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Congress Approves First Big Dodd-Frank Rollback
- rdiddly 8y agoApparently they would like a financial crash and a violent revolution?
- voodootrucker 8y agoIn bound...
- WC3w6pXxgGd 8y agoIt's about time. Dodd-Frank is an absolute embarrassment and is just bureaucratic nonsense, created so the gov can pretend they've done something.
- godzillabrennus 8y agoBitcoin should jump up in price.
- lopmotr 8y agoPeople really need to stop predicting market prices on internet forums. You have no hope of being right better than chance. Bitcoin is liquid enough that any news about law changes will have been incorporated into the price before you hear about it on Hacker News. If you actually believed yourself, you'd be betting money on it, not telling everyone. That shows that you don't believe what you're saying, so it's wrong to try to persuade other people. Wait till you got rich being right more than you were wrong, then tell people about it.
- wmccullough 8y agoAre you okay?
- smudgymcscmudge 8y agoAre you familiar with the phrase, “shooting the shit”? That’s all we do in the comments here. You shouldn’t take them seriously.
- smt88 8y agoI took GP's comment as somewhat tongue-in-cheek
- ry4n413 8y agolol i was going to say same thing, but seriously if this relaxes the prop trading at larger firms, and they decide to invest in bitcoin, bitcoin will go up. now, whether of not this portion does that, i don't know.
- microcolonel 8y agoExcellent, now if we can just stop manipulating risk assessment in the student loan market we'll be on track. Glad to be moving to the U.S. in the middle of what appears to a policy renaissance. Maybe something can be done about the budget, though I can't exactly judge each administration for not taking on such an abstract marketing challenge. Pretty sure this only applies to banks with small holdings, so I'm not really sure why anyone's getting their panties in a knot.
- frgtpsswrdlame 8y ago>Pretty sure this only applies to banks with small holdings, so I'm not really sure why anyone's getting their panties in a knot. Definitely not small, maybe medium but even then depends how you define it. The relevant regulations are rolled back for banks with less than $250 billion in assets. So the megacorps like BoA and JPMorgan are still regulated but other very large entities aren't - American Express and BB&T were the examples I read earlier.
- microcolonel 8y agoAmerican Express is not a bank, and BB&T isn't a particularly big one (though they'll possibly cross this line soon). Apple Inc. has more assets than BB&T.
- geggam 8y agothanks to fractional reserves most banks dont have any money
- trhway 8y ago> Apple Inc. has more assets than BB&T. it is Apple own assets, not deposited by somebody. Apple also is the biggest by valuation and in the first 10 by revenue worldwide. Not a good yardstick to compare with to showcase that somebody isn't a big one. I mean it is like saying that USS Enterprise isn't a big one because Caribean Princess is bigger :)
- ajross 8y ago
- chiefalchemist 8y ago"A decade after the global financial crisis tipped the United States into a recession..." should read: A decade after the global financial cluster f#ck - orchestrated by irresponsibility and negligence on the past of the United States government, and its puppet master, Wall Street - politely refereed to as a recession..."
- girvo 8y agoThat also pushed most of the western world and some other financial hubs into meltdown too! This doesn’t just affect the USA :(
- chiefalchemist 8y agoMy point was, the USA was the means and the ends, not just the ends. The USA was the perp, not the victim. The NYT's wording attempts to rewrite history, badly. This is journalism?
- girvo 8y agoI wasn’t disagreeing with ya, just expanding on your point. The quote and article seemed to ignore the world wide impact 2007 had
- TomMckenny 8y agoSeems 2008 didn't cause enough misery for voters to understand their own interest. But maybe the next one will be bad enough, or the one after that worse yet. I gather the last time this happened (1870s-1930s) it was a lot of fun.
- deleted 8y ago[deleted]
- nielsbot 8y agoNot being snarky--but did Trump promise anything specifically about bank regulation when he was campaigning? Maybe the populist "drain the swamp" could be taken as a vague direction on this issue, but in any case he seems to have done the opposite.
