In case you wonder who stands in the way of financial reform, from ThinkProgress.org:
This week, Senate Banking Committee Chairman Chris Dodd (D-CT) released the latest version of his financial regulatory reform bill, which aims to correct the deficiencies in the financial system that led to 2008’s economic crisis. The House of Representatives has already passed a comprehensive regulatory reform bill, and now that Dodd has given up on negotiating with recalcitrant Republicans, he is moving on an expedited timeline, with a markup scheduled for Monday.It’s taken the Senate a year and a half after the financial crisis to even get to this point, but House Minority Leader John Boehner (R-OH) told “an enthusiastic crowd of bankers” today that, even if the Senate passes a bill, reconciling it with the House version will take another year. “If the Senate is able to produce a bill, I think it’s just as likely that we’ll be talking about the same issue a year from now as we are right now,” Boehner said at the American Bankers Association government relations summit. Link to article…
MBS- FNMA 4.5 price: 101-01
10-yr Treasury Yield: 3.65%
Seeing some improvement in both today— may result in rate improvements mid-day.
MBS- FNMA 4.5 price: 100-27
10-yr Treasury Yield: 3.68%
Mixed, but improvement is with the Treasury yield.
From the SF Chronicle’s AP wire:
China retained its spot as the biggest foreign holder of U.S. Treasury debt in January although it trimmed its holdings for a third straight month. The string of declines are likely to underscore worries that the U.S. government could face much higher interest rates to finance soaring budget deficits.
The Treasury Department said Monday that China’s holdings dipped by $5.8 billion to $889 billion in January compared to December. Japan, the second largest foreign holder of U.S. government debt, also trimmed its holdings but by a much smaller $300 million to $765.4 billion.
Net foreign purchases of long-term securities, a category that includes both government and corporate debt, totaled $19.1 billion in January, as net purchases of private corporate bonds fell by $24.8 billion, the biggest drop on record. Link to article…
Week 2, March 2010
While I know this is a tall order, I hope some time in the near future you can take a full hour and watch this video. It is perhaps the best explanation of the American financial system’s meltdown I have thus far found— and it is all framed within layman’s terms. From history we try to learn what happened so we can avoid repeating the same mistakes over again, right? Well, in this you’ll see how history repeated itself because of a careless disregard for history. But you’ll also see how the biggest players responsible for the meltdown are STILL the biggest players and how the lack of regulation keeps the door open for essentially all the same abuses TODAY:
See here for why Jon Stewart calls financial whistle-blower Harry Markopolos “an angry dude.”
To contact me about financing your dream-home click here.
Weekend Wanderer’s Events
…finding the treasures in your town and beyond.
Two for This Weekend:
Harmony Sweepstakes A Cappella Festival: From their website: The Harmony Sweepstakes A Cappella Festival is the premier American showcase for vocal harmony music. The annual national competition draws from hundreds of vocal groups from around the country with regional competitions in eight cities. The winning group from each festival is flown to perform in front of celebrity judges and a sold out house of enthusiastic a cappella fans at the National Finals.
Rayko’s Third Annual Juried Plastic Camera Show: From the Chronicle: RayKo’s Third Annual Juried Plastic Camera Show includes strange and stunning images made by the winners of this competition. Photographers from all over the Bay Area as well as national and international entries are featured in this dynamic exhibit. There were even more entries than last year, yet somehow we whittled it down to less than a hundred stellar pieces. Come see beautiful images taken with less-than-gorgeous cameras. Flawed, but not forgotten.
Help Your Fellow Living Beings:
Conservation Corp North Bay: From their website:
Over the years, CCNB has flourished, becoming a national leader in the local corps movement. Since our inception, we’ve helped 5,000 young men and women break the cycle of poverty while serving the environment and community.
We now provide year-round job training and education services to 120 youth. Our programs prepare young people from all corners of the North Bay to become strong environmental leaders, develop an ethic of service and create strong, sustainable communities.
