Tag Archives: Big banks

Can Wall Street Save the World? – Tobin Tax

When President Obama wrangled an agreement in the waning hours of the Copenhagen climate change summit, left unsaid was how agreed-upon subsidies from wealthy nations to poor nations will be paid.

The ambiguity of the agreement, which calls for $100 billion to be doled out annually beginning in 2020, along with an appeal from several European Union members to tap into the financial markets, has given momentum to the prospect of a worldwide financial transaction tax to help pay the freight for climate change solutions.

Supporters say the money would be a boon to the environmental movement, helping developing nations deal with the ramifications of climate change.

“We support the fund, and we think it needs to be paid for and we think the U.S. ought to do its part,” said Bob Deans, of the National Resource Defense Council. Deans said the council has not taken a specific position on the tax, adding that it is one of many ways aid to developing nations could be funded. “There are several hundred million people right now dealing with the ravages of climate change, so we feel this needs to be funded in some way.”

If imposed, the tax would tack on a fee – 0.25% is the number mentioned most, but some envision it as high as 0.5% – to most financial transactions worldwide, including stock and bond purchases, currency transactions and derivative trades.

Estimates from various groups put the amount of potential revenue from the tax in the hundreds of billions of dollars annually, with more than $170 billion coming from the United States alone.

Also known as the Tobin tax, it is named for late economist James Tobin, who first proposed it in the 1970s when the United States abandoned the gold standard for its currency. Tobin theorized that an additional fee on currency transactions would discourage speculators and keep exchange rates stable.

via Can Wall Street Save the World? – FOXBusiness.com.

via Can Wall Street Save the World? – FOXBusiness.com.

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Keep Wall Street risks away from Main Street | islandpacket.com

The four biggest banks — JPMorgan Chase, Citigroup, Bank of America and Wells Fargo –now control more than two-fifths of all bank deposits, more than 66 percent of all credit card accounts and more than half of all mortgages in the U.S.Unfortunately, they also run trillions of dollars in risky trading ventures that could blow up in our faces again.We need to keep risk where it belongs — on Wall Street — and security where it matters — on Main Street. That way, if the derivatives cowboys want to take obscene risks, they can but without driving the rest of us to the brink of financial oblivion.

via Keep Wall Street risks away from Main Street | islandpacket.com.

via Keep Wall Street risks away from Main Street | islandpacket.com.

McCain and Cantwell Want a New Glass-Steagall Law | Newsweek Voices – Michael Hirsh | Newsweek.com

The blinding complexity and interconnections created by modern capital markets—especially because of the way nearly half a trillion dollars in derivatives trades linked the firms to each other—demanded that there be strong firewalls and capital buffers between Wall Street institutions and their affiliates, and between banks and nonbanks and insurance companies. Otherwise there would be no islands of safety—no healthy institutions left to come and rescue the day, as commercial banks traditionally had done since the days of J. P. Morgans famous bailout in 1907. The repeal of Glass-Steagall took things in precisely the opposite direction, eliminating most of the firewalls and inviting staid commercial banks into the buccaneering world of Wall Street trading. Representative Hinchey says it “was a recipe for disaster because these banks were empowered to make large bets with depositors money, and money they didnt really have. When many of those bets, particularly in the housing sector, didnt pan out, the whole deck of cards came crumbling down and U.S. taxpayers had to come to the rescue.”Today the walls between firms still seem low indeed, and trading in derivatives that are “over the counter” that is, out of public sight continues at an astonishing pace, having risen back up to nearly $600 trillion worth. One big danger sign ahead is that the biggest banks have gotten even bigger in the aftermath of the catastrophe, and under the new rules requiring swap dealers to post capital for margin requirements, the big banks are likely to monopolize even more of this derivatives market and become that much richer and more powerful.

via McCain and Cantwell Want a New Glass-Steagall Law | Newsweek Voices – Michael Hirsh | Newsweek.com.

via McCain and Cantwell Want a New Glass-Steagall Law | Newsweek Voices – Michael Hirsh | Newsweek.com.

Regulators Resist Volcker Wandering Warning of Too-Big-to-Fail – Bloomberg.com

Dec. 15 (Bloomberg) — Paul A. Volcker visited nine cities in five countries in the past eight weeks to warn that bankers and regulators “have not come anywhere close to responding with necessary vigor” to the worst economic crisis in 70 years.

“There is a lot of evidence that financial weaknesses brought us to the brink of a great depression,” Volcker, 82, said Dec. 8. at a conference in West Sussex, England. He told executives there that the changes they’ve proposed are “like a dimple.”

Two years after the start of the deepest recession since the 1930s, no U.S. or European authority has put in force a single measure that would transform the financial system, based on data compiled by Bloomberg. No rule- or law-making body is actively considering the automatic dismantling of banks that Volcker told Congress are sheltered by access to an implicit safety net.

There’s little evidence that policy makers are heeding Volcker, the former chairman of the U.S. Federal Reserve.

via Regulators Resist Volcker Wandering Warning of Too-Big-to-Fail – Bloomberg.com.

via Regulators Resist Volcker Wandering Warning of Too-Big-to-Fail – Bloomberg.com.

Robert Creamer: Pass Financial Regulatory Reform – Then Break Up the Big Wall Street Banks

Last Friday, the House passed critical regulatory reform legislation aimed at preventing the recurrence of the kind of financial meltdown that devastated our economy at the end of the Bush administration.

The lobbyists from Wall Street worked hand-in-glove with the Republicans, and a few Democrats, to try to kill the bill. Astoundingly, the Republicans argued that Wall Street should continue to be free to engage in the same reckless speculation that led directly to 10 percent unemployment and required the taxpayers to inject hundreds of billions into the markets so that the geniuses of private finance would not plunge us all into the abyss of another Great Depression.

With no regard for history — and here I mean the events of only 12 months ago — the Republicans and Big Banks have the audacity to contend that the creation of jobs and a growing economy requires the lowest levels of regulation and government involvement possible.

Here’s a news flash: we tried it your way for eight years. The results: the lowest level of job creation of any eight-year period since World War II; all of the country’s economic growth was siphoned off by the top 2 percent of the population and the financial sector; and the economy imploded. Sure — let’s try that again.

The Republicans even had the brazenness to convene a convocation of 100 Wall Street lobbyists last Wednesday to plot how they could completely kill financial regulatory reform. They failed, largely due to the great work of Americans for Regulatory Reform, House Speaker Pelosi, Finance Chair Barney Frank and intensive lobbying from the Obama administration.

via Robert Creamer: Pass Financial Regulatory Reform – Then Break Up the Big Wall Street Banks.

via Robert Creamer: Pass Financial Regulatory Reform – Then Break Up the Big Wall Street Banks.