- jryan49 8y agoHe said he wanted to "dismantle" Dodd-frank entirely. So he wanted to deregulate much more than this bill does. [0]: https://www.nytimes.com/2017/01/30/us/politics/trump-dodd-frank-regulations.html https://www.nytimes.com/2017/01/30/us/politics/trump-dodd-fr...
- dmix 8y agoThe Treasury Secretary Steven Mnuchin more eloquently broke down their plan during his hearing in where he stated his primary goal is reducing the spurious regulations added to small/medium banks follow the crisis, while leaving the regulations for the large ones (most of which caused the original crisis). Which is exactly what this bill does by excluding big banks from the new reductions in regulation. He provided many examples and cited data showing how the number of small banks has drastically shrunk since the regulation has passed, and directly related to it, causing the US banking market to further consolidate. Ironically, there are now 5 major banks who control most of the market now largely as a result, while competition from smaller firms has declined drastically. So much for ending "too big to fail". Like most well intentioned democratic policy during the last decade intended to punish the larger banks for their destructive behavior, if anything they've come our stronger. Not to mention the bail outs with completely neutered terms in terms of bonuses and other potential disincentives for bad behavior. It's one thing to say you want to restrict the power of banks to manipulate markets and generate risk, it's another to actually do it. The fact this bill only benefitted small firms and kept the major banks under check sounds completely consistent with the Mnuchin's promises during his congressional hearing. He's on of the few Trump cabinet that seems highly competent and well suited for the job. I'm happy he has stuck around. https://www.c-span.org/video/?421858-1/treasury-secretary-nominee-steven-mnuchin-testifies-confirmation-hearing https://www.c-span.org/video/?421858-1/treasury-secretary-no...
- castratikron 8y agoI've been holding off buying a house until the next crash. Won't have to wait much longer.
- mtgx 8y agoIt's nice that you're an optimist and you believe you'll easily be able to take your money out of the bank to buy a house when the next crash happens.
- tfehring 8y agoThe risk of a run on US retail deposits is negligible due to the FDIC. The credit crisis in 2007-2008 was driven by run-prone shadow banking assets outside the purview of the FDIC, not by retail banking. However, there is a significant risk of not being able to get a mortgage under reasonable terms in the event of another credit crisis.
- ars 8y agoYou'll be waiting a LONG time. The next crash will be student loans. The one after that will be something else entirely. There won't be another house price crash until there is another generation of people who forgot the old one. You could be waiting 20 to 30 years. A truism of the financial world is that if you thought of it, so did everyone else. That means that unless you are truly original (you probably aren't) you can only make money on a particular position if that position is one that makes money if everyone does it. A position that requires you to do it, and everyone else to do something else (like waiting on a crash to buy a house, while everyone else doesn't) isn't going to work. If you are waiting, so is everyone else, and that means everyone will buy, which means the price won't go down, and you have a self-canceling prophecy.
- basementcat 8y ago1. Apply to graduate school 2. Max out student loans 3. Use funds to speculate on Real Estate, Dogecoins and/or Moviepass stock 4. ??? 5. Profit!!! On a more serious note, I agree with you that it doesn't make sense to wait for a crash. It is better to position yourself such that when a crash happens (whether it be real estate, equities or baseball cards) one is in a reasonable position to take advantage.
- ars 8y agoWhy is everyone so against this? These types of laws tend to be worthless, except in one thing: Preserving incumbents (large banks in this case). Large banks can easily deal with the law and keep right on going. All it does is make life much harder for smaller banks.
- nielsbot 8y agoMy vague understanding was that Dodd-Frank was a partial restoration of the pre-Clinton era limits on speculation... Is that not correct? In any case I don't understand how that helps preserve incumbents over small banks.
- ars 8y agoIt does a LOT of stuff. Some good, some just paperwork. It's the paperwork part I'm talking about. But it's such a large act that without knowing which parts were repealed it's very hard to discuss.
