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Finally The Farce That Is Fin Reg Reform Passes And Wall Street Can Resume Its Rapid March To Financial Armageddon

Tyler Durden's picture


As if anyone thought otherwise, the final shape of finreg has now been formalized and as Shahien Nasiripour at the Huffington Post notes, "many of the measures that offered the greatest chances to fundamentally reshape how the Street conducts business have been struck out, weakened, or rendered irrelevant." Congrats, middle class, once again you get raped by Wall Street, which is off to the races to yet again rapidly blow itself up courtesy of 30x leverage, unlimited discount window usage, trillions in excess reserves, quadrillions in unregulated derivatives, a TBTF framework that has been untouched and will need a rescue in under a year, non-existent accounting rules, a culture of unmitigated greed, and all of Congress and Senate on its payroll. And, sorry, you can't even vote some of the idiots that passed this garbage out: after all there is a retiring lame duck in charge of it all. We can only hope his annual Wall Street (i.e. taxpayer funded) annuity will satisfy his conscience for destroying any hope America could have of a credible financial system.

From Huff Po:

The two most high-profile provisions were the last items to be considered. Neither emerged intact. One would have forced banks to stop trading financial instruments with their own capital and give up their stakes in hedge funds and private equity funds, named after their original proponent, former Federal Reserve Chairman Paul Volcker. The other would have compelled banks to raise tens of billions of dollars because they'd have to spin off their derivatives-dealing operations into separately-capitalized affiliates within the bank holding company, pushed by Senate Agriculture Committee Chairman Blanche Lincoln. As currently practiced both activities are highly lucrative, annually generating billions for the nation's megbanks.

Ultimately, despite widespread approval among those pushing for fundamental reform in the wake of the worst financial crisis since the Great Depression, yet perhaps aided by near-unanimous revulsion among those on Wall Street, both were watered down in front of C-SPAN cameras beginning around 11 p.m. ET. Democratic lawmakers had been rushing to complete the bill by Friday morning under a self-imposed deadline. The final vote was recorded at 5:40 a.m. The conference began their final day just before 10 a.m. on Thursday.

Among the "compromises" were the push to have Tier 1 instead of Tangible Common Equity as a variable in determining how much could be invested in hedge funds and private firms:

After days of leaks to the news media that the Senate was looking to ease the restrictions, on Thursday afternoon Senate conferees confirmed the rumors: banks could invest up to three percent of their tangible common equity in hedge funds and private equity firms. Tangible common equity -- considered to be the strongest form of bank capital -- is comprised of shareholder equity. A few hours later, the Senate amended its proposal, changing the metric from tangible common equity to Tier One capital. Banks have more Tier One capital than they have tangible common equity, so changing the requirement to the weaker form of capital allows banks to invest more of their cash in hedge funds and private equity funds. The concession was confirmed by Steven Adamske, spokesman for House Financial Services Committee Chairman Barney Frank.

Unlike Dodd, luckily Barney Frank can at least be voted out.

The 1.5% to 3.0% increase was solely dictated by Jamie Dimon so that the firm could keep its investment in mega fund Highbridge and have breathing room for other asset management allocations. From FT:

The limit for JPMorgan Chase, which owns a hedge fund called Highbridge and a private equity group, would be about $2.8bn. People close to JPMorgan said the company had more than $1bn invested in Highbridge alone.

Limits for Morgan Stanley and Goldman Sachs, securities houses with smaller balance sheets, would be lower: about $900m for Morgan Stanley, which has already signalled its intention to sell its stakes in hedge funds, and about $1.78bn for Goldman, which has a large and very profitable fund business.

For those who remember that Obama, to great fanfare, said prop trading would spin off, well, it's good to see the President was purchased by Dimon's henchmen too:

As for the measure's proposed ban on banks trading with their own money, also known as proprietary trading, the agreed-upon provision calls for federal financial regulators to study the measure, then issue rules implementing it based on the results of that study. It could be anything from an outright ban to a barely-there limit.

Finally, on Lincoln's derivative spin off proposal, it appears that one is DOA as well:

Lincoln's divisive measure had been reached.

"There's been some work done by the administration and some of the senators on a potential compromise, I guess you could call it," said Peterson, chairman of the House Agriculture Committee, in a reference to the Obama administration.

The negotiations were not public.

Rather than banks being forced to spin off their swaps desks, they'd be allowed to keep those units dealing with "the biggest part of all these derivatives," Peterson said. The rest would be pushed out to an affiliate.

Under the agreement, reached late Thursday, banks would continue to be allowed to deal interest rate and foreign exchange swaps, "credit derivatives referencing investment-grade entities that are cleared," derivatives referencing gold and silver, and the firms would be allowed to hedge "for the banks' own risk."

Banks would be forced to push out to their affiliates derivatives referencing "cleared and uncleared commodities, energies and metals (with the exception of gold and silver), agriculture, credit derivatives referencing non-investment grade entities and all equities, and any uncleared credit default swaps," Peterson said.

"Frankly, the biggest part of all these derivatives, by far, are the ones that I named that are going to be able to stay in the bank," Peterson added. "Interest rate and foreign exchange are by far the greatest part of the amount of business that's involved here."

In other words, the greatest theatrical production of the past few months is now over, it has achieved nothing, it will prevent nothing, and ultimately the financial markets will blow up yet again, but not before the Teleprompter in Chief pummels the idiot public with address after address how he singlehandedly was bribed, pardon, achieved a historic event of being the only president to completely crumble under Wall Street's pressure on every item that was supposed to reign in the greatest risktaking generation (with Other People's Money) in history.

We hope, with this farce behind us, Goldman and JPMorgan can resume adding to their hundreds of trillions in IR, FX and other swaps promptly, as always oblivious of the end unwind, and finally blow up the world for good when the $1.5 quadrillion in fake credit money collapses into the gold singularity at the bottom of the Exter pyramid, and it all comes crashing down.


