Politics Americans being forced to eat healthy food, Wall Street says we need more junk food

TRUMP SAYS HE CUT WALL STREET REFORM BECAUSE HIS “FRIENDS” NEED MONEY

On Friday, Donald Trump signed an executive order intended to roll back Dodd-Frank, the sprawling regulatory framework President Obama signed into law in 2010 to avoid another financial crisis, which was not entirely beloved on Wall Street. He also scrapped a fiduciary rule intended to protect retirees by forcing brokers and advisers to “work in the best interest of their clients.“ (This, too, was controversial.)

According to its defenders, Dodd-Frank has been a modestly successful, if tortuous affair, requiring banks to bend over backwards to comply with regulations that protect investors and consumers from abusive practices and excessive risk. According to Trump, it was inconveniencing his friends:

“There is nobody better to tell me about Dodd-Frank than [JP Morgan C.E.O.] Jamie [Dimon]. So he has to tell me about it, but we expect to be cutting a lot from Dodd-Frank because, frankly, I have so many people, friends of mine, that have nice businesses, they can’t borrow money,” Trump said Friday morning, shortly before signing the executive orders. “They just can’t get any money because the banks just won’t let them borrow because of the rules and regulations in Dodd-Frank.”

And here’s how Gary Cohn, Goldman Sachs president turned White House National Economic Council Director made the case for getting rid of the fiduciary rule unveiled last spring:

“We think it is a bad rule. It is a bad rule for consumers. This is like putting only healthy food on the menu, because unhealthy food tastes good but you still shouldn’t eat it because you might die younger.”

That is literally the greatest analogy we’ve ever heard, and we challenge Cohn and the Trump administration to top it. (In fact, the only way they could is if Cohn appeared on Meet the Press on Sunday and said, “The fiduciary rule is like only putting out vape pens at a party, because crystal meth feels good but you still shouldn’t smoke it because you might die younger.” Let the consumer have their meth! How could more choice be bad, in an industry defined by vast asymmetries of information between brokers and consumers?

http://www.vanityfair.com/news/2017...se-his-friends-need-money?mbid=social_twitter

 

Ability for businesses to borrow is a pretty big deal.

 

The good news is you triple mortgage your goats as long as you feed them nothing but twinkies.

 

There's not much evidence that companies can't borrow money right now. And at very low interest rates too.



It's possible that Trump's friends are looking for loans that aren't secured by much other than promises... those are probably harder to get.

barfo

 

Yes!

 

Leverage is a great thing if you're successful.

If successful businesses aren't able to borrow, they're not building new factories or buying new equipment.

We shouldn't socialize their losses, period.

 

So lets not change or improve the few regulations enacted after we bailed out the banks, instead lets just get rid of them.

Makes sense.

 

Overleverage had nothing to do with Sept 2008.

The government insisted banks lend to poorly qualified buyers. Home ownership being the american dream and all that. Nothing down loans and variable interest rates that all came due at a time when millions couldn't afford the new payments.

Exactly who do you think was over-leveraged, and how?

 

Yes Denny, the big evil guberment forced the sweet innocent Wall Street banks to make terrible loans.

 

Those aren't the regulations Trump is removing, eh? Banks forced to give bad loans.

 

Banks are averse to risk. They'll do the smart thing if government isn't guaranteeing they won't fail if they take ridiculous risk.

Banks survived for decades (even centuries and millennia) without these regulations.

NYTimes blamed Bush (of course), in 2008. When government distorts markets, what else can you expect?

http://www.nytimes.com/2008/12/21/business/worldbusiness/21iht-admin.4.18853088.html

Bush drive for home ownership fueled housing bubble

(meanwhile, democrats fought against regulations proposed by Bush and McCain, because they wanted poor people to own homes and those evil banks to make bad loans)

http://www.usnews.com/opinion/blogs...rats-were-wrong-on-fannie-mae-and-freddie-mac

Seventeen. That's how many times, according to this White House statement (hat tip Gateway Pundit), that the Bush administration has called for tighter regulation of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. Congress has cooperated only once. In spring 2007, as House Financial Services Committee Chairman Barney Frank likes to point out, the House did pass a bill in response.

...

Much if not all of that could have been prevented by a bill cosponsored by John McCain and supported by all the Republicans and opposed by all the Democrats in the Senate Banking Committee in 2005. That bill, which the Democrats stopped from passing, would have prohibited the GSEs from speculating on the mortgage-based securities they packaged. The GSEs' mission allegedly justifying their quasi-governmental status was to package or securitize such mortgages, but the lion's share of their profits—which determined top executives' bonuses—came from speculation.
​

And a must read:

https://www.theatlantic.com/busines...vernment-did-cause-the-housing-crisis/249903/

 

Can you imagine playing Monopoly with Denny?

He takes all the money, all the properties, declares there are no rules, announces he's the winner, and if anyone complains he calls them butthurt.

 

https://www.bloomberg.com/news/arti...rillion-hoard-of-bonds-as-bofa-leads-stampede

Banks Are Hoarding $2.4 Trillion of Bonds

• Tighter standards, lackluster U.S. economy damp lending

But instead of ramping up lending to keep up with deposits, banks are plowing into U.S. government and related debt at the fastest clip since 2014.

The easy answer, of course, has to do with post-crisis financial regulations, which were designed to curb risk-taking and have compelled banks to hold more high-quality assets. Yet in many ways, the buildup reflects a more worrying sign. In the past year, more loan officers at large and midsize banks have tightened credit to businesses than at any time since 2009, when the U.S. was still reeling from the housing bust...



But with banks finding fewer opportunities to lend, it’s raising deeper questions about the prospects for future economic growth.

Commercial banks in the U.S. have amassed $90 billion of Treasuries and non-mortgage debt from federal agencies this year alone, bringing the total to $754 billion, according to data compiled by the Fed. Including federally guaranteed mortgage-backed securities, banks now own $2.4 trillion of government bonds, which would be the most since the central bank began compiling data in 1973.

The five biggest lenders -- Wells Fargo & Co., JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and U.S. Bancorp -- held a combined $206 billion of government debt at the end of the second quarter, according to the latest available filings. That’s a 74 percent increase over the past three years.


Banks aren’t lending more because the economy “isn’t growing as fast as we’d like it to grow,” said Paul Miller, a bank analyst at FBR Capital Markets & Co. “Banks are only able to take a certain amount of risk.”​