- mtgx 8y agoYes, this. Perhaps some of the Dodd-Frank reversal will indeed be good for smaller banks, but my guess without reading the bill is that they also removed a lot of the stuff that only affected the big banks or simply regulated the worst behavior that banks can have, like say over-charging customers on fees and stuff like that.
- lallysingh 8y agoJust a note: paperwork is usually just data on disk now. Maybe a database or 10, or just a bunch of logs. But generally not as bureaucratically onerous as one envisions a ton of actual paperwork. A virtual paper trail isn't a bad thing when you've got to (a) manage risks based on decisions made by these processes and (b) make sure you're obeying the law.
- pzone 8y agoNo, Dodd-Frank is in fact bureaucratically onerous. The cost of paperwork has nothing to do with whether or not the documents are actually on paper.
- BurningFrog 8y agoNobody knows what's actually in Dodd-Frank, but a lot of people have opinions about it!
- reilly3000 8y agoMy understanding of the issue is that it was mostly a scaling falicy. A ratio of assets to loans was asserted by the federal government that banks and credit unions must operate within, but that ratio was too onerous for small players like credit unions with less than $1B in assets. I did marketing for a credit union that had to constantly stop doing auto loans or quickly double down to maintain a tightrope walk to stay inside those ratios. It was much easier to comply with at larger scale. Bad maths made a decent rule into something that had unintended consequences.
- chris11 8y agoI can see it both ways. I have heard that the original restrictions were too onerous on small banks. But on the other hand, a failing asset class will affect multiple banks. It's possible that multiple community bank failures could act like a bigger bank failing.
- jopsen 8y agoTo be fair, deregulating small banks might make some sense.. If it's not too big to fail, then by all means let it fail :) Ideally, you would follow it up by putting even stronger regulation on big banks.
- woodie_w 8y agoThis is actually a good thing, the regulations were a big burden to small banks. The roll back doesnt affect the "too big to fall" institutions but it really eases the pressure on local and regional players. Dodd-Frank costs banks a lot of many but it doesnt scale with the size of the bank, smaller banks are subject to the same constraints as the biggest banks though they are not capable of causing a systemic crash. They should not be penalized for the actions of the bigger players.
- eganist 8y ago> smaller banks are subject to the same constraints as the biggest banks though they are not capable of causing a systemic crash. Contagion (https://en.wikipedia.org/wiki/Financial_contagion https://en.wikipedia.org/wiki/Financial_contagion) can still take place with a (literal) local bankruptcy depending on the exposure of larger institutions to that smaller firm's losses.
- zizek23 8y agoTaxpayers are on the line for trillions of dollars with socialized risk and yet there are people on this thread regurgitating the same old anti-government anti-regulatory line without any irony. How can you roll back regulations without resolving fundamental questions about risk and 'too big to fail'. With citizens like this who needs oligarchs. These are the same anti-government folks who will whine endlessly about social services as 'handouts' and 'freebies' and look the other way while trillions go to subsidize the rich and powerful. This is ideology. Either you believe in democracy or you do not. In a democracy the government is you, not an organization out to get you. Regulations exist to protect the whole from the greed of a few. This mythical anti-government civilization full of freedom only works in a farming based frontier society that has occupied land and can give parts of it away for free to all new comers, where any government can only take away rights. But that time is long gone.
- deleted 8y ago[deleted]
- mseebach 8y agoIf anything is mythological, it's this: > Regulations exist to protect the whole from the greed of a few. That's clearly one reason, and certainly the most commonly cited reason, but it's equally clearly not the only one, and it's certainly not the only outcome, whether intended or not. The best buffer against "the greed of a few" is to allow real competition. Lightening regulations on smaller banks is quite likely to encourage competition.
- kingraoul3 8y agoThis ignores the natural tendency toward oligopoly in mature markets.
- mseebach 8y agoIronically, the opposition to the rollback ignores how in this case the regulation unintendedly encouraged and cemented said oligopoly.