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Fri, 06/25/2010 - 08:10 | 433293 JGus
JGus's picture

Not that any of us are surprised by this!

Fri, 06/25/2010 - 09:28 | 433444 knukles
knukles's picture


This is a Scam wrapped in a Farce, Pretending Progress.
The Original Intent of the Regulation was to Change the Wall Street Business Model such that Events of the Past Several years Could Not Repeat Themselves.
The Wall Street Business Model has Not Been Changed, in spite of Grandiose Platitudes. 
The only New Development has been the Establishment of an Ongoing Source of Campaign Contributions for the Politicians and Increased Barriers to Entry for Business Competition.

And Higher User Fees and Taxes.

Oh.  Pardon.  As well as a Continued Push for Global Financial (Broken System) Integration.
All Hail the Power Elite and Global EU Model.

Wonder Why Gold is Rallying, Contemporaneous with Announcements?   

Fri, 06/25/2010 - 08:10 | 433295 jkruffin
jkruffin's picture

The fantasy land on Scam Street is already trying to bid bank stocks higher this morning, but one clause I see in the bill that screws banks like JPM, C, and BofA is the 3% cap.  We already know JPM and C are at least near 150% or more,  thats alot of junk to unload somewhere.  BofA probably real close as well being way over cap.

People buying stocks just to buy anything and try to squeeze a dollar.  When they get caught in the next flash crash, which we all know is coming soon, they will yet again learn the hard way.

Fri, 06/25/2010 - 08:15 | 433300 MichiganMilitiaMan
MichiganMilitiaMan's picture

At least there is still cap-and-trade and immigration reform to look foward to.

Fri, 06/25/2010 - 08:15 | 433302 cbaba
cbaba's picture

We already know that system is corrupt to the core, all congress is inside this ponzi scheme, its would be naive to believe that these corrupt politicians will make a change.

Fri, 06/25/2010 - 09:02 | 433406 Trundle
Trundle's picture

Is there anyone worse than Chris Dodd?


Fri, 06/25/2010 - 09:29 | 433446 caconhma
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<Is there anyone worse than Chris Dodd?>

The answer is Yes. It is Obama.

Fri, 06/25/2010 - 08:16 | 433303 peripatetic86
peripatetic86's picture

Wake me up when something substantive actually happens.

Fri, 06/25/2010 - 08:56 | 433385 Cognitive Dissonance
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Depending on the shoes you're wearing , this was very substantive. Dick Bove was quite frank and forthright this morning on CNBC when he said this is actually good for the banks, because they will find some loop holes and the cost will be passed on to "us", and bad for everyone else. I agree.

Surprise. When the banking cabal has demonstrated total effective control over the political class, should we be surprised that substantively the banks did well. Of course, you will hear a great deal of spin how this is bad for banks BUT it could have been worse. Bullshit. Fed has been given more power to feed the cabal and we pay the bills.

Bye Bye Blackbird. Where is our moral courage to take these bastards down? We cry and moan and groan and complain but unless we actually accept responsibility for making the changes needed, we all have limp dicks. This is why we welcome the quicker picker upper, that of Denial and Viagra. Let's stop blaming others and act.

Fri, 06/25/2010 - 09:06 | 433415 Rick64
Rick64's picture

Let's stop blaming others and act.


Fri, 06/25/2010 - 09:07 | 433417 peripatetic86
peripatetic86's picture

Exactly.  Nothing has changed except the banks will now have to take a few weeks to figure out how to work around the new "rules and regulations" and keep on keeping on with their implied and explicit mission.  I agree that in fact they now have more power, if that is possible, but the issue is how do we get to Hello Bluebird!!   The question quickly becomes how do we enact positive changes while working within the rubric of our current political system.   Now maybe our current political system fundamentally lacks the potentiality to do anything about our current malaise and then the question quickly becomes how do we effect change in our current system to adopt another system that will redress the absolutely fundamental design flaws that are quickly destroying what was once the best political ideal in the history of man. Citizens with the mind to create and contour such solutions absolutely need to step and take responsibility because in my view that is our only hope.

Fri, 06/25/2010 - 09:27 | 433442 AccreditedEYE
AccreditedEYE's picture

Of course, you will hear a great deal of spin how this is bad for banks BUT it could have been worse. Bullshit.

Yes sir. I'm going to be sick... I know, stupid me for actually hoping 1 or 2 amendments would have had SOME kind of teeth to them. America!!! Wake the F*CK up!! When "sweeping" regulation passes and the common on these banks is UP in the same day, nothing has changed. And everyone swallows it!!

Where does it end? What do we need to do to blow the lid of this pig? Even government manipulated data is coming in negative and barely a reaction.

Fri, 06/25/2010 - 09:53 | 433479 Cognitive Dissonance
Cognitive Dissonance's picture

"What do we need to do to blow the lid of this pig?"

The seemingly endless supply of denial and false hope held by the middle class....ops.......slave class must be exhausted before they will blow the lid off. We're getting closer. 

Of course, people will act like they have nothing left to lose ONLY when they have nothing left to lose.

Fri, 06/25/2010 - 15:39 | 434142 Geoff-UK
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...and not before.  +10

Fri, 06/25/2010 - 12:38 | 433749 hbjork1
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I have enjoyed your posts but can't always respond to say so.

I didn't get to watch more than the tail end of the session on C-SpanI last night but happened to catch the hearings during the (IMO) illogical boilerplate rationalization of why the separation of derivative tradings would not work because Europe would not be able to do that and hence there was no point in putting it in the bill.  Barney Frank was rationalizating while Chris Dodd was standing over Blanch Lincoln constantly jawboning her, I assumed to prevent comment.  It was the same spiel that Frank made previously when the draft wording was being readied for a vote. 

I didn't want to watch the painfull final vote.  Lincoln previsions were out, the deal was done.


