posted May 02, 2013 10:57 AM            

By Susie Madrak

Video
with some news that is making bankers very, very unhappy:

Minds are changing on Too Big to Fail. A month ago, it was just something in the air. Now, it looks like we're headed for a real legislative confrontation. And man, is the finance sector freaking.

Last week, on April 24th, Democratic Senator Sherrod Brown of Ohio and Louisiana Republican David Vitter introduced legislation called the "Terminating Bailouts for Taxpayer Fairness Act of 2013 Act," or the "Brown-Vitter TBTF Act" for short. The bill is a gun aimed directly at the head of the Too-Big-To-Fail beast.

During the Dodd-Frank negotiations a few years ago, Brown teamed up with Delaware Democrat Ted Kaufman to introduce an amendment that would have physically capped the size of the biggest banks. The amendment was bold and righteous but was slaughtered on the floor by a 61-33 margin, undermined by leaders of both parties – 27 Democrats voted against it.

Brown-Vitter offers a different and, in a way, more elegant solution to the problem than Brown-Kaufman. Rather than impose size limits, it simply insists that banks with over $500 billion in assets maintain higher capital reserves than are currently required. Companies like J.P. Morgan Chase, Wells Fargo, Morgan Stanley, Goldman Sachs, Citigroup and Bank of America will have to keep capital reserves of about 15 percent, about twice the current amount.

http://crooksandliars.com/

http://www.rollingstone.com/politics/blogs/taibblog/too-big-to-fail-takes- another-body-blow-20130501

:edit to add:

The bill only has such tough requirements for just those few megabanks, which sounds unfair, except that the aim of the bill, precisely, is to level the playing field. Right now, the biggest U.S. banks enjoy a massive inherent market advantage in that they're able to borrow money far more cheaply than other banks, because everybody on earth knows the government will never let them fail and will always bail them out in a pinch, making their debt essentially U.S.-government guaranteed. Studies have shown that these banks borrow money at about 0.8 percent more cheaply than other banks, and that this implicit government subsidy is worth about $83 billion a year just to the top 10 banks in America. This bill would essentially wipe out that hidden subsidy and make the banks bailout-proof.

posted May 02, 2013 04:44 PM            

I'm going to give a very hard nosed answer, telling it like it is.

Bankers as a whole are indifferent. It's only those on executive boards that are sweating. Those guys earn in excess of $10MM to $30MM per year, and so they can afford to sweat it a little. Instead of a 200 foot yacht, maybe compromise with a 120 foot yacht? Maybe have two misteresses instead of five?

It's up to the corporate boards to go sweat it and issue more common stock in the market. More equity offerrings is a glut of bank stocks, and will drive down US bank stock prices.

That is cool. Most bankers don't want to even own bank stocks. I'm a shareholder of only one US bank, and even then its opportunistically. But so far, long-term returns on bank stocks have been robust, and I know that whatever negative news it entails would be short lived.

The government is killing the competitiveness of US banks. Most bankers don't care. They walk across the street to the foreign banks that will pay even higher salaries to lure bankers from US banks.

I personally don't work for a US bank right now, so it makes no difference to me. Theoretically, this legislation benefits me because it boosts earnings for the foreign bank that I work for, and further increases my paycheck. Dittos for most of the industry.

At the end of the day, all the hoopla doesn't amount to a hill of beans because senior partners at Goldman are still pulling an average of $4MM to $5MM in pay a year. Blankfein, the CEO pulled $13MM last year. Other schlubs like myself earn a lot less but still have a decent living, as long as we keep our jobs.

Like I said, the US banking industry is like the combo of a Carnival Cruise and the Titanic. The cr4pper cannot flush, BS is piling up, and the government is loading it with bombs to sink it.

Where does this leave Congress and the President? Totally ineffective. And how about the average Joe? Shafted.

posted May 03, 2013 06:49 AM            

When a million isn’t enough: why top bankers are struggling to get by
...
“You just get trapped at a certain level of expenditure,” said Tony Greenham, a former investment banker at Barclays and head of finance and business at the New Economics Foundation. “You’re in a peer group which aspires to and achieves a certain standard of house in a certain area, a certain type of holiday home, and certain schooling for your children.”
[...]
An even stronger urge than the need to keep up with the Rothschild's or satisfy the missus is rooted in the bankers' childhoods. Every time they push a client to buy a sub prime CDO, these bankers are merely trying to bring a smile to the cold, disapproving eyes of the parents looking over their shoulders. According to the squid/therapist quoted in the article, only "intense therapy" can help.

Poor dears, maybe we should have a bake sale to help out....

What also might be needed is investment counseling for the investment brokers?