Forget about the phony baloney nonsense of how Populist Obama is siding with the middle class against the rich. His real business is playing Silicon Valley off the movie industry, doing the bidding of Wall Street in private as he chides it in public, talking the 99% talk while walking the 1% walk.
Today he's off to Hollywood to placate pouty entertainment plutocrats like Senator-turned-lobbyist Christopher Dodd, who vowed last month to cut off the Obama cash because of the president's failure to support SOPA and PIPA. If you were hoping to catch TV footage of the president crooning with the stars in the next few days, you're out of luck. All the events will be private, unless a millionaire Occupier manages to sneak in and get video.
And now that the paltry foreclosure fraud settlement is apparently a done deal, and Campaign Director Jim Messina has met with banksters to assure them that Obama has no beef with them, the president will go to four back-to-back Wall Street fundraisers in New York on March 1. This is where it gets interesting.
It turns out that one of the $35,800-a-plate soirees will be hosted by regular Obama bundler Ralph Schlosstein, a hedge fund manager who is among a whole slew of financial overlords going public with opposition to the looming Volcker Rule. He is also among the money men whom Messina soothed last week, promising that the president will not be demonizing Wall Street in campaign speeches.
The Rule, which is set to go into effect in July, will ban proprietary trading by banks -- in other words, it will prevent them from trading with their own money rather than for clients. A centerpiece of the Dodd-Frank regulatory overhaul, it says that banks should not make risky wagers while the government guarantees their deposits. It's designed to prevent the kind of bubble which caused the Crash of 2008. Or the kind of unpunished theft allegedly committed by former Senator and Obama Bundler Jon Corzine. But since these kinds of bets are so lucrative for banks, they are howling at the prospect of their profits being reduced in the interest of honesty, fairness and the public good.
Regulatory agencies only have four months to further tweak the Volcker Rule here and there and everywhere. They are being beset from all sides as they decide to either water down an already watered-down bill, or stand firm against the banks. From the L.A. Times:
The passion on both sides of the issue — and the big money that is at stake — are evident in the 14,490 public comments that the SEC had received and posted on its website as of Tuesday. Thousands of those were from private individuals expressing their support for cracking down on Wall Street's risky trading practices.Schlosstein has gone on TV to signal publicly what he will no doubt be whispering privately in the presidential ear as he tantalizingly waves his bundle of cash.
For banks, the debate comes at a particularly sensitive moment. The last few months have been filled with news of layoffs and pay cuts on Wall Street as banks grapple with a raft of newly proposed regulations and continued economic turmoil in Europe.
The proposed Volcker rule puts a number of new limitations on the financial industry. Big banks would be able to own only small stakes in private equity and hedge funds and they would have to do away with any trading desks that trade solely for the profit of the bank.
"Its (the Volcker Rule's) intent is to reduce risk in commercial banking and investment banking,” Schlosstein said today (2/14) in a Bloomberg Television interview with Betty Liu. “But the line between proprietary trading and market-making is almost impossible to draw. You wind up with this incredibly complex regulation with incredibly complex enforcement, all of which will really increase costs for investors and for companies in the U.S.,” Schlosstein said. (waaaaah)The United States Chamber of Commerce has also bundled up corporations to stand in solidarity with Wall Street to protest the Volcker Rule. It may have unintended consequences for profit-hoarding "job creators", they fear. Corporations are people, my friend, etc.
But others, such as pension fund managers, individual citizens and even a few bankers, say the Rule -- even in its current un-tweaked, pre-Schlosstein influenced state -- does not go nearly far enough in reining in the big banks. It is one more weak, and delayed, and meagerly-funded part of the already limp Dodd-Frank financial "reform" bill (yeah, the same Dodd to whom Obama must also now kowtow for even more cash). One former banker who disagrees with Obama's bundler buddy is:
John S. Reed, who ran Citigroup from 1984 to 2000 and has been an outspoken proponent of financial reform, cited the recent cases of MF Global and UBS in his comment letter to make his case for tougher regulation, writing, "When a firm is focused on market gain, it will employ every available device to achieve those gains -- including taking advantage of clients and putting the firm at risk."
In his own way, Reed was a victim of the deregulatory environment on Wall Street that the Volcker rule aims to rein in. He was ousted soon after Citigroup was created in the wake of the repeal of Glass-Steagall in 1999, allowing banking, securities and insurance firms to merge.(See Reed's suggestions for improvement at the above link).
And this from Occupy the SEC, via Firedoglake.
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