In all, our volunteers and corpsmembers have performed nearly three million hours of work on 150,000 acres of public lands. If you haven’t seen them scattered throughout the county cheerfully doing their work, you’ve certainly seen the results of their labors in pristine trails, clear rivers and streams, fewer wildfires, reduced carbon footprint, as well as reduced crime in your neighborhood.
In short, we teach youth with uncertain futures to create a better present and future for all of us.
Two Weekends from Now:
San Francisco International Chocolate Salon: From their website: The premier chocolate show on the West Coast takes place this Spring at the 4th Annual San Francisco International CHOCOLATE SALON, Saturday March 20th, 2010 at the Fort Mason Center’s Festival Pavilion in San Francisco. Chocolate aficionados, fanatics, buyers and journalists can experience the finest in artisan, gourmet & premium chocolate in one of the world’s great culinary metropolitan areas.
Pic of the Week… from my phone camera:
I’m guessing you know where this is.
Because it continues to bug me so much here is the full article From the New York Times:
As Greece has tottered on the brink of fiscal chaos, threatening to drag much of Europe down with it, Wall Street’s role in the fiasco has drawn well-deserved scorn.
First came the news that Greece had entered into derivatives transactions with Goldman Sachs and other banks to hide its public debt. Then came reports that some of those same banks and various hedge funds were using credit default swaps — the type of derivative that kneecapped the American International Group — to bet on the likelihood of a Greek default and using derivatives to wager on a drop in the euro.
European leaders have called for an inquiry into the Greek crisis. Ben Bernanke, the Federal Reserve chairman, has told Congress that the Fed is “looking into” Wall Street’s deals with Greece, and the Justice Department is investigating the euro bets. That is better than turning a blind eye, but it is not nearly enough.
The bigger problem is in America, where markets are supposed to be fair and transparent. These particular — and particularly complicated — instruments are traded privately among banks, their clients and other investors with virtually no regulation or oversight.
The Obama administration and Congress have been talking for a year about fixing the derivatives market. Big banks have been lobbying to block change. And the longer it takes, the weaker the proposed new rules become.
Here are some of the problems that must be fixed:
NO TRANSPARENCY Derivatives are supposed to reduce and spread risk. In a credit default swap, for instance, a bond investor pays a fee to a counterparty, usually a bank, that agrees to pay the investor if the bond defaults. But because the markets in which they trade are largely unregulated, derivatives can too easily become tools for dangerous risk-taking, vast speculation and dodgy accounting.
A big part of the problem is that derivatives are traded as private one-on-one contracts. That means big profits for banks since clients can’t compare offerings. Private markets also lack the rules that prevail in regulated markets — like capital requirements, record keeping and disclosure — that are essential for regulators and investors to monitor and control risk.
That is why it is so essential to move derivative trades onto fully transparent exchanges. The administration originally embraced that idea, with exceptions only for occasional, unique contracts. But when the Treasury proposed legislation in August, it included huge loopholes, and a derivative reform bill that passed the House in December has many of the same problems. (The Senate has yet to introduce a reform bill.)
Both the administration and the House would exclude from exchange trading the estimated $50 trillion market in foreign exchange swaps — similar to the derivatives Greece used to hide its debt. The rationale for the exclusion never has been clearly explained.
The Treasury proposal and House bill also would exclude transactions that occur between big banks and many of their corporate clients from the exchange trading requirement, ostensibly because those deals are only for minimizing business risks, not for speculation or for window-dressing the books. That’s debatable. But even if true, other derivatives users would almost inevitably find ways to exploit such a broad exemption.
What is clear about the exemptions is that they would help to preserve banks’ profits. What is also clear is that they would defeat the goals of reform: to lower risk, increase transparency and foster efficiency.
LIMITED POWER TO STOP ABUSES When the House put out a draft of new rules in October, it sensibly gave regulators the power to ban abusive derivatives — ones that are not necessarily fraudulent, but potentially damaging to the system. Derivatives investors who stand to make huge profits if a company or country defaults, for example, might try to provoke default — a situation that regulators should be able to prevent. In the final House bill, however, the ban was replaced with a requirement that regulators simply report to Congress if they believe abuses are occurring.
