Obama's Treasury Sides With Wall Street To Fight Derivatives Overhaul

[Amerigo Vespucci]

Obama's Treasury Sides With Wall Street To Fight Derivatives Overhaul



http://www.huffingtonpost.com/2010/06/14/obamas-treasury-dept-work_n_611205.html

A Senate proposal to force banks to shed their lucrative yet risk-laden derivatives units -- which is vehemently opposed by Wall Street -- is gaining steam, picking up the support of some regional Federal Reserve chiefs with more on the way.

Yet President Barack Obama's Treasury Department, led by Timothy Geithner, continues to oppose the measure, Senate aides say, who add that Treasury is supporting Wall Street over Main Street by opposing the measure considered of "utmost importance" to financial stability.

"It shows the access of the major Wall Street banks in the Treasury Department in spades," one Senate aide said on the condition of anonymity. Assistant Treasury Secretary for Financial Institutions Michael S. Barr is said to be leading Treasury's efforts.

Senate aides say that more letters of support from other regional Fed presidents are on the way.

Treasury is joined in its opposition to the measure by the Federal Reserve's Washington-based Board of Governors and the head of the Federal Deposit Insurance Corporation, Sheila Bair.

Meanwhile, supporters include the longest-serving policy maker in the Fed, Federal Reserve Bank of Kansas City President Thomas Hoenig, Federal Reserve Bank of Dallas President Richard Fisher, Nobel Prize-winning economist Joseph Stiglitz and House Speaker Nancy Pelosi.

Hoenig and Fisher wrote letters of support last week to Senate Agriculture Committee Chairman Blanche Lincoln, the author of the provision, referring to it as "of utmost importance to our nation's long-term financial and economic stability."
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"The dynamic with two Federal Reserve presidents coming out for it publicly, and the fact that there are more who are probably going to come out for it, means that Treasury can't resist it any longer," the Senate aide said. "They're going to have to accept it, because the regional Fed support is basically undermining both Bernanke as well as Geithner."

[FrenchieCat]

1. Link & attribution please.

[Amerigo Vespucci]

3. OOOOOPS. It's updated, thanks. n/t

[Junkdrawer]

2. Derivatives manage risk - especially when backed by the US Treasury!

Too Big to Fail (tm)

[dionysus]

4. man, timmeh really does look like an elf...

[karynnj]

8. That picture does make him look like an elf, an evil elf

[dionysus]

9. swampie could throw some pointy ears on that pic!

[pscot]

5. I'm so glad they're on our side

n/t

[WCGreen]

6. These people are so smarmy it makes me ill to look at them...

Mercantilism straight from alexander Hamilton...

[polichick]

7. Public scolding, private deal - that's this administration's m.o. nt

[msongs]

11. that and aim low settle for even less nt

[Catherina]

10. Quelle surprise n/t

[Political Tiger]

12. It amazes me how what "one Senate aide said on the condition of anonymity"

is presented as the undeniable truth.

But hey, if it's on Huffington Post it must be the truth......

[Bluebear]

13. And if it reflects poorly on Obama, what the diddle, it must be a lie!

[branders seine]

14. what do you mean 'siding with'?

they ARE Wall Street

[Rex]

15. Wall Street = US Treasury. Investigate the whole criminal lot.

We lost our country when Reagan sold it to the highest bidder.

[ProSense]

16. Not a single quote from Geithner or the WH.

"Treasury is supporting Wall Street over Main Street by opposing the measure considered of 'utmost importance' to financial stability"

It's really convenient to push that tired line with no evidence but an unsourced quote

Completely opposite of what he has said and written.

I suppose when the final bill emerges, people will say Congress bucked the WH, and nothing the President says will be able to counter that to some people.

[hayu_lol]

17. This is another 'gusher' rat's nest if you took the lid off...

and looked inside. The powers that be don't want another boondoggle on their hands right now.

[Bluebear]

18. .

[amborin]

19. K&R

[Wilms]

20. .

[IOKIYAL]

21. Why No Mention Of Volcker

http://tpmdc.talkingpointsmemo.com/2010/06/volcker-softens-his-opposition-to-tough-derivative-regulations.php

Why no mention of Volcker's opposition to derivatives? Volcker is one of the guys the Left has been pushing to be Obama's only point man on the economy, yet I don't hear a peep from the Left about his opposition to derivatives. Why? Only now he is softening? Why no uproar from the Left? Also why no mention of Summer's and Geithner making it clear to the US and the international community that now is not the time to be deficit hawks? They get no credit for that? Those two have been saying a lot of the right things since being appointed and get not one ounce of credit from the Left - why?

[laughingliberal]

22. Not pushing for Volcker to be Obama's only point man. We want Warren, too. Guess that might be

point woman, come to think of it.

AFAICS, the schooling of the deficit hawks is a fairly recent development. I do hope it's a trend, though.

[laughingliberal]

23. Best news in the entire post is the last line:

"They're going to have to accept it, because the regional Fed support is basically undermining both Bernanke as well as Geithner."