Fri, 06/25/2010 - 08:17 | 433305 Sudden Debt
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If I'm lucky, I'll be able to sell my CITI's with a nice profit soon :)


Fri, 06/25/2010 - 08:17 | 433306 Turd Ferguson
Turd Ferguson's picture

The truly sad component is the 99% of Americans that are totally fucking oblivious to what is happening.

Fri, 06/25/2010 - 08:28 | 433332 Sudden Debt
Sudden Debt's picture

In the land of fools, the Joker is king!

Fri, 06/25/2010 - 08:51 | 433373 Boilermaker
Boilermaker's picture

Actually, I think 99% is probably optimistic.

Fri, 06/25/2010 - 09:04 | 433409 mephisto
mephisto's picture

And the truly sad corollary is that 99% of US politicians come from that 99%.

Fri, 06/25/2010 - 09:29 | 433445 AccreditedEYE
AccreditedEYE's picture


Fri, 06/25/2010 - 09:45 | 433465 loki
loki's picture

amen to that.  land of the stupid, ruled by the cunning.

Fri, 06/25/2010 - 10:08 | 433504 Boilermaker
Boilermaker's picture

The blind leading the retarded.  Unreal.

Fri, 06/25/2010 - 08:17 | 433307 E pluribus unum
E pluribus unum's picture

If you think Dodd is bad as Chairman, wait until you see his replacement: Tim Johnson makes Barney Frank look honest.

Fri, 06/25/2010 - 08:17 | 433308 billwilson
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AND somehow the banks get to keep gold and silver swaps! If they can't do commodities, equities or credit default swaps, why are they allwoed to keep gold/silver. Lert the manipulations continue!

Fri, 06/25/2010 - 08:40 | 433351 justbuygold
justbuygold's picture

Yes. They of couse snuck this in at the last second but of course had plans to do this all along.   JP Morgan definitely behind this.  Without it the run on gold would kill them.


"derivatives referencing gold and silver, and the firms would be allowed to hedge 'for the banks' own risk"

Fri, 06/25/2010 - 08:18 | 433311 John Self
John Self's picture

This was a disastrous piece of legislation even before yesterday's capitulations.

The opportunity was to set some metric for establishing how big is too big to fail.  You can be bigger than that, but if you are, then you're subject to a pure interpretation of the Volker Rule.  You want to do prop trading?  Fine, but you have to be small enough that you can fail -- and know that means you won't be bailed out. 

Fri, 06/25/2010 - 08:21 | 433318 bigdumbnugly
bigdumbnugly's picture

This game of musical chairs seems to have one helluva lot of seats left to pull away i'm afraid.  plus, it seems they are secretly adding new ones to the circle all the time - even if they only have 3 legs.

keep the music playing, maestro.


Fri, 06/25/2010 - 08:21 | 433319 Commander Cody
Commander Cody's picture

Mega QE on the way and it will be risk on with a vengeance.  What's in your wallet?

Fri, 06/25/2010 - 08:27 | 433330 Sudden Debt
Sudden Debt's picture

Just some paper pulp, but if I poor some green ink on it and press it into paper I'll be able to sell them as 100$ bills.

Fri, 06/25/2010 - 08:23 | 433324 Freebird
Freebird's picture

Gold rising in sympathy to the planet's plight - 1252

Fri, 06/25/2010 - 08:28 | 433331 Sudden Debt
Sudden Debt's picture

Time to short it back to 1230 by monday :)

Fri, 06/25/2010 - 08:57 | 433391 Cognitive Dissonance
Cognitive Dissonance's picture

It's the humans that have the problem. The planet will survive, oil disaster or not.

Fri, 06/25/2010 - 09:08 | 433422 Trundle
Trundle's picture

To wit:

George Carlin with a twist on the second law of thermodynamics:

Fri, 06/25/2010 - 12:50 | 433793 Freebird
Freebird's picture

I stand corrected.

Gold rising in sympathy with the humanoids plight - 1256

Fri, 06/25/2010 - 08:23 | 433325 I need more asshats
I need more asshats's picture

Over the objections of Republicans, House and Senate Democratic lawmakers also agreed to charge big banks fees to cover the costs of the bill, including $3 billion in funds to be used to help unemployed homeowners avoid foreclosure. A new financial stability oversight council would impose the fee structure and the Federal Deposit Insurance Corp. would collect the assessment from the largest financial companies to offset the net deficit effect of the bill.

Get ready to pay higher banking fee. LoL.

Fri, 06/25/2010 - 08:25 | 433327 Chemba
Chemba's picture

Right.  And of course, I always look to the Huffington Post for my expert analysis on all matters financial and economic.


Fri, 06/25/2010 - 08:40 | 433350 I need more asshats
I need more asshats's picture

You and Dylan(MSNBC superman, financial crime fighter, savior of the little people).

Fri, 06/25/2010 - 08:56 | 433384 John Bigboote
John Bigboote's picture

You two need to get a room.

Fri, 06/25/2010 - 13:17 | 433857 Clayton Bigsby
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Totally agree there Asshats - Dylan "Fuck-Nipple" Ratigan is... well, he's an Asshat

Fri, 06/25/2010 - 12:36 | 433767 Calculated_Risk
Calculated_Risk's picture

Stole my thunder! LOL

Of all places to pull a quote... I can't stand that sight for more than two seconds before I feel dirty like a rape victim!

Fri, 06/25/2010 - 08:27 | 433329 tmftdoyle
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From the NY Times "Senator Christopher J. Dodd of Connecticut, the Democratic chairman of the Senate Banking Committee, said legislators were still uncertain how the bill will work until it is in place. “But we believe we’ve done something that has been needed for a long time,” he said."

So we don't know how it will work, but we had to do it. Just absolutely unbelievable.

Fri, 06/25/2010 - 09:22 | 433430 Trundle
Trundle's picture

Note that Dodd is from the same state (CT) that brings us Joe Lieberman:

Maybe he should learn how to turn on a computer before he turns off the internet:!