- gehwartzen 8y agoMy wife works in the corporate mortgage department of a fairly large US bank and she told me how many of her fellow employees cheered on this news a few months ago when it became clear regulations would be rolled back. Then a month ago about half of those same people lost they're jobs; turns out spending extra resources checking the accuracy of loans and applicant financials is not something banks do if they don't have to. The other interesting tidbit I learned form her is that the bare minimal paperwork processing that will still get done is actively being outsourced to India. Just a reminder that one of the large problems to come out of the last financial crisis was that banks couldn't even tell who owned the actual morgages or provide the actual signed loan documents to many borrowers. If (or rather when) we have the next mortgage crisis it's going to be an absolute mess.
- nervousvarun 8y agoSo basically when that invariably happens (next mortgage crisis) we can expect more of the same...public losses, privatized profits.
- ktsmith 8y agoThe more immediate crisis will probably be due to other types of consumer debt. Take a look at auto lending and bundling as an example.
- klipt 8y agoFrom what I read this is predatory but in a different way - auto lenders want buyers to default, then they repossess the car while keeping the previous payments - basically like leasing out the car but higher profits.
- fallingfrog 8y agoNot to mention the mountains of leveraged buybacks and leveraged buyouts. In my industry all the big players are bidding prices that can't possibly turn a profit for assets which they evidently hope to flip later. I think that kind of behavior is endemic at this point. So I think it's going to wind up being a corporate debt bubble.
- asah 8y agoSorry for the naive question, but what actually happened? WSJ is reporting that the big change is the increase from $50B to $250B for the definition of "large bank" subject to automatic "too big to fail" regulations. Here's the list of ~30 banks affected according to wikipedia as of ~Jan 1, 2018: rank, name, location, marketcap 13 Charles Schwab Corporation San Francisco, California $243B 14 State Street Corporation Boston, Massachusetts $238 15 BB&T Winston-Salem, North Carolina $221 16 SunTrust Banks Atlanta, Georgia $205 17 American Express New York, New York $181 18 Ally Financial Detroit, Michigan $167 19 Barclays New York, New York $157 20 USAA San Antonio, Texas $155 21 MUFG Union Bank New York, New York $154 22 Citizens Financial Group Providence, Rhode Island $151 23 Deutsche Bank New York, New York $148 24 Fifth Third Bank Cincinnati, Ohio $142 25 Royal Bank of Canada New York, New York $141 26 Credit Suisse New York, New York $141 27 UBS New York, New York $140 28 BNP Paribas New York, New York $139 29 Northern Trust Chicago, Illinois $138 30 KeyCorp Cleveland, Ohio $137 31 BMO Harris Bank Chicago, Illinois $131 32 Santander Bank Boston, Massachusetts $128 33 Regions Financial Corporation Birmingham, Alabama $124 34 M&T Bank Buffalo, New York $118 35 Huntington Bancshares Columbus, Ohio $104 36 Discover Financial Riverwoods, Illinois $100 37 Synchrony Financial Stamford, Connecticut $95 38 First Republic Bank San Francisco, California $87 39 BBVA Compass Birmingham, Alabama $87 40 Comerica Dallas, Texas $71 41 Zions Bancorporation Salt Lake City, Utah $66 42 E-Trade New York, New York $63 43 Silicon Valley Bank Santa Clara, California $51 What else is there? (besides partisan histrionics) Xpost from Reddit: https://www.reddit.com/r/politics/comments/8ldxmj/comment/dzffn3v https://www.reddit.com/r/politics/comments/8ldxmj/comment/dz...
- gehwartzen 8y agoWill be interesting to see what with some of these banks as they grow and start approaching the new $250B cliff. I suspect a lot of creative accounting and a glut of banks at the $249B level in a few years.
- hackeraccount 8y agoMeanwhile what's being done about Fannie Mae and Freddie Mac? Nothing. It's being pushed around with the hope that everyone will forget about them until the next crisis.