[hrothgar]

FM75, on 2013-December-02, 17:22, said:

If you want to talk specifically about it, why not post a link to the prospectus. Otherwise, we don't have any facts to discuss with respect to the issue. So we will expect the usual "feelings based" biased statements.

Of course, even if you do that, we are likely to do a lot of resulting.

http://av.r.ftdata.c...er-Document.pdf

The reference portfolio is documented in schedule A

[y66]

U.S. finalizes Volcker rule, curbing Wall Street's risky trades

Quote

(Reuters) - U.S. banks will no longer be able to make big trading bets with their own money after regulators finalized on Tuesday a rule shutting down what was a hugely profitable business for Wall Street before the credit crisis.

The measure known as the Volcker rule was a late addition to the 2010 Dodd-Frank Wall Street reform law and seeks to ensure that banks can't make speculative trades that are so large and risky that they threaten individual firms or the wider financial system.

Banks had hoped to substantially soften the rule, but JPMorgan's (JPM.N) $6 billion trading loss in 2012, dubbed the "London Whale" because of the huge positions the bank took in credit markets, motivated regulators to devise a tough version.

After more than two years crafting the complex reform, five regulatory agencies signed off on the roughly 900-page rule with new narrower exemptions for legitimate trades.

Former Federal Reserve Chairman Paul Volcker had promoted the restriction on proprietary trading as a simple measure to reduce risk, and U.S. officials acknowledged the final version was not as streamlined as they had hoped.

Banks said they were still poring over the details, but did not immediately expect to make further major changes to their operations. Large banks such as Goldman Sachs (GS.N) and Morgan Stanley (MS.N) have already wound down parts of their trading desks in anticipation of the rule.

But experts said the reform could still erode revenues, depending on how forcefully regulators police banks to make sure they are not trying to mask speculative bets as permissible trades.

"At some point someone is going to have to write up a manual for examiners on what to look for and ... how to enforce that stuff. That's going to be a really important document," said Bradley Sabel, a lawyer at Shearman and Sterling.

Another outstanding question is whether banking groups will mount a legal challenge. Wall Street banks have long warned that an overly restrictive rule could damage market liquidity and limit their ability to hedge against risks.

Better Markets, a Washington-based group critical of large banks, reacted positively to the final rule, calling it a "major defeat for Wall Street."

Bank of America (BAC.N) Chief Executive Brian Moynihan said at a conference on Tuesday that it cost his bank up to $500 million of revenue per quarter when it exited the trading activity banned under the Volcker rule.

But he said the final text should not force the bank to make any further significant adjustments. "I don't think it changes anything dramatically," Moynihan said.

The Volcker rule applies only to banks that have access to the Federal Reserve's discount window or other government backstops. Financial firms that do not have access, such as Jefferies, can continue to own hedge funds or engage in proprietary trading.

Who said this?

Quote

Paul Volcker by his own admission has said he doesn’t understand capital markets. He has proven that to me.

Spoiler

Jamie Dimon to Fox News, 3 months before JPMorgan’s massive $6 billion trading loss on credit default swaps engineered by Bruno Iksil, the London Whale.

[PassedOut]

Michael Lewis weighed in on the current hot topic: The Secret Goldman Sachs Tapes

Quote

I don't want to spoil the revelations of "This American Life": It's far better to hear the actual sounds on the radio, as so much of the meaning of the piece is in the tones of the voices -- and, especially, in the breathtaking wussiness of the people at the Fed charged with regulating Goldman Sachs. But once you have listened to it -- as when you were faced with the newly unignorable truth of what actually happened to that NFL running back's fiancee in that elevator -- consider the following:

1. You sort of knew that the regulators were more or less controlled by the banks. Now you know.

2. The only reason you know is that one woman, Carmen Segarra, has been brave enough to fight the system. She has paid a great price to inform us all of the obvious. She has lost her job, undermined her career, and will no doubt also endure a lifetime of lawsuits and slander.

So what are you going to do about it? At this moment the Fed is probably telling itself that, like the financial crisis, this, too, will blow over. It shouldn't.

It's definitely worth downloading the episode, which can be found with Jake Bernstein's Pro Publica article: Inside the New York Fed: Secret Recordings and a Culture Clash

Quote

As ProPublica reported last year, Segarra sued the New York Fed and her bosses, claiming she was retaliated against for refusing to back down from a negative finding about Goldman Sachs. A judge threw out the case this year without ruling on the merits, saying the facts didn't fit the statute under which she sued.

At the bottom of a document filed in the case, however, her lawyer disclosed a stunning fact: Segarra had made a series of audio recordings while at the New York Fed. Worried about what she was witnessing, Segarra wanted a record in case events were disputed. So she had purchased a tiny recorder at the Spy Store and began capturing what took place at Goldman and with her bosses.