Fri, 06/25/2010 - 08:34 | 433341 Chemba
Chemba's picture

Horrors! The banks are still allowed to make trades with their own capital, and they are still allowed to own the equity tranches of private equity and hedge funds!  These activities had nothing to do with the creation and collapse of the credit bubble, but it still makes for effective populist buffoonery.

Fri, 06/25/2010 - 08:40 | 433348 Instant Karma
Instant Karma's picture

Financial Armegeddon? Seems to me the race is on for Wall Street, local, state and the federal government, europe, and japan?

But, I must point out yet again that if you can print your own money and it is accepted you can in fact paper over any problem, at least for while.

Fri, 06/25/2010 - 08:40 | 433352 Rick64
Rick64's picture

Foxes in charge of the chicken coop.

Rep. Jane Harman (D-Calif.) chaired a homeland security, intelligence, information sharing and risk assessment technology subcommittee while holding $1 million in intelligence and homeland security contracting companies,

Sen. Frank Lautenberg (D-N.J.) chaired a subcommittee that oversees water quality. At the same time, he owned a $1 million plus stake in Linn Energy, a company that has been cited by federal authorities for alleged water pollution,

Sen. Thomas R. Carper (D-Del.) served on a clean air and nuclear safety subcommittee while holding as much as $65,000 in major nuke player and "Top 100 Corporate Polluter" Duke Energy.

Fri, 06/25/2010 - 08:45 | 433354 justbuygold
justbuygold's picture

Banks and the FED win once again !!   Barney Frank has to go.  Do America a favor and vote this idiot out !  Do you think anyone fell for that Red Herring that was brought in on limiting proxy voting for the sole purpose of allowing Frank to posture. 

The whole thing has been one big scripted play run by the banks and played out by their puppeteers.


Fri, 06/25/2010 - 09:07 | 433418 Chemba
Chemba's picture

The Volvo driving, "Baby on Board" sign posting, Boston Globe reading, Harvard Square shopping set, which is Barney's district, are never going to vote out Barney.  To do so would open them to a charge of "homophobia", which is something they could not shoulder when they are at dinner parties with their Harvard University colleagues

Fri, 06/25/2010 - 08:45 | 433358 Thinking Bulldog
Thinking Bulldog's picture

Get ready for nausea-inducing appearances on the Sunday news shows by Dodd, Frank, and various Obama dog-washers trumpeting how they've finally brought long-awaited protections for hard working middle class Americans and brought the Wall St. bankers to their knees. Perhaps even more tragic--the reporters doing the interviews won't ask one tough question.

Fri, 06/25/2010 - 08:45 | 433360 disgusted_american
disgusted_american's picture

Headlines over at Drudge

CHRIS DODD: ‘No one will know until this is actually in place how it works’…

I guess this is another bill, where "we have to pass it to find out what's in it"

Good God, how much can more chit can they throw on America and Americans.

Fri, 06/25/2010 - 09:07 | 433419 Rainman
Rainman's picture

Dood is lying. The banksters know exactly how it will work.

Fri, 06/25/2010 - 08:56 | 433387 fuu
fuu's picture

Cretins one and all.

Fri, 06/25/2010 - 08:57 | 433388 Translational Lift
Translational Lift's picture

"We can only hope his annual Wall Street (i.e. taxpayer funded) annuity will satisfy his conscience for destroying any hope America could have of a credible financial system."

Surely you jest....and no I will never call you Surely again....

Fri, 06/25/2010 - 08:59 | 433395 brian0918
brian0918's picture

Tyler blames Wall Street, and wants to have it more heavily regulated. But it is regulations that got us here in the first place. More regulations will do nothing but delay the inevitable, and make it all the worse when it actually does occur. The Federal Reserve has a force-backed monopoly on the control of our currency, thanks to government regulation, and the US Dollar has a force-backed monopoly as the only legal tender in the US. Those two pillars of regulation laid the foundation for where we are today. People must be free of the tyranny of both the Federal Reserve and a government-chosen and enforced currency. They must be free to use whatever form of payment they choose, and have it stand up in court as a valid form of currency. Only then can they separate themselves from the arbitrary whims of those in political power.

Fri, 06/25/2010 - 09:05 | 433414 Tyler Durden
Tyler Durden's picture

So long as the Fed provides preferential terms and tips the scales on behalf of Wall Street, regulation is critial. If you do away with the Fed, then, of course, regulation becomes moot

Fri, 06/25/2010 - 09:38 | 433451 Cognitive Dissonance
Cognitive Dissonance's picture


Some CNBC talking head "repeater" early this morning was explaining how the Fed was seen as the only "honest" game in town and thus the reason they were handed additional power. I stood mesmerized by what I was seeing and hearing. And judging by his body language and voice, this was what the repeater really believed.

I'm starting to see more and more of my blue collar clients turn the corner here and completely reject what they're being told. One client called me yesterday and there was capitulation in his voice when he said "This is all coming apart, isn't it?"

My answer? "Yes, it is. Which was the reason I asked you to purchase physical Gold 7 years ago, 5 years ago, 3 years ago, last year and last month."

He's finally taking my advice. Unfortunately Gold is no longer $500. Fortunately Gold isn't at $2,000.

Fri, 06/25/2010 - 09:45 | 433466 brian0918
brian0918's picture

The solution to the violation of individual rights via a force-backed currency and money manipulator is not *more* violations of individual rights through *more* incompetent regulation. By advocating such, you are only setting yourself up to be controlled further, and have more of your own rights violated. The Wall Street execs are not your enemy - so stop trying to influence the government to apply force against them. It is the government initiation of force that is the problem, and the only rational action to advocate is the dismantling of the Fed and the force-backed monopoly on currency.

Fri, 06/25/2010 - 10:14 | 433506 Crab Cake
Crab Cake's picture

The Wall Street execs are not your enemy...

You are correct, they are not the singular enemy.  They are only one of we the little peoples' enemies.

