Tag Archives: Financial Reform

Continuing coverage on the Rise of State-sponsored Capitalism” href=”http://globaleconomy.foreignpolicyblogs.com/2009/05/09/the-rise-of-state-sponsored-capitalism/” target=”_blank”>I’ve written about frequently here in my Global Markets blog — namely the Chinese state’s spin on capitalism. Though there were many critics early on — and still are in many quarters — who argued that China’s state-managed version of capitalism was unsustainable, it seems the long-term sustainability of so-called ‘State Capitalism‘ has been proven, and is even gathering steam in unlikely places — India, Cuba, Vietnam and the Middle-East to name a few — with great success. It’s a trend that Western financial centers should be attuned to, nor should it be dismissed as the global financial architecture continues to evolve following the global financial crisis.

Trade, global economic competition, job growth, the Federal deficit, spending cuts, taxes, infrastructure investments and technology innovation were the focus of President Obama’s annual State of the Union address to a newly divided Congress last night.

The U.S. Senate this week passed a sweeping bank regulation bill that will make major changes to the U.S. financial system. The legislation cracks down on banks and Wall Street in the hopes of avoiding another major financial meltdown.

The U.S. Senate had finally, and unexpectedly, passed the much ballyhooed Wall Street Reform legislation. The Senate vote, 59-39, represents a major achievement for the Obama administration despite strong GOP opposition and coming just months after the historic, but substantially watered-down, Healthcare reform package.

Wall Street reform bill is taking that rarest of paths as it meanders through the Senate: it’s actually gaining tougher provisions against the industry as it proceeds, not being watered down to win votes as health care reform was. And that puts the president’s opponents, Republicans, in an increasingly difficult position.

Financial Regulatory Reform Update from around the horn for the week of 11 May 2010.

Today’s precipitous sell-off in US Markets – the most volatile single day of trading in Wall Street history – my most recent read, After the Fall: Saving Capitalism From Wall Street & Washington, by Nicole Gelinas of the Manhattan Institute, is suddenly very relevant. Her premise is that robust financial markets support capitalism, they don’t imperil it.

Chronicles the rise and fall of the efficient market theory and the century-long making of the modern financial industry, Justin Fox’s The Myth of the Rational Market is as much an intellectual whodunit as a cultural history of the purveyors, the perils and possibilities of financial risk.

The latest from Davos: global bank regulators unite to urge large banks to embrace reform. Regulators also endorsed the more aggressive efforts by the U.S. (Obama) administration.

Daily update of talking points, central issues being discussed in Davos’ World Economic Forum 2010 by world leaders in politics, finance, central banks, corporate, energy, lobbyists and philanthropy.

Finally capitulating to voter outrage, and the very kind of “Change” he campaigned on last year, President Obama proposed tough new financial industry restrictions under what he called “the Volcker Rule” – named after Paul Volcker, the former Fed Chair.

Following the lead of Europe’s approach to their financial industry reforms, the Obama Administration in coming weeks is poised to take a more aggressive stance with the financial industry. In response to the proposed measures, Edward Yingling, President & CEO of the American Bankers Association (ABA), the banking sectors powerful industry lobby, said “It is perplexing to us,” why taxpayers are outraged about the bailouts and other financial indsutry behaviors.

An arm of the Federal Reserve, then led by now-Treasury Secretary Timothy Geithner, told bailed-out insurance giant AIG to withhold key details from the public about overpayments that put billions of extra tax dollars in the coffers of major Wall Street firms, most notably Goldman Sachs. The sordid tale unfolds in a series of e-mails between the company and the New York Fed while Geithner was its president.

On Wall Street the past year was filled with one opportunity after another to fix the myriad fundamental structural deficiencies — revealed all too painfully by the financial crisis — that continue to plague the nation’s economic outlook. But as we enter 2010, not a single one of the “systemic failures” in the financial system has been adequately addressed, let alone resolved. This ongoing failure to act in the face of the worst economic downturn since the Great Depression is especially disappointing since President Barack Obama was elected, in part, on a promise to bring constructive and lasting change to the canyons of Wall Street.

Rumors persist in recent days that JP Morgan CEO, Jamie Dimon is being considered as the most likely replacement for Tim Geithner at U.S. Treasury, as confidence in Geithner wanes because he is too cozy with Wall Street as he insists on soft reforms for the industry.