"Every where there's little piggies, living piggie lives. You can see them out for dinner, with their piggy wives, clutching forks and knives, they ate...........our............. ba................con!!!!! " Geo Harrison 1968 Scope of Regulatory Revamp Is Likely to Widen Derivatives Market Could Get Oversight As Fed Expands Role By KARA SCANNELL September 16, 2008; Page A10 The dizzying events of the weekend make it increasingly likely that regulatory oversight lines will be redrawn by the next administration and Congress. A big regulatory overhaul already was under discussion in Washington. Now that likely will go beyond the question of agency regulation of investment banks. The result could also end in oversight of derivatives and tighter provisions to prevent firms taking on too much debt. Since the sale of Bear Stearns Cos., the Securities and Exchange Commission has shared oversight of big, independent brokerage firms with the Federal Reserve. Over the summer, it solidified that arrangement in a memorandum of understanding. Lehman Brothers Holdings Inc.'s bankruptcy filing and Merrill Lynch & Co.'s sale to Bank of America Corp. add heft to the argument that the Federal Reserve should oversee investment banks to ensure market stability. The weekend's shake-up left the SEC with oversight of just two large brokerage firms, Goldman Sachs Group Inc. and Morgan Stanley. "The role of the Fed as the systemic risk regulator was well on its way to being adopted, and this will make it more likely," says Robert Glauber, a former Undersecretary at the Treasury Department for domestic finance. Treasury Secretary Henry Paulson issued a blueprint for a regulatory revamp in March that called for a bigger role for the Fed in guarding the overall health of the financial system. Mr. Paulson said Monday that "major changes" need to be made, including establishing a process to unwind investment banks akin to the orderly process in place for unwinding commercial banks. Future oversight is "going to have to be streamlined and more effective regulation," he said. In 1999, Congress created a system of "functional regulation" that put the SEC in charge of brokerage firms and the Fed in charge of commercial banks. Congress didn't address brokerage-firm parent companies. The Fed has oversight of commercial banks in part because they have access to the Fed's special lending facilities and because the government insures customer deposits. Brokerage firms, by contrast, have been subject to different regulation because their business model has been based more on helping companies raise capital and on risk-taking. The current credit crunch, which has brought the Fed into a much tighter relationship with Wall Street, has changed that dynamic. SEC Chairman Christopher Cox in July told a congressional committee that the SEC should be given statutory oversight of investment-bank parent companies, given its staff's deep knowledge of financial markets. On Monday, through a spokesman, Mr. Cox said, "Even in the aftermath of Merrill and Lehman, the concept of functional regulation still makes sense." He said that it would still make sense even if investment banks merged into commercial banks, but he added, without elaboration, that the Fed and SEC's approach would have to "be adapted." Richard Breeden, a former chairman of the SEC, said switching regulators alone, without taking a deeper look into what went wrong, would be a mistake. "The issue that is most important to me is making sure that regulators are able to have a realistic picture of overall leverage and do a better job of controlling it than we have done historically," he said. Other regulatory changes also are likely to gain momentum, former government officials said. Federal regulators have called for changes to the over-the-counter derivatives market -- the trading of complicated financial products -- where there are fewer standard rules and procedures compared with regular stock markets. That has become an issue for regulators as they try to determine the impact of one firm's trades on the entire market. Additional regulation could range from requiring more details about who is trading what, and with whom, to requiring such contracts be traded on an exchange. Wall Street firms have resisted such moves for years because they would eat away at profit margins. But the credit crunch has exposed how intertwined those contracts are. Monday, lawmakers said Congress needed to conduct examinations to find out what led up to the current credit crunch. In addition, Rep. Paul E. Kanjorski (D-Pa.) called for the House to pass a law that would create an office within the Treasury Department to oversee insurance. Write to Kara Scannell at kara.scannell@wsj.com
SEPTEMBER 16, 2008 Scope of Regulatory Revamp Is Likely to Widen Derivatives Market Could Get Oversight As Fed Expands Role By KARA SCANNELL The dizzying events of the weekend make it increasingly likely that regulatory oversight lines will be redrawn by the next administration and Congress. A big regulatory overhaul already was under discussion in Washington. Now that likely will go beyond the question of agency regulation of investment banks. The result could also end in oversight of derivatives and tighter provisions to prevent firms taking on too much debt. Since the sale of Bear Stearns Cos., the Securities and Exchange Commission has shared oversight of big, independent brokerage firms with the Federal Reserve. Over the summer, it solidified that arrangement in a memorandum of understanding. Lehman Brothers Holdings Inc.'s bankruptcy filing and Merrill Lynch & Co.'s sale to Bank of America Corp. add heft to the argument that the Federal Reserve should oversee investment banks to ensure market stability. The weekend's shake-up left the SEC with oversight of just two large brokerage firms, Goldman Sachs Group Inc. and Morgan Stanley. "The role of the Fed as the systemic risk regulator was well on its way to being adopted, and this will make it more likely," says Robert Glauber, a former Undersecretary at the Treasury Department