Rage Against The Machine: Know Your Enemy

Compromise, conformity, assimilation, submission
Ignorance, hypocrisy, brutality, the elite
All of which are American dreams
All of which are American dreams...

Fri, 06/25/2010 - 10:36 | 433583 uraniuman
uraniuman's picture

"The Wall street execs are not your enemy" - I don't know - it feels like all these powers are conspiring against the public - including the politicians and banksters.

Fri, 06/25/2010 - 10:52 | 433636 sumo
sumo's picture

Spoken like an academic who hasn't a fucking clue.

Try making a living in the real world, where failure actually costs you, and find out just how predatory it is. Only the rule of law - yeah, regulation - limits that predation.

Fri, 06/25/2010 - 11:07 | 433673 brian0918
brian0918's picture

Of course the government has a purpose - to uphold and protect individual rights, which means punishing those who initiate force against anyone. Until you specify what you mean by "predation", I cannot be clear about what you mean. If someone commits fraud, of course the government should get involved to punish them, through the courts.

Calling me an academic, and saying that I don't make a living in the real world, is not only incorrect, but irrelevant, and not an argument.

Fri, 06/25/2010 - 12:33 | 433760 sumo
sumo's picture

Wall street execs are not our enemy, and you don't know what I mean by predation?

Fucking clueless.

Fri, 06/25/2010 - 13:44 | 433925 Muir
Muir's picture

What did you expect of a Ayn Rand wannabe?

All you'll ever get is more dribble like Mr. Greenspan.

Fri, 06/25/2010 - 15:02 | 434070 brian0918
brian0918's picture

What aspect of Alan "Addicted to Power" Greenspan could you confuse with Ayn Rand? Do not confuse the fact that he was a fan of Rand in the 60s with the fact that he became power hungry in the 90s. The Federal Reserve and everything Greenspan now promotes are absolutely contrary to the principle of individual rights that Rand categorically stood for.

Likewise, don't criticize all starving artists for the actions of Hitler. :P

Fri, 06/25/2010 - 16:08 | 434219 Muir
Muir's picture

"Likewise, don't criticize all starving artists for the actions of Hitler. :P"

This is true.


This is also true:



Fri, 06/25/2010 - 16:31 | 434258 brian0918
brian0918's picture

Wow, you found 44,000 people who mistake an oil spill caused by government incentivizing risky deepwater drilling by a) banning shallow-water and land drilling, b) capping company liability, c) subsidizing the construction of deepwater drilling, and d) banning private ownership of open waters, with Rand's uncompromising promotion of total privatization of property and restriction on government intervention into the economy.

It's a common mistake to assume that the current market's actions, in this mixed economy, are the same actions one should expect in a free market. But the fact that a mistake is common does not validate it.

Fri, 06/25/2010 - 20:35 | 434486 Muir
Muir's picture

I very much doubt you'll read this.

But you make only one mistake.

You assume that the market and the government are two entities.

Alas, life is never as simple as your heroine thought it to be.

Fri, 06/25/2010 - 20:36 | 434489 Muir
Muir's picture

I very much doubt you'll read this.

But you make only one mistake.

You assume that the market and the government are two entities.

Alas, life is never as simple as your heroine thought it to be.

Fri, 06/25/2010 - 14:33 | 434025 Apocalicious
Apocalicious's picture

Hey Sumo, are lions the “enemies” of zebras? Yes and no. But mother nature provided zebras with an innate sense of self-preservation that creates the fight or flight response when they see a lion. But what happens to an ecosystem once the apex predator is removed? Well, in short it’s not good for the prey animals in the long run.

I believe Brian is pointing out the intervention via the Fed and many poorly constructed regulations essentially is way of convincing the zebras that the lions are their buddies, when in fact, they are not. On the other hand, demonizing the lions serves no purpose either and is quite frankly foolishness.

While we certainly need protection of individual ownership, property rights, and fraud enforcement, we really need individual accountability injected back into the system whereby people need to realize that - surprise of all surprises – banks are trying to make money off you, rather than mollycoddling the idiot classes into believing someone will magically take care of them. A bank will rip you off if you let them, and when society as a whole can’t see they’re being ripped off, they won’t fight to save their striped hides. So, removing the façade of “protection” is pretty much the only thing I can see as being effective.

You clowns are arguing past each other on semantics but in agreement on principles. But if two guys as relatively smart as you can’t agree on what needs to be done, there’s no chance our society as a whole will.

The four horsemen draw nigh…

Fri, 06/25/2010 - 15:33 | 434129 brian0918
brian0918's picture

Great post.


Although I believe there is still hope - after all, I once believed in government regulation. :P

Fri, 06/25/2010 - 14:56 | 434060 brian0918
brian0918's picture

Apparently you do not know what you mean by "predation", either. So long as you demand that I wallow among your undefined terms, debate is obviously not possible. Either define it clearly - thus opening it up to discussion - or GTFO.

Fri, 06/25/2010 - 13:52 | 433956 Apostate
Apostate's picture

I have to disagree with you on the issue of the Wall Street execs.

They're far more the government than the clowns in DC. Any one of them could've publicly dissented when Paulson forced the "rescue." As a rule, most WS execs are statist in the extreme, along with much of the rank and file.

If they want to undermine the government, they can and will. But as far as I can tell, they're happy to join in the looting. And they're, in fact, the primary driver of that process.

Fri, 06/25/2010 - 15:37 | 434140 brian0918
brian0918's picture

They are certainly contributing to the problem, but condemning them will not bring about a solution. The only solution is to remove the ability of government to manipulate the market. Then there will be no incentive for lobbyists to exist.

Fri, 06/25/2010 - 16:49 | 434302 Geoff-UK
Geoff-UK's picture

I understand you're a fan of Ayn Rand but...good Lord that icon is creepy!  Her eyes follow me whereever I go!  Could you make an icon of the letters AR or something?  Or a kitten?

