In the discussion thread: Growth of Income Inequality Is Worse Under Obama than Bush [View all]
Response to Karmadillo (Reply #5)
Thu Apr 12, 2012, 03:35 PM
ProSense (116,464 posts)
Banks’ preemptive strike against Dodd-Frank
By Suzy Khimm
When Deutsche Bank reorganized its U.S. operations this week in response to new banking rules, it was the latest manifestation of what both supporters and opponents of the Dodd-Frank regulatory overhaul predicted would happen: The law has pushed big banks to reorganize — to comply with the new rules on Wall Street, as well as to avoid their impact...Deutsche Bank and London-based Barclays have moved their commercial banks from their U.S. subsidiaries into their global firms to avoid new, more stringent capital requirements — even though they don’t go into effect until July 2015.
But that doesn’t necessarily mean that Dodd-Frank has fallen short of what its authors intended. By giving up its status as a U.S. bank holding company, Deutsche Bank is forfeiting its access to the Federal Reserve’s emergency lending window. Doing so effectively cuts itself out of any future government-backed bailout in the event of a crisis. One of the overarching goals of Dodd-Frank was limiting taxpayer exposure to bailing out big firms.
“They’re saying, ‘If this is the price we have to pay, we’re going to shed that protection — we’re not too big to fail,’ ” said University of Maryland law professor Michael Greenberger, a former regulator at the Commodity Futures Trading Commission. Deutsche Bank was the Fed’s second-largest discount-window borrower during the 2008-2009 crisis.
The Volcker Rule, which is scheduled to take effect in July, also prohibits banks from providing more than 3 percent of capital in private-equity or hedge funds, prompting banks to spin off those operations as well. Other Dodd-Frank rules recently prompted insurance giant MetLife to sell its FDIC-insured banking unit, which would have subjected the firm to greater regulation and scrutiny by the Federal Reserve.
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Regulators Move Closer to Oversight of Nonbanks
By ANNIE LOWREY
WASHINGTON — The Financial Stability Oversight Council, the country’s top financial regulatory body, moved closer on Tuesday to increasing its oversight of nonbank financial institutions, like hedge funds, private equity firms and insurers.
The 10-member council, headed by the Treasury secretary, Timothy F. Geithner, voted unanimously to adopt a rule that will designate some of those firms as “systemically important financial institutions,” and put them under stronger regulatory supervision.
The rule “is an important tool provided in Dodd-Frank for extending the perimeter of transparency, oversight and prudential supervision over parts of the financial system that can be a particularly important source of credit to the economy and potentially important source of risk,” Mr. Geithner said during the 10-minute meeting.
The oversight council will now begin a three-part process of determining which firms are subject to additional scrutiny from regulators. The Dodd-Frank financial regulatory reform law, which passed in the summer of 2010, automatically put banks with more than $50 billion in assets under stricter standards.
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SEC Begins Big Dig Into Hedge Fund Data
By JULIET CHUNG
The top U.S. securities regulator has started to sift through a trove of new data on the nation's largest hedge funds and other private money managers to help identify firms whose behavior might pose the greatest risks to their investors.
About 1,400 new firms, including Moore Capital Management and Tiger Global Management, disclosed new details on their funds, investors, brokers and other facts ahead of a March 30 deadline.
The Dodd-Frank financial overhaul included a provision requiring hedge-fund, private-equity and other private-fund advisers of a certain size to register with the SEC, in a bid to bring more transparency to one of the more secretive corners of Wall Street. The SEC is using the new disclosures to beef up the data it streams through its analytics to look for signs of trouble.
While many of the most high-profile hedge-fund advisers have long registered voluntarily with the SEC, in part to attract money from institutional investors, others historically had relied on an exemption for advisers with fewer than 15 clients, or funds. Dodd-Frank did away with the 15-client exemption.
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