Segarra ultimately recorded about 46 hours of meetings and conversations with her colleagues. Many of these events document key moments leading to her firing. But against the backdrop of the Beim report, they also offer an intimate study of the New York Fed's culture at a pivotal moment in its effort to become a more forceful financial supervisor. Fed deliberations, confidential by regulation, rarely become public.

She was fired because she didn't accept that it was the appearance of regulation that was required, not actual regulation. They'll be careful not to hire anyone like her again.

[Winstonm]

Showing once again that the "job creators" and "risk takers" don't really create any jobs or take any risks. The only thing that creates jobs is demand; demand comes from increased spending; the only way to increase spending is to redistribute some income from the top 10% to the bottom 90%.

[mike777]

Winstonm, on 2014-October-02, 09:37, said:

Showing once again that the "job creators" and "risk takers" don't really create any jobs or take any risks. The only thing that creates jobs is demand; demand comes from increased spending; the only way to increase spending is to redistribute some income from the top 10% to the bottom 90%.

Not sure how to do this, some suggestions if this is your goal:

1) 80% tax on gifts and close loop holes. Loop holes include charity deductions, insurance, estate taxes, trusts, and of course tax all gifts.
2) roughly 2-3% annual wealth tax.

Note this has nothing to do with capital gains or income tax rates.

[mike777]

PassedOut, on 2014-September-29, 11:37, said:

Michael Lewis weighed in on the current hot topic: The Secret Goldman Sachs Tapes


It's definitely worth downloading the episode, which can be found with Jake Bernstein's Pro Publica article: Inside the New York Fed: Secret Recordings and a Culture Clash


She was fired because she didn't accept that it was the appearance of regulation that was required, not actual regulation. They'll be careful not to hire anyone like her again.

yes regulators are captured by the industry. I have told this story often in this forum.


I interviewed with the SEC, they asked me about how to handle the people we regulate.

I stopped the question as it seemed weird and answered...I am the government answer my questions or I put you out of business why in the world am I intimidated.....I intimidate./ I shut you down. The point being the SEC was worried about the industry not the other way around.


BTW I note that the SEC basically said that everyone..I mean everyone failed their audit....over and over again over years and years. When everyone fails...and they fail all the time......there is problem yet the SEC did not know that basic fact or they know and no one cares that all audits fail.

to put it another way ..when everyone fails...no one fails.....

[kenberg]

No doubt some regulators are honest, courageous and wise. Equally without doubt, some in a position of great regulatory power lack one or more of those virtues. What to do? Tough question. Consider tis quote from a few posts up: "After more than two years crafting the complex reform, five regulatory agencies signed off on the roughly 900-page rule with new narrower exemptions for legitimate trades". I haven't seen this report. If I saw it, I could not stand to read it. If I read it, I would not understand it. This is not some false modesty, I am not claiming that I am stupid (others can do that well enough) rather I just know myself. We are at the mercy of people doing very important things that I, and many, do not understand at all. This is always risky, but when there are huge amounts of money at stake,it's a miracle that the system works at all.

So get rid of regulation? Hardly. There really are reasons for setting limits on what people can do. I don't think you have to be a raging liberal to be wary of banks being able to manipulate the market as they please.

[mike777]

Winstonm, on 2014-October-02, 09:37, said:

Showing once again that the "job creators" and "risk takers" don't really create any jobs or take any risks. The only thing that creates jobs is demand; demand comes from increased spending; the only way to increase spending is to redistribute some income from the top 10% to the bottom 90%.

btw we need not wait for Congress to do this. One can have their local city and county and state tax authorities do this now.

[barmar]

mike777, on 2014-October-02, 22:25, said:

1) 80% tax on gifts and close loop holes. Loop holes include charity deductions, insurance, estate taxes, trusts, and of course tax all gifts.
2) roughly 2-3% annual wealth tax.

I'm mostly OK with this, but are charitable deductions really a loophole? If rich people give less money to charities, where will they get funds from? It will probably fall to the government to make up the shortfall. Instead of spending 35 cents on the dollar in tax deductions, it will have to pay the full amount.

[mike777]

ok, once you accept the evidence that job creators don't create jobs, that risk takers don't create jobs or really take risk and accept redistribution and creating demand spending is the cause of economic growth there are a lot ways to do it.

Again cities, counties and states can do this own their own and need not wait on Congress.

[PassedOut]

mike777, on 2014-October-03, 17:56, said:

ok, once you accept the evidence that job creators don't create jobs...

Actually, job creators do create jobs. It just that the real job creators are not the people who ideologues mean when they use the phrase "job creators."