Fri, 06/25/2010 - 16:53 | 434311 brian0918
brian0918's picture

Hahah... 40x40 is not much to work with. I wanted to make my influences clear, and that is the most recognizable photo of hers. Apostate is using a photo of Rand as well, but it's not as recognizable.

Didn't anyone tell you, Rand ate kittens for breakfast?

Fri, 06/25/2010 - 13:58 | 433963 SheepDog-One
SheepDog-One's picture

'Tyler 'blames' Wall St and wants it more regulated'...


Ayn Rand wanna-be...WHAT regulation? Repeal of Glass Steagal brought on the present Wild West in the East Wall St where even pirates would blush at the lawlessness! You speak like a chowder head who read 1 book and suddenly know it all. Pull your head out of your ass, buy a gun.

Fri, 06/25/2010 - 15:39 | 434145 brian0918
brian0918's picture

"Regulation" includes any government intervention into the economy, whether negative (e.g. tax) or positive (e.g. subsidy). Both are violations of individual rights, and derail the market's natural incentives.

Fri, 06/25/2010 - 08:59 | 433397 dan22
dan22's picture

China’s Coming Banking Crisis- The Banks Are Loosing Deposits At a Rapid Pace

Lower Interest Rates Can No Longer Attract Deposits, Major Banks Are Luring Customers With Higher Interest Rates."

By the end of March, Citi bank, Ever bright bank, Merchant Bank, Pudong Development banks, Industrial Bank, and Minshen Bank of china’s loan deposit ratio is exceeding the official upper limit(75%) set by CBOC and China Banking Regulatory Committee. Among them, Mingshen and industriral bank are exceeding 80%, while local city commercial banks are at even worse of a shape. So, the deposits in Chinese banks are shrinking and they are facing rising liquidity risk while there is a capital out flow of wealthy Chinese .


China’s Coming Banking Crisis- The Banks Are Loosing Deposits At a Rapid Pace  

Fri, 06/25/2010 - 09:00 | 433401 Tic tock
Tic tock's picture

So now we know how much Gold and Silver the US Treasury holds... apt name there, Tyler.

Fri, 06/25/2010 - 09:01 | 433405 Boilermaker
Boilermaker's picture

Well, bank stocks are soaring even with the (again) 10% reduction in 'estimated' GDP.

Commercial Real Estate (IYR) is also, of course, rising.

My god...fuck this.

Fri, 06/25/2010 - 09:06 | 433411 Translational Lift
Translational Lift's picture

Yep.....Bank stocks up in pre-mkt.   They're laughing all the way to the

Fri, 06/25/2010 - 09:44 | 433463 Cognitive Dissonance
Cognitive Dissonance's picture

This is the tell, the signal that the financial class understands who the winner really is. You can't hide the intent of money on an open exchange.

Poor Mandy on CNBC is morning let slip a truth. There was back and forth talk about banks winning and everyone else losing and how this bill won't stop future problems. Mandy asked the obvious question. Why go through all this if it does fix the problem?

Poor Mandy, still clueless to the big game and her part in it. At least she wore red.

Fri, 06/25/2010 - 10:05 | 433498 Boilermaker
Boilermaker's picture

At some point, seriously, pitch forks and torches will be absolutely in vogue.  I think bankers will 'get the message' only with a razor to their jugular.

This is outrageous.

Fri, 06/25/2010 - 09:03 | 433408 Leo Kolivakis
Leo Kolivakis's picture

I see they're still not taking Brooksley Born's warning very seriously. What a sham!

Fri, 06/25/2010 - 09:05 | 433412 TheWord
TheWord's picture

If you want an example of how much the formerly-comfortable-middle-class will take, look no further than Zimbabwe.  Even after all the crap they've been through, they STILL haven't violently revolted.

Only societies which have recently been through wars or other hard times (eg. regime change) have the fire in the belly to force change in the streets.

We're soft cocks, destined to be ass-raped by the banksters and politicians until we haemorrhage.  Only after they've taken anything worth stealing will the average American look up from their cable and KFC and say, "whuuaattt?.....Hey, you.....hang on!!"

By then, it'll be a decade too late.

Fri, 06/25/2010 - 09:25 | 433436 Innocent Bystander
Innocent Bystander's picture

"Obama: Wall Street bill toughest since Depression"

I don't understand why all the debate on this thread

Fri, 06/25/2010 - 09:41 | 433458 exportbank
exportbank's picture

Bystander... you have the answer - government is all about the one-liner. The masses will hear that line (over and over and over) and think something changed.

Fri, 06/25/2010 - 09:43 | 433460 John McCloy
John McCloy's picture

The masses are becoming more aware. They laugh when the President attempts to talk up unemployment. One thing that amazed me is that those I had though would be braindead were actually pointing out to one another that all the new jobs are from census. 

Fri, 06/25/2010 - 21:46 | 434627 StychoKiller
StychoKiller's picture

"Obama: Wall Street bill toughest since Depression"

I was holding out for Draconian!

Fri, 06/25/2010 - 09:27 | 433443 yabs
yabs's picture


its lack of regulation that took away glass seagal act

that is the main contributor to todays problems plus the fact that

if a company goes tits up it triggers the tsunami of cds contracts so therefore no big company can go bust.

they need to reinstate glass seagal and ban cdo's and other derivatives

Fri, 06/25/2010 - 10:01 | 433491 brian0918
brian0918's picture

yabs: Your suggestions are like trying to plug holes on a sinking Titanic, while demanding that nobody use any of the lifeboats. The more fundamental contributor to the specific problems in the market are the force-backed monopoly of the Federal Reserve and the US Dollar as the only legal tender currency. You can plug holes all you want by banning CDOs, derivatives, or whatever - the problem is still going to keep resurfacing in some other form. The foundation of our market was built on air - the whims of politicians - and as the winds change, so the market rocks. The only solid foundation for the market is a free society in which everyone is personally responsible for his own financial situation and livelihood.

