‘If these folks want a fight, it’s a fight I’m ready to have’: Obama
On the same day that President Barack Obama announced an ambitious plan to reform the US financial system, bankers at the largest Wall Street institutions indicated that they are already finding ways around the proposed changes.
Sources at three Wall Street banks told BusinessInsider’s John Carney that “they are already finding ways to own, invest in and sponsor hedge funds and private equity funds” despite the proposed restrictions on those activities. One unnamed operative at a major bank said his firm expects the reforms to affect no more than one percent of its business.
President Obama announced two major reforms of the financial system on Thursday. The first would see the US in effect return to the separation of commercial and investment banking that was mandated by law until 1999, when that rule in the Depression-era Glass-Steagall Act was abandoned.
Many economists say allowing banks to be both lenders to the public and investors in large hedge funds and other securities contributed to the economic collapse of 2008.
The other rule would limit the size of banks, ostensibly to ensure that no banks are “too big to fail” and require taxpayer bailouts to keep the economy from collapsing.
But Wall Street bankers are pointing to a phrase in the proposed reforms — that banks will be barred “from proprietary trading operations unrelated to serving customers” — as an easy loophole to get around. John Carney reports:
The key phrase is “operations unrelated to serving customers.” The banks plan to claim that much of the business in which it engages is related in one way or another to serving customers….
A still more devious way is to have a bank’s own employees be the customers who are invested in the internal hedge funds. That way trading operations can remain closed to outsiders while the regulatory requirement of relating the trading to customer service is met. Goldman Sachs is rumored to be considering this approach.
In the wake of a slew of criticism accusing the president of weak leadership on the health care issue, particularly in light of the Democrats’ loss of Ted Kennedy’s old Senate seat earlier this week, Obama sounded a tougher note on the issue of financial reform than he has been known for in the past.
“If these folks want a fight, it’s a fight I’m ready to have,” Obama said Thursday in announcing the financial reforms.
“While the financial system is far stronger today than it was one year ago, it’s still operating under the same rules that led to its near collapse,” Obama said. “Never again will the American taxpayer be held hostage by a bank that is too big to fail.”
Obama dubbed his plan to separate commercial and investment banking the “Volcker rule,” after former Fed Chairman Paul Volcker, who is credited by many economists for being the architect of the economic policies that allowed the US economy to thrive during the Reagan era. For much of the past year, Volcker, who is now an economic advisor to Obama, had argued for a return to the Glass-Steagall era that separated commercial and investment banking.
The fact that a former Fed chairman considered to be economically right wing was pushing for these reforms was one major reason that the reforms began to gain traction among commentators and lawmakers.
But news that banks are already easily finding ways around the proposed reforms will likely lead to questions over whether Obama’s proposed fixes are tough enough, or whether any reforms can actually be effective in the current business environment.
“This thing is about showing the public that Obama is standing up to Wall Street,” an unnamed Wall Street insider told BusinessInsider. “So the rhetoric is heated. But the implementation will require far less change than people think right now.”
‘Worse than Obama’: Lindsey Graham has full-blown freak out over Trump’s latest Syria statements
Sen. Lindsey Graham (R-SC) on Wednesday had a full-blown freak out after President Donald Trump publicly said that the Turkish slaughter of the Kurds in northern Syria was not America's problem.
Writing on Twitter, the senator had his harshest condemnation yet of the president's decision to abruptly pull American troops out of Syria while giving Turkey a green light to invade the area.
"I hope President Trump is right in his belief that Turkeys invasion of Syria is of no concern to us, abandoning the Kurds won’t come back to haunt us, ISIS won’t reemerge, and Iran will not fill the vacuum created by this decision," Graham wrote. "However, I firmly believe that if President Trump continues to make such statements this will be a disaster worse than President Obama’s decision to leave Iraq."
Trump spirals into deranged conspiracy theory when asked about Giuliani: ‘I want to see the server’
President Donald Trump on Wednesday blurted out a nearly incomprehensible conspiracy theory about the 2016 election.
During an Oval Office meeting with Italian President Sergio Mattarella, reporters asked Trump if he expected former National Security Adviser John Bolton to testify to the House impeachment inquiry.
Trump sidestepped the question and launched into a rant about "corruption" in the 2016 election.
"Giuliani was seeking out corruption in the 2016 election," the president said. "There was tremendous corruption in that 2016 election. It was disgraceful what happened and what happened to me and what happened to the Republicans."
Ohio voter purge targets state’s League of Women Voters head
Ohio’s government admitted that nearly 20 percent of voters targeted in the state’s looming purge of “inactive” were actually active voters.
Earlier this year, the Ohio secretary of state’s office issued a list of 235,000 names targeted for removal from the voter rolls because, the state purported, they had not participated in the last three election cycles. The purge is part of an effort to remove names of people who have passed away or moved. The state is required to send notices to people it plans to remove to give them a chance to verify that they should still be on the rolls.