The phrase "job creators" is a creation of propaganda guru Frank Luntz. Lots of folks swallow propaganda. That's why Frank gets the big bucks: How Republicans are being taught to talk about Occupy Wall Street

Quote

The Republican Governors Association met this week in Florida to give GOP state executives a chance to rejuvenate, strategize and team-build. But during a plenary session on Wednesday, one question kept coming up: How can Republicans do a better job of talking about Occupy Wall Street?

"I'm so scared of this anti-Wall Street effort. I'm frightened to death," said Frank Luntz, a Republican strategist and one of the nation's foremost experts on crafting the perfect political message. "They're having an impact on what the American people think of capitalism."

Luntz offered tips on how Republicans could discuss the grievances of the Occupiers, and help the governors better handle all these new questions from constituents about "income inequality" and "paying your fair share."

And it was so.

[mike777]

ok I was just using Winston's words not this luntz guy, you must have missed his post which started this

[blackshoe]

Winstonm, on 2014-October-02, 09:37, said:

Showing once again that the "job creators" and "risk takers" don't really create any jobs or take any risks. The only thing that creates jobs is demand; demand comes from increased spending; the only way to increase spending is to redistribute some income from the top 10% to the bottom 90%.

I think you have it backwards. Increased spending comes from increased demand.

And I think your take on entrepreneurs is bonkers.

[kenberg]

I went back to the first post and to the link http://www.bloomberg...id=aUpBrUJ.pIiA


I will say a few words about the complexity of modern life. I may start a thread on just this topic so as to not hijack this one, but for the moment I will focus on this original post and the linked article.


The fourth paragbraph:

Quote

If there’s one group to blame, Lewis says it’s the “people who designed synthetic CDOs at Goldman Sachs.”

I havew no idea what this means. And if I learn what it means, I have little faith that I will have a confident opinion as to whether the quoted statement is correct.

Let's compare it to earlier days.

The nation needed coal. Miners dug coal. Coal mines provided jobs for the miners, coal for our furnaces (we had a coal bin in the basement and we shoveled coal into the furnace) and profits for the owners. The job was dangerous both for dramatic dangers such as cave-ins and fires, and long term with the almost certainty of shortened life from inhaling coal dust. Anyone with an ounce of sense could understan all of this, so the country could support inreased safety, increased wages and better working conditions for miners. Sure it wasn't that simple, not at all, but the basic issues were pretty clear to everyone. Now, in order to be an informed citizen/voter I have to learn about synthetic CDOs. I am sorry to be such a laggard, but I do not have an opinion about synthetic CDOs. I wouldn't recognize one if it slapped me in the face. I am very far from unique in this, I am sure.

Passed Out says that a lot of people swallow propaganda. This is true.. Including me. Surely part of the reason is that the issues are often complex and distant from the experience of the vast majority.

Don't get me wrong. I appreciate the comments and references. By analogy, I watched The 50 year argument last night, It's an HBO documentary by Martin Scorsese and David Tedeschi about the New York Review of Books. I recommend it. I was left a little stunned by seeing how much some people know that I don't know. And they didn't even get to synthetic CDOs.

An aside: When I was a grad student I had a friend who, upone seeing me, would say "Do you know how dumb I am? I didn't even know that..." and then he would proceed to download all of the mathematics that he had learned since I last saw him. Very annoying. I am not doing that here with my claim of ignorance. I think I once knew what a CDO is, but I have forgotten. I don't think that I ever knew what a synthetic CDO is. And when I read this stuff, my eyes quickly glaze over. I know I should learn this so that I can invest wisely or vote wisely or do something wisely, but I can't stay focused. As I say, I think the vast majority of people are in a similar situation.

[blackshoe]

CDO stands for "Command Duty Officer". He's the senior officer in the in port duty section, and has limited authority to act for the CO in the CO's absence. Or so says my US Navy experience.

[Winstonm]

blackshoe, on 2014-October-04, 06:27, said:

I think you have it backwards. Increased spending comes from increased demand.

And I think your take on entrepreneurs is bonkers.

A lot depends on how words are used and understood. Concerning expansion in an established economy, the is no incentive to expand production without more people wanting more of your stuff - there is incentive only to reduce costs to elevate profits. When that part of the population that spends nearly 100% of their income is provided a raise (either minimum wage increases or tax breaks), they do not horde that money but spend it - adding additional demand.

It is this additional demand that spurs business owners to expand production to meet new demand. This creates jobs.

Bottom line: money creates jobs.

My take on entrepreneurs is not bonkers but bankers . There is no risk-taking when there is no failure allowed - and the bailout of the TBTF banks provided a social safety net for these wealthy bankers.