Fri, 06/25/2010 - 11:03 | 433666 Marla And Me
Marla And Me's picture

Actually, fractional reserve banking coupled with compound interest are enough to bring the ship down.  Actually, simply charging compound interest will suffice.  You can't have infinite exponential growth in a closed system; it inevitably collapses.  Now that the private sector has been completely saturated with debt, and can't take on anymore, the government will step in and take that role.  That's why the healthcare reform had to pass, and that's why we'll get a cap & trade bill that will allow carbon derivatives trading.  If they don't, the whole system would slowly collapse in a spiral of deflation to reach its equilibrium.  Deflation is a non-starter for TPTB (it destroys their paper wealth), so they will use every tactic imaginable, until they can no longer avoid it and then, and only then, will the collapse take place.  Until then, take all precautions necessary.

Fri, 06/25/2010 - 14:54 | 434056 Escapeclaws
Escapeclaws's picture


Nice post, I've always thought growth was necessary due to fractional reserve banking and compound interest. The cycle seems designed go from bubbles to crash. Those with lots of money buy up all the worthwhile assets at firesale prices in depressions and then distribute them to the unwary in bubbles. They just keep getting richer and richer as the cycle plays out. Depressions are *good* if you're one of those people. They also discipline the reserve army of labor. Problem is that depressions lead to war, and you can never tell how that will turn out.

Fri, 06/25/2010 - 12:30 | 433751 SRV - ES339
SRV - ES339's picture

Ayn... how about sending John Galt to Washington to clean this mess up!

Fri, 06/25/2010 - 09:38 | 433448 John McCloy
John McCloy's picture

I just wrote about 1500 words on this crime but ZH crashed and now what I wrote is lost but essentially all I had to say was that every meaningful amendment step by step has been met with a fight and there should be no doubt in anyones mind now that this country no longer belongs to us. We all need to look through the prism of how best can the top 1% extract money from the U.S. system and how can the middle class best be harvested to keep them in power and money. 

All you need to know in order to predict what will occur the moment any debt default or attempt to control these motherless fucks is how can the American middle class suffer the most form this and within 48 hours a Senator, CEO, or captured TV host will be rotated into place with talking points. 

  At this point I hope BP goes to zero because this may be the only event that will collapse the entire derivatives and financial markets and now every pol cannot plead ingornace since the writing was on the wall in 2008 at how urgently this needed to be repaired along with the banning of all HFT's.

The reason all of us say Why is the opposite of what is supposed to be happening occuring it is because it is exactly the opposite of who benefits and who is punished. Reverse logic.

Fri, 06/25/2010 - 09:47 | 433468 brian0918
brian0918's picture

John, I've been copying/pasting my text into Notepad before clicking Submit, just in case. :D

Fri, 06/25/2010 - 09:50 | 433473 John McCloy
John McCloy's picture

   Yeah I usually do that. Of course not today when I write a novel. 

Fri, 06/25/2010 - 13:58 | 433962 Apostate
Apostate's picture

Get Lazarus for Chrome or Firefox.

Fri, 06/25/2010 - 16:06 | 434211 Geoff-UK
Geoff-UK's picture

Speaking of the middle class being "harvested" long until more and more middle class Americans start pulling a "Timmay" on their taxes?  What's good for the Geithner is good for the gander...



Fri, 06/25/2010 - 09:33 | 433449 centerline
centerline's picture

Every day now, little by little, more evidence that we are on a one-way trip to financial oblivion.    

Fri, 06/25/2010 - 09:37 | 433452 disgusted_american
disgusted_american's picture

Wow. Another freaking "independent" agency?  Yes, because the SEC sure as heck has such a stellar record.

Another layer of useless beaucratic crap.

Fri, 06/25/2010 - 09:41 | 433456 Hdawg
Hdawg's picture

Huff Post - controlled form of public frustration/protest - delete their media from your processes (similar to Noam Chomsky, no debate on 9/11 = corrupted).


Fri, 06/25/2010 - 09:51 | 433477 BumpSkool
BumpSkool's picture

Gold/ S+P 500 spread now +180 (over) ... this sucker was minus 100 just 2 months ago!!!

Fri, 06/25/2010 - 09:54 | 433481 disgusted_american
disgusted_american's picture

One of my co-workers, who normally doesn't follow the news, let alone financial news, earlier this week, said something pretty simply, but made a lot of sense. He said, it feels like everything is being propped up by toothpicks, and no one knows when its going to collapse, because they keep adding more toothpicks, but what happens when the weight of of this nonsensical crap coming from DC and losses in the system can no longer be held up by toothpicks?

He said its comning. I must admit I was a bit stunned that he seems to get it and laughs at CNBS when they talk.

I just wonder how many people are waking up to the lies they are being told?

Fri, 06/25/2010 - 10:00 | 433490 John McCloy
John McCloy's picture

Yeah it is Krazygluenomics. Spin the plate of the day. If two plates emerge they spin that one as well tomorrow. Crash landing is going to need to be redefined.

Fri, 06/25/2010 - 09:58 | 433487 Rider
Rider's picture


Buying an nice small Island with a house on Nicaragua's Lake for 50K, fishing is good, nice nicaraguan girls around and enough local services in the other islands.

Comming back after FIN COLLAPSE V2.0 around  2016, I will load stocks then.


Fri, 06/25/2010 - 11:02 | 433661 sumo
sumo's picture

Some Greek islands are now for sale. No joke.

Fri, 06/25/2010 - 11:21 | 433676 Marla And Me
Marla And Me's picture

Then you can rest assured that the liquidation phase has begun.

Fri, 06/25/2010 - 10:03 | 433494 Boilermaker
Boilermaker's picture just loves a guaranteed double dip recession / depression....

IYR is UP, Banks UP, Small Caps UP...


