divest them of their monopoly power, then proceed to see what solvency is left.  Ultimately, antitrust regulation is the only thing that can prevent “too big to fail”.

Most of these changes are done with approval of many lobbyists are clever enough to formulate laws in such a way that they cannot be either implemented cleanly or something the industry can later fight upon.  First mistake by Obama was ask politicians without much experience to create it.  Instead it should have been Paul Volker or they should brought back Glass Stegall act which was very well known how it was operated.

Sam in Texas…........Excellent comments.  You’ve said it all in your one page 3-[4] point legislative directive.  Please post your comments on all of the critical thinking sites.

Larry Crawford

June 10, 2011, 4:58 p.m.


“‘How do you put together resolution authority for these banks that have $2 trillion in assets? How do you do it across country lines?” Kaufman said.’”

The “banks” acted treasonously. Why not consider sending the military in…

WHO REALLY OWNS YOUR “LOAN”, and to whom are you giving your money to…???

from livinglies(.)wordpress(.)com:

“So here is the current situation: Many if not not a majority of people who have passing knowledge of the housing crisis and the attendant credit crisis which has brought our economy to a crawl, assume that the mortgages were valid; they assume that somehow, as if my magic, the obligations, notes and mortgages are owned by pools that never received any documents of transfer, delivery, assignments or evidence of recording the instruments in the title records; they assume that the documents of transfer exist in recordable form when they don’t exist at all. They assume that the problem is fixable and just a paperwork mess when in fact there was NO DEAL, NO VALID NOTE and NO VALID MORTGAGE.
Investors advanced money on the premise that the mortgages already existed when they advanced the money. They were wrong. The investors assumed that the transfer documents existed. They were wrong. And they assumed that the law which requires the transfers be properly made and documented within 90 days would be followed. They were wrong. And most importantly, they assumed that they were buying valid performing loans when in fact the notes and mortgages describe a transaction that never took place and the real transaction went undocumented. Instead, the only documents for transfer are those involving loans that have been declared in default but which are not in default because the servicers are continuing to make payments to cover up the fraud at the inception of the false securitization scheme.
Thus the only thing the pools have are some documentation that was not and could not be accepted. The transfers are contrary to the two basic restrictions that one would expect in any such pooling arrangements: that the mortgages were valid and properly transferred and that they were transferred in a timely manner. By transferring improperly documented and non-performing loans into the pools the investors were screwed. And still the logical extension of that fact has not been made; if the investors were screwed and the their deal was improperly documented and obtained by false pretense, then it follows that the same holds true for the only other real party in interest — the homeowner.
As long as we continue this myth the economy will drag along the ground, while the people who have capital and wealth — homeowners who do NOT have a mortgage encumbrance but think they do, or who have been evicted from their homes when they still owned those homes — are prevented from spending, capitalizing new businesses and all the other good things that would stimulate the economy and turn the markets a — all of them — in a 180 degree turn from bad to good.”

“The Consumer Financial Protection Bureau, a new agency created to protect consumers from dangerous financial instruments they don’t understand, is coming together, though the Obama administration has yet to appoint a person to head the agency.”

That’s a bit disingenuous, don’t you think? Elizabeth Warren has been named by Obama to head the Agency, but both House and Senate Republicans have blocked her hearings at every step and turn. It seems that they are afraid of the nice lady.

If I were Mr. Obama, I’d be afraid of Elizabeth Warren, too - a progressive, pro-consumer populist? Sure would make a good presidential candidate in this day and age.

This article is part of an ongoing investigation:
The Wall Street Money Machine

The Wall Street Money Machine

Enticed by profits and bonuses, Wall Street took advantage of complicated mortgage-based instruments to reap billions, only to exacerbate the eventual crash.

The Story So Far

As the housing market started to fade, bankers and hedge funds scrambled for ways to maintain the lavish bonuses and profits they had become so accustomed to, repackaging mortgages in complex securities called collateralized debt obligations. The booming CDO market masked how weak the housing market was, and exacerbated its collapse.

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