NO STATE REGULATION, EITHER Current law also exempts unregulated derivatives from state antigambling laws. That means that states have no power to police their use for excessive speculation. Treasury and House reform proposals have called for maintaining the federal pre-emption of state antigambling laws. Pre-emption could be tolerable if derivatives were traded on fully regulated exchanges. But as long as many derivative products and transactions are exempted from fully regulated exchange trading, pre-emption of state antigambling laws is a license for, well, gambling.
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The big banks claim that derivatives are used to hedge risk, not for excessive speculation. The best way to monitor that claim is to execute the transactions on fully regulated exchanges, pass rules and laws to ensure stability, and appoint and empower regulators with independence and good judgment to enforce compliance.
Without effective reform, the derivative-driven financial crisis in the United States that exploded in 2008, and the Greek debt crisis, circa 2010, will be mere way stations on the road to greater calamities.
Week 1, March 2010
Over the course of this week I have seen some stories in the world of economics and finance that I would usually consider worthy of highlighting in this Thursday Edition— such as this one regarding the extension for one year of the Home Affordable Refinance Program (HARP) enabling refinances of Fannie or Freddie owned loans up to 105% and sometimes up to 125% of the property value— but I find myself far more invested in seeking stories about solutions being embraced for a legitimately sustainable economy going forward. And frankly, that quest has far less to do with BORROWING money than it does with good old-fashioned American ingenuity innovating and producing and selling to the world new, legitimately useful products. And the one that, at least for me, rises immediately to the top of that list is energy— sustainable and non-polluting energy in particular. I can only imagine how historians hundreds of years from now will describe our era of history, filled with international conflicts as it’s been, where oil and coal have fueled our enterprises and where the great United States of America is measured as the largest per-capita polluter in the world. What this says to me is that in the United States today, our focus must be to champion sustainable energy as a PRIMARY industrial priority for the foreseeable future so that we, indeed, develop and produce the commodity most needed by all the world: clean, sustainable energy. These are the jobs that have grown in spite of the recession, but these also are the industries that are far more deserving of the billions of dollars worth of government investment money which we’ve so sanctimoniously funneled to our fat-cat, ungrateful banking and insurance industries. My opinion is that business needs a GREAT PRODUCT far more than it needs an ability to borrow. And perhaps the greatest product of all is energy. See below how our nation just allocated $100 million to developing green energy. Bravo. Bailing out AIG alone cost the U.S. $182 BILLION.
See here for how the U.S. is investing $100M in sustainable energy.
To contact me about financing your dream-home click here.
Weekend Wanderer’s Events
…finding the treasures in your town and beyond.
Two for This Weekend:
Think California Exhibition in SF: From their website: The California Historical Society presents Think California, an exhibition highlighting the colorful history of California through the institution’s remarkable collection of artwork, artifacts, and ephemera. This ambitious exhibition asks the question “What do you think about when you think of California?” Here you see both common and little known facts of the Golden State’s fascinating history, as well as the myths and realities that are the lore of California.
Greening Oakland Homes Fair in Oakland: From the Chronicle: This educational fair will feature exhibitors with solutions to help you save energy, water, and natural resources. It will include presentations on the benefits provided by various types of retrofits and also offer information on financial aid and programs that will save you money.
Help Your Fellow Living Beings:
Plaza Adelante Grand Opening and Street Fair: For over 34 years MEDA has worked to improve economic and social conditions in the neighborhood by stimulating investment, enhancing the business environment, and creating jobs for area residents. MEDA is committed to maintaining the cultural identity and resources of the Mission District.
Two Weekends from Now:
Experience Hendrix Tribute show at the Warfield in SF: From their website: Inspired by Jimi Hendrix’s unparalleled creative and musical influence, Experience Hendrix, L.L.C.–the company formed by the late guitarist’s father, James “Al” Hendrix to oversee his legendary son’s legacy–has continued that innovative spirit with its ongoing series of all-star tribute concerts held in honor of the late great musician. This is a Wednesday night show, so be aware of that part.
Pic of the Week… from my phone camera:
A little blurred, but from the Top of the Mark at sunset