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The Democratic Platform’s Nonsense on Banks

11:46 am in Financial Crisis by masaccio

Photo by Redwin Law via Flickr

The Democratic Platform seems to have missed the central point of the banking mess: the Obama administration did not investigate the disaster, and didn’t indict anyone for the crimes that led to the Great Crash. In fact, the administration specifically refused to follow up on criminal referrals from the Financial Crisis Inquiry Commission regarding one of the Goldman Sachs mortgage deals, saying as it always does, that it stinks, but isn’t a crime.

The Platform admits that

For too long, we’ve had a financial system that stacked the deck against ordinary Americans. Banks on Wall Street played by different rules than businesses on Main Street and community banks. Without strong enough regulations, families were enticed, and sometimes tricked, into buying homes they couldn’t afford. Banks and investors were allowed to package and sell risky mortgages. Huge reckless bets were made with other people’s money on the line. That behavior not only nearly destroyed the financial system, it cost our economy millions of jobs, hurt middle class and poor families, and left taxpayers holding the bill.

Then we find out the solution offered by the party in power:

The path to restoring middle class security is through the basic values that made our country great. We are a nation that says anyone can make it if you try – no matter who you are, where you come from, or what you look like. We know that America is strongest when everybody has a seat at the table and when the same rules apply to everyone, from Main Street to Wall Street.

The only reason the banks were allowed to play by different rules is that the Obama administration mulishly refused to enforce the law against them. There is no doubt that the law was broken, over and over. But the candy-ass prosecutors at the Justice Department won’t act, and the craven time-servers at the SEC are so worried about their careers that they fall all over themselves in admiration of the thugs who stole all the money and kept it, while millions of Americans lost their life savings and their houses.

The platform ignores the reality that the bankers got away with theft, wire fraud, bank fraud, loan fraud, securities fraud, and commodities fraud. There are two causes for this, both the responsibility of the President and Democrats in the legislature. First, the President hired a bunch of known bank sympathizers and fellow travelers to head up every part of the financial sector. At the head of the list are Attorney General Holder and Treasury Secretary Geithner. Holder hired a slew of white collar defense lawyers from Covington and Burling, and he and they will all return to their civilian jobs with their hands unsoiled by something so ugly as criminal prosecutions of their former and future clients. Geithner is a product of the inbred financial sector, a man unable to conceptualize the possibility that any of his trainers was a common thief.

Second, the investigative arm of every financial regulator is full of time-servers. The first responsibility of every incoming administration is to get rid of the moles left from the prior administration, the wreckers, the foot-draggers, the bureaucratic sludge, the people waiting their turn at the revolving door. Obama failed to do that, and he failed to instruct the head of agencies to do it either.

The platform asserts that Dodd-Frank is a common sense solution to the problem, and will prevent future problems. Nonsense. The agencies have been so thoroughly captured by the financial sector that they can’t even get their regulations into effect. The biggest banks are much bigger than they were, and even more dangerous.

The platform says that Democrats are “… holding Wall Street accountable, bringing new transparency to financial markets, and ending taxpayer-funded bank bailouts and the era of “too big to fail” and by “… by requiring them to provide relief for homeowners still struggling to pay their mortgages and to change practices that took advantage of homeowners.

So holding people accountable means a) we told the banks not to do that again, and b) we asked banks to help some of the people damaged by the banks get a few bucks out of the stolen hundreds of billions.

That is not the rule of law applicable to all. That is just a load of garbage dumped on our heads as if to say: you people get what you deserve.

SEC Thinks Arithmetic is Hard

11:05 am in SEC by masaccio

Form W-2. See how easy it is?

In an article on the staggering compensation of CEOs of giant US companies, the New York Times adds arithmetic to the things that are too hard for the SEC, along with other hard things like investigating securities fraud on Wall Street. The Dodd-Frank bill requires corporations to state the ratio of CEO pay to the median income of employees of the company. But:

The requirement isn’t likely to come into effect any time soon, because many companies have complained to the S.E.C. that it would be a burden to comply with it, said Ms. Bowie of [Institutional Shareholder Services].

“There’s been a lot of pushback from companies on that,” she said.

Mary L. Schapiro, the chairwoman of the S.E.C., said at a Congressional hearing last month that the commission was trying to work through “a lot of technical issues” on how companies might calculate this.

Let me help.

Step 1. Make a list of your company’s subsidiaries and controlled entities and the company itself. HInt: see Exhibit 21 to your Annual Report on Form 10-K.

Step 2. Tell the accounting persons for each subsidiary on the list to prepare a list of each employee, and the sum of the amounts shown in Boxes 1, 10, 11,and 12, plus any contributions to a defined benefit plan for that employee which were not recorded in any of the boxes.

Step 3. Add all the lists to a database. Sort by the number next to the name.

Step 4. Count the names. Divide by 2. Count down that many names. Record the number. That is the median payment to employees. Call that X.

Step 5. Find the total amount paid to the CEO. Hint: see your Proxy Statement. Call that Y

Step 6. Divide Y by X.

Tell us the answer in boldface print at least as large as the font you use for the main document. I’m sure that isn’t perfect, but it’s close enough for government work, and see how easy it was?

Then add any explanation you like, using either Comic Sans or Symbol as you see fit. You will want to put in those technical details that might make it look less abusive. Show us your number, explaining how it is different from my number. Explain how awful the government is for making you do all this work. Tell us how many people you had to fire to pay for the intellectual effort of doing these calculations and making up your explanations about why that fabulous paycheck should go to the CEO instead of workers or shareholders. Explain the workings of the market in CEOs compared to the market in accounting and bookkeeping people, salespeople, the people who wrote the code that you sell and the people who actually put the steam turbines together. I love a good work of fiction.

Technical issues my foot. Try Captured Agency.