Fri, 06/25/2010 - 10:13 | 433514 earnyermoney
earnyermoney's picture

Did the bill adopt the House or Senate's version of Audit the Fed? My bet is the weaker version from the Senate. I'll bet Bernie Sanders in the Senate and Allan Grayson in the House voiced not one syllable of opposition to the gutting of their legislation. Trojan Horses providing populist cover for progressives.

Fri, 06/25/2010 - 10:29 | 433568 chinaguy
chinaguy's picture

When the citizens get angry and demand the Plutocrats pass laws protecting them from the Plutocrats......they get....Panem et circenses.

I'm F-ing shocked.

Fri, 06/25/2010 - 10:31 | 433569 Quinvarius
Quinvarius's picture

The fact that exceptions were made specifically for publicly known frauds in the gold and silver markets is really all I need to see.

Fri, 06/25/2010 - 10:40 | 433601 Ted K
Ted K's picture

I kept telling Tyler Durden he didn't need to post all those cheap shots about the SEC after Phil Gramm and his Republican buddies gutted the SEC of funds and resources.  FINRA has and will take care of all of this.  FINRA is going to make MMS look like a vigilant group when this is all finished.

Fri, 06/25/2010 - 10:41 | 433604 Ted K
Ted K's picture

I kept telling Tyler Durden he didn't need to post all those cheap shots about the SEC after Phil Gramm and his Republican buddies gutted the SEC of funds and resources.  FINRA has and will take care of all of this.  FINRA is going to make MMS look like a vigilant group when this is all finished.

Fri, 06/25/2010 - 11:50 | 433694 Stun Gun
Stun Gun's picture

"Bye Bye Blackbird. Where is our moral courage to take these bastards down? We cry and moan and groan and complain but unless we actually accept responsibility for making the changes needed, we all have limp dicks. This is why we welcome the quicker picker upper, that of Denial and Viagra. Let's stop blaming others and act."

CD you over looked the simple fact that we can't be bothered to get off of the couch to start a revolution. Hell we might miss our favorite TV shows. Have somebody else do it and call me when it's over.

Maybe we could just pay a few CEOs a visit and check their reflexes by applying one of these in a careless manner? 


Fri, 06/25/2010 - 12:24 | 433698 Ripped Chunk
Ripped Chunk's picture

July 4 march on DC.  This has to happen now to protest this slap in the face - joke of a bill. The bill is designed to promote TBTF growth. Status Quo, business as usual once again.

We still need an INCUMBENT BLOODBATH IN NOVEMBER but this 3,000 + page fiasco of a bill shows that OUR ELECTED REPRESENTATIVES ARE NOT HEARING THE MESSAGE.


Fri, 06/25/2010 - 13:15 | 433854 hound dog vigilante
hound dog vigilante's picture

Trillions in taxpayer bail-outs weren't enough to convince many politicians that Wall St. is fundamentally unsound and hopelessly corrupt.


Maybe a permanent place on the unemployment line will remind these politicians who they really work for...


Incumbent bloodbath in november.


Fri, 06/25/2010 - 13:22 | 433863 williambanzai7
williambanzai7's picture

Here is what I think. They, the financial industrial comlex, are in for very hard times. Here is why: 1. We all know that Benny's magical mystery tour is running out of steam. There goes all that easy trading income financed with cheap Fed money. 2. The disappearance of Lehman and Bear created a momentary competitive void that has now been filled many times over. Truth be told there are too many bankers searching for too little deals. 3. Don't hold you breath waiting for private equity deal flow to come back any time soon. 4. China is not the short term answer for bloated banks. It will be a very long time until transaction flows rival pre crash flows. Very long time. 5. They are all sitting on toxic time bombs. The market is not going reinflate those assets. More likely a new crisis will force them to blow it all out. 6. Who wants to invest in banks with all the unknowns? 7. Real estate securitization was really a hail Mary play, what are they going to pillage next? There is nothing left. They will have to cannibalize themselves. This means the take the money and run gestalt will be the predominant mind set of your friendly neighborhood bankers. My guess, look for lay offs to start again this fall.

Fri, 06/25/2010 - 13:33 | 433903 perpetual-runner-up
perpetual-runner-up's picture

How does a privatly owned institution (the fed) get appointed to run a government agency?

Fri, 06/25/2010 - 13:37 | 433914 Ripped Chunk
Ripped Chunk's picture

Barney on CNBC right now.  He looks drunk (again)


Continuous Parade of Filth  (CPF)

Fri, 06/25/2010 - 13:49 | 433945 SheepDog-One
SheepDog-One's picture

Guns n ammo, Bitchez!

Fri, 06/25/2010 - 14:14 | 433993 jmc8888
jmc8888's picture

Fin Reg: (not worth the paper its printed on)       $0


Kickback from Wall Street:                                  $10,000 donation


The look on both democrats and republicans, and Nero O-bummer's face when the entire market collapses AFTER financial reform: Priceless

.......For some things there use to be mastercard, now that's it's been repossessed, you're screwed.

Fri, 06/25/2010 - 14:34 | 434014 Apocalicious
Apocalicious's picture



Fri, 06/25/2010 - 15:48 | 434178 DR
DR's picture

So there you have it...the US sovereign will continue to backdrop the world’s biggest casino.

So what as US citizens, shall we do?

Move as much as possible the productive economy to the underground economy.

Buy only local and US products-foreign buying creates treasury debt and feeds Wallstreet.

Pay under the table for all services when possible and expect reciprocation as such.

Support your local butcher, and grocer so when the next financial crisis forces the economy to revert to more primitive forms they will be available.

And for hell sakes…stop buying those overpriced Nike shoes!

Fri, 06/25/2010 - 16:08 | 434217 NorthenSoul
NorthenSoul's picture

In the 30's, Congress waited to have the results of the Pecora Commission to craft a Finance Reform Bill.

Imagine the revolutionary concept: We had a problem, let's investigate what went wrong, then, and only then, we'll fix the problem.

Nowadays, the people in Congress are so smart: They don't even need to understand what happened to "pass something".

And people wonder why this country is heading in the wrong direction?



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