[PassedOut]

Rolling Stone has an interesting piece about an honest young lawyer who finds herself working in a den of thieves: The $9 Billion Witness: Meet JPMorgan Chase's Worst Nightmare

Quote

One of the ongoing myths about the financial crisis is that the government is outmatched by the legal talent representing the banks. But Fleischmann was impressed by the lead attorney in her case, a litigator named Richard Elias. "He sounded like he had been a securities lawyer for 10 years," she says. "This actually looked like his idea of fun – like he couldn't wait to run with this case."

She gave Elias and his team detailed information about everything she'd seen: the edict against e-mails, the sabotaging of the diligence process, the bullying, the written warnings that were ignored, all of it. She assumed that it wouldn't be long before the bank was hauled into court.

Instead, the government decided to help Chase bury the evidence. It began when Holder's office scheduled a press conference for the morning of September 24th, 2013, to announce sweeping civil-fraud charges against the bank, all laid out in a detailed complaint drafted by the U.S. attorney's Sacramento office. But that morning the presser was suddenly canceled, and no complaint was filed. According to later news reports, Dimon had personally called Associate Attorney General Tony West, the third-ranking official in the Justice Department, and asked to reopen negotiations to settle the case out of court.

It goes without saying that the ordinary citizen who is the target of a government investigation cannot simply pick up the phone, call up the prosecutor in charge of his case and have a legal proceeding canceled. But Dimon did just that. "And he didn't just call the prosecutor, he called the prosecutor's boss," Fleischmann says. According to The New York Times, after Dimon had already offered $3 billion to settle the case and was turned down, he went to Holder's office and upped the offer, but apparently not by enough.

A few days later, Fleischmann, who had by then moved back to Vancouver and was looking for work, was at a mall when she saw a Wall Street Journal headline on her iPhone: JPMorgan Insider Helps U.S. in Probe. The story said that the government had a key witness, a female employee willing to provide damaging testimony about Chase's mortgage operations. Fleischmann was stunned. Until that moment, she had no idea that she was a major part of the government's case against Chase. And worse, nobody had bothered to warn her that she was about to be effectively outed in the newspapers. "The stress started to build after I saw that news," she says. "Especially as I waited to see if my name would come out and I watched my job possibilities evaporate."

Fleischmann later realized that the government wasn't interested in having her testify against Chase in court or any other public forum. Instead, the Justice Department's political wing, led by Holder, appeared to be using her, and her evidence, as a bargaining chip to extract more hush money from Dimon. It worked. Within weeks, Dimon had upped his offer to roughly $9 billion.

In late November, the two sides agreed on a settlement deal that covered a variety of misbehaviors, including the fraud that Fleischmann witnessed as well as similar episodes at Washington Mutual and Bear Stearns, two companies that Chase had acquired during the crisis (with federal bailout aid). The newspapers and the Justice Department described the deal as a "$13 billion settlement," hailing it as the biggest white-collar regulatory settlement in American history. The deal released Chase from civil liability. And, in what was described by The New York Times as a "major victory for the government," it left open the possibility that the Justice Department could pursue a further criminal investigation against the bank.

But the idea that Holder had cracked down on Chase was a carefully contrived fiction, one that has survived to this day. For starters, $4 billion of the settlement was largely an accounting falsehood, a chunk of bogus "consumer relief" added to make the payoff look bigger. What the public never grasped about these consumer--relief deals is that the "relief" is often not paid by the bank, which mostly just services the loans, but by the bank's other victims, i.e., the investors in their bad mortgage securities.

When the bankers own the government and the police, corruption results. Fortunately we still have some folks with the courage to speak up and we still have some ways for them to tell the world what they know.

[kenberg]

PassedOut, on 2014-November-07, 12:22, said:

Rolling Stone has an interesting piece about an honest young lawyer who finds herself working in a den of thieves: The $9 Billion Witness: Meet JPMorgan Chase's Worst Nightmare


When the bankers own the government and the police, corruption results. Fortunately we still have some folks with the courage to speak up and we still have some ways for them to tell the world what they know.

That is a very optimistic way of looking at it. These guys are worse than the Mafia. With the Mafia, you can pretty much stay out of their way and everything goes ok.

[mike777]

Note sure why anyone would think that bankers own the government or the police. If anything it seems the opposite. See all the regulations and fines in just the past few years. As a result lawyers have been in place at the top not bankers.

If you read the article you see even the large banks and bankers spend most of their time with the lawyers and the government, not business.


Of course it has long been conceded that the bond markets if not own then often exert control over governments.

[kenberg]

Of course they have lawyers. A lot of lawyers. The Mafia used to hire gunmen. Very crude and inefficient. Hire lawyers. You can get away with much much more that way.