From Bloomberg News: "JPMorgan Chase & Co. Chief Risk Officer Barry Zubrow will tell Congress that regulators risk impeding the economic recovery by going too far in tightening bank rules and raising capital requirements…A capital surcharge on the largest global banks combined with higher U.S. margin requirements for certain trading accounts 'currently risks doing more harm than good,'" and "puts U.S. firms at a 'distinct and unnecessary competitive disadvantage.'"
Funny, that's exactly what the financial industry convinced Bloomberg and Schumer to say in a report in 2007, a report I commented on in June 2008. The financial industry has clearly either learned nothing, or has learned that it could bully its way to increased concentration, power and bailouts. Has anyone else learned anything?
Senator Schumer has thoughtfully taken that January 22, 2007 report, Sustaining New York’s and the US’ Global Financial Services Leadership, off his official Senate website.
In my prior post I had argued that increasing concentration in a handful of oligopolistic, overpriced, overpaid, customer cheating, politcally hated firms, and the status of the U.S. as a debtor nation, were the real threats to the city's financial industry. Not regulation to correct these things. I had made the comparison between NYC's financial industry and the "big three" auto oligopoly in Detroit, which used its power to fight off reform but ultimately collapsed as alternatives emerged from outside the United States.
Here are some choice quotes from that report, as captured on my post.
"Schumer and Bloomberg, together with New York Governor Eliot Spitzer, warned that New York financial markets, stifled by stringent regulations, and high litigation risks, are in danger of losing businesses and high-skilled workers to overseas competitors, relegating New York to regional market status and adversely impacting the U.S. economy."
Then, as now, there were objections to the regulation of derivatives. I suggest viewing "Inside Game" to see how our "harsh regulations" worked out during the crisis.
“The increasing pace of innovation and new project development in financial services has meant that responsiveness and flexibility have become ever more important features of regulation. Yet against this need for speed comes regulators’ obligation to protect investors and customers…Not surprisingly, the vast majority of interviewees and survey respondents strongly believe that the pendulum of regulation in the United States has swung too far in recent years.”
Back then they didn't know what was coming. Now we do.
“The more amenable and collaborative regulatory environment in London in particular makes businesses more comfortable about creating new derivative products and structures there than in the U.S.”
AIG's London derivatives unit bankrupted AIG and would have bankrupted every major bank in the U.S. in domino fashion if the federal goverment didn't pile up massive debt to stop the economic collapse. Debt that now leads some to say that while Medicare spending on today's seniors should go up without limit, the federal government will not be able to afford Medicare for those now under age 55.
How the hell do people have the nerve to make the same arguments over and over in spite of the evidence, lining their pockets with other people's money all the way?