for domestic finance. Treasury Secretary Henry Paulson issued a blueprint for a regulatory revamp in March that called for a bigger role for the Fed in guarding the overall health of the financial system. Mr. Paulson said Monday that "major changes" need to be made, including establishing a process to unwind investment banks akin to the orderly process in place for unwinding commercial banks. Future oversight is "going to have to be streamlined and more effective regulation," he said. In 1999, Congress created a system of "functional regulation" that put the SEC in charge of brokerage firms and the Fed in charge of commercial banks. Congress didn't address brokerage-firm parent companies. The Fed has oversight of commercial banks in part because they have access to the Fed's special lending facilities and because the government insures customer deposits. Crisis on Wall Street Brokerage firms, by contrast, have been subject to different regulation because their business model has been based more on helping companies raise capital and on risk-taking. The current credit crunch, which has brought the Fed into a much tighter relationship with Wall Street, has changed that dynamic. SEC Chairman Christopher Cox in July told a congressional committee that the SEC should be given statutory oversight of investment-bank parent companies, given its staff's deep knowledge of financial markets. On Monday, through a spokesman, Mr. Cox said, "Even in the aftermath of Merrill and Lehman, the concept of functional regulation still makes sense." He said that it would still make sense even if investment banks merged into commercial banks, but he added, without elaboration, that the Fed and SEC's approach would have to "be adapted." Richard Breeden, a former chairman of the SEC, said switching regulators alone, without taking a deeper look into what went wrong, would be a mistake. "The issue that is most important to me is making sure that regulators are able to have a realistic picture of overall leverage and do a better job of controlling it than we have done historically," he said. Other regulatory changes also are likely to gain momentum, former government officials said. Federal regulators have called for changes to the over-the-counter derivatives market -- the trading of complicated financial products -- where there are fewer standard rules and procedures compared with regular stock markets. That has become an issue for regulators as they try to determine the impact of one firm's trades on the entire market. Additional regulation could range from requiring more details about who is trading what, and with whom, to requiring such contracts be traded on an exchange. Wall Street firms have resisted such moves for years because they would eat away at profit margins. But the credit crunch has exposed how intertwined those contracts are. Monday, lawmakers said Congress needed to conduct examinations to find out what led up to the current credit crunch. In addition, Rep. Paul E. Kanjorski (D-Pa.) called for the House to pass a law that would create an office within the Treasury Department to oversee insurance. Write to Kara Scannell at kara.scannell@wsj.com
Oh that's right democraps, keep building the size of government to ensure you have a legitimate reason to raise taxes. Don't actually fix the problem, that would put job security at risk for you assholes! A bit premature for Hussein's reign, but right on target, nonetheless.
McCain said the regulatory system is outdated. He said he's gonna fix it right up. By the time all the new and improved regulation gets passed, Bear, Lehman and Merrill will be referred to as the lucky firms.
Take off on the ole, "why do Jewish men die before theyr wives...........": joke. Why'd Bear and Lehamn go out? Because they wanted to. http://www.rimshot.com Good one.
We The People Declare: any financial institution engaging in leveraged transactions beyond 10-1, will be immediately seized and the principles executed on the spot.
Hedge Fund Standards Chief Fears Backlash By Reuters Thursday, October 09, 2008 11:52:00 AM ET LONDON (Reuters)âThe chairman of the Hedge Fund Standards Board on Wednesday [Oct. 8] voiced fears that financial regulators could be swayed into implementing potentially harmful legislation in the wake of the credit crisis. Antonio Borges is at the forefront of the hedge fund industry's drive to head-off increased regulation. The HFSB was set-up to develop a voluntary code of best-practice that would offer sufficient oversight of the industry. "There is extraordinary political pressure and when that happens it's very difficult to know whether the outcome will be the best possible one or not," Mr. Borges told Reuters. "The reputation of the industry will drive public opinion and therefore politicians in directions which might be harmful for all of us, not just hedge funds. Banning short selling is bad for the whole market." Hedge funds have come under intense scrutiny over the past few months, notably for the impact of short selling strategies which many managers employ to target stocks they think will fall in value. In September, regulators in Europe and the United States imposed a temporary ban on shorting financial stocks amid fears hedge funds were exacerbating the sharp declines in bank stocks. Even sharper falls since have called that argument into question. "Some of these more immediate reactions can be counter-productive," said Mr. Borges, formerly vice chairman and managing director at Goldman Sachs International. "The most important thing now is to reassure investors so people feel their investments aren't going to disappear overnight. You can't remove the instruments that give people greater security and enables them to make returns." The HFSB on Wednesday announced it had added 10 new signatories including Blackrock Investment management UK, New Star Asset Management and Sabre Fund Management Previous Reuters Story. The new additions mean the HFSB now represents about half the hedge fund assets in Europe. By James Molony James.Molony@ThomsonReuters.com