The Obama administration's two-pronged attack on Wall Street execs' pay — Czar Kenneth Feinberg's crackdown and the Fed's plan to regulate compensation — is no more than a poke at a pig.
Feinberg's task was difficult, but he wielded more of a loofah than a whip. And the idea of the Fed Reserve Bank's stepping in to regulate compensation at banks is little more than fancied-up self-regulation by the banks. By its nature, the Fed is not much of a regulatory agency except in macroeconomic matters. Just look at the board of the New York Fed: It includes such "regulators" as JPMorgan Chase CEO Jamie Dimon, plus GE CEO Jeff Immelt and Pfizer CEO Jeff Kindler. They'll keep those Wall Street execs in check.
Yet another threat to health care that's even bigger than the Democrats' infighting: Thieves, believed to be based in Eastern Europe, defrauding U.S. nonprofits that serve the disabled, uninsured, and kids. Another health threat from overseas, but this one affecting people from overseas: "The 'keister bomb' is the newest terror threat."
Hedge funds recovering, mergers and acquisitions are starting up again, the big banks are frantically trying to figure out how to spin their impending resumption of big bonuses. Meanwhile, "the job market is bleaker than ever in the current recession."
A pox on the G-20, at which "the lack of questioning of the status quo was spectacular." Halligan notes: "Obama's oratory was typically impressive. The trouble is, it wasn't true. ... Nothing 'bold' was done to lessen systemic dangers or overhaul the global regulatory regime."
Russian oligarch's pending purchase of New Jersey Nyets continues an odd, tragicomic history of ownership of the franchise that once boasted Dr. J. Funny little story by Brad Parks notes that Bruce Ratner, who bought the team in 2004 for $300 million, wound up spending about $1.5 million per win.
Even bears are optimistic about impact on market. "One big reason for the market's continued strength is that expectations were so low for the economy and corporate earnings that the market was able to rise even on modestly good news."
Funny piece on the first day of the Senate's "debate" on the health-care bill. GOP senator Jim Bunning declared he was against the bill, no matter what form, and then he promptly fell asleep. The Republicans might as well have sung "Whatever It Is, I'm Against It," Groucho Marx's bit from Horse Feathers (1932). Or just stayed home to watch re-plays of former colleague Tom DeLay dancing with the stars.
Stimulus packages boost the market so much that, well, another boom is underway. Here's an example of excessive greedsters feasting on carcasses artificially bloated by government money, from the WSJ: "Speculators Seek Fortune in AIG." The NY Post notes that Lehman alums are setting up funds to pick at the carcass of their failed bank. Stocks are rising and traders are waiting with bated breath as the Fed meets this week to figure what, if any, action it will take.
Though some foreclosures are being delayed out of good intentions to help beleaguered homeowners, "some analysts believe the delays are prolonging the mortgage crisis and creating a growing 'shadow' inventory of pent-up supply that will eventually hit the market."
Warning: "... this rally is the largest one powered by the least volume ..." Even crazier, an astonishing share of volume has been from a mere handful of stocks. See Liam Denning's "Smoke Signals From the Stock Rally" in the WSJ.
A modern-day Father Coughlin. "Crazy-quilt cosmology" mixes with populism to blanket the country. (Sounds like another media creation to me.) Read Salon's "The making of Glenn Beck," if you want.
Relying on Kaiser Family Foundation's last Employer Benefits Survey, Ezra Klein notes:
The average health-care coverage for the average family now costs $13,375, according to Kaiser. Over the past decade, premiums have increased by 138 percent. And if the trend continues, by 2019 the average family plan will cost $30,083.
FDIC Chair Sheila Bair was already marginalized by the Obama Administration — despite the curious fact that she's pursued a more progressive and people-friendly agenda than the yes-we-can president has. Compared with Obama's conservative aides Larry Summers and Tim Geithner, Bair's out in left field. And now, with her op-ed in the yesterday's Times ("The Case Against a Super-Regulator"), Bair just has to be headed for a permanent benching.
Why the American Prospect's Tim Fernholz calls Bair's op-ed "opaque" is opaque to me. Bair is pretty clear in her criticism of giving the Fed all-encompassing power. But where she really hits home is when she pins the blame for the Wall Street meltdown on the big banks. (No wonder the administration doesn't want her to have any hand in regulating the big banks.) Bair, a former aide to Bob Dole, comes straight out with it:
The principal enablers of our current difficulties were institutions that took on enormous risk by exploiting regulatory gaps between banks and the nonbank shadow financial system, and by using unregulated over-the-counter derivative contracts to develop volatile and potentially dangerous products.
That's the problem, all right, but Bair isn't just rehashing. Her fear is that a super-regulator would focus on just the biggest banks and that would mean even more consolidation in the banking industry.
Progressive outlets keep wailing at Obama with suggestions to do this and that. They haven't realized that the Obama economic crew (especially Summers and Geithner) is hardly an improvement over Henry Paulson. Bair has at least been consistent. She started shouting into the wind last October against Paulson's bailout plan with her cries for social welfare over corporate welfare:
"Why there's been such a political focus on making sure we're not unduly helping borrowers but then we're providing all this massive assistance at the institutional level, I don't understand it. It's been a frustration for me."
Book review of Henry Kaufman's The Road to Financial Reformation: Warnings, Consequences, Reforms. One of the Wall Street elder statesman's "biggest beefs is the Fed's tolerance of concentration in the financial system." Ten largest U.S. financial institutions control more than 50 percent of country's financial assets, compared with only about 10 percent in 1990. Glass-Steagall, he says, should have never been repealed.
FDIC's absorbing banks' risk on billions in loans. Shudder. Call it the Bank Buying Bubble. But the NYT looks at the bright side: "As Big Banks Repay Bailout Money, U.S. Sees a Profit," saying that "taxpayers have begun seeing profits" from the bailout of banks.
The state that already allows corporations to gamble like crazy with little regulation is eager to offer sports betting on single games, starting Sept. 1 (to plug budget gaps), but the Third Circuit Court of Appeals says no. The major sports leagues and the NCAA had sued Delaware to stop it. So for now, all bets are off: The sports gambling stays in Vegas and the rest of Nevada and nowhere else. (Las Vegas Review-Journal story here.)
Did anyone really think that President Barack Obama wouldn't reappoint the Fed chairman? Especially now that Wall Street has declared that major combat operations against the Great Recession are over? The markets barely reacted to the news; they would have freaked if he weren't reappointed. Salon's "Ben Bernanke gets to clean up his mess" recalls Nouriel Roubini's nuanced assessment of Bernanke's performance. For harsher criticism of Bernanke, go back to Anna Jacobson Schwartz's "Man Without a Plan."
Great headline by Post, but story's just a couple of paragraphs. See the actual story: the National Geographic's "Women With High Testosterone Take Financial Risks." Based on a highly spurious study of MBA students, but Wall Street's overwhelmingly male bankers can now claim that the meltdown was drug-induced and not really their fault.
Battling back from a liver transplant, Moses returns to scale the mountain and deliver a new tablet to the faithful. The touch-screen device he's working on could be as revolutionary as the laptop was.
Cash for clunky Treasuries — that's the Federal Reserve plan for the near future regarding the continual force-feeding of debt. Putting an optimistic spin on the proceedings of the Fed's Open Market Committee, the WSJ says the Fed today "suggested the economy is on more stable ground, more confirmation that the severe recession is either already over or will be very soon."
MarketWatch's story emphasizes that the Fed is apparently going to keep interest rates low for a long time. The Fed also praised itself for doing a good job.
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