Hooray, More Free Money
Bloomberg reports Banks Get Easier Volcker Rule and $40 Billion Break on Swaps.
The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. approved changes to the Volcker Rule Thursday that let banks increase their dealings with certain funds by providing more clarity on what’s allowed. The regulators also scrapped a requirement that lenders hold margin when trading derivatives with their affiliates.
Thursday’s separate reversal of the interaffiliate margin requirement for swaps trades could free up an estimated $40 billion for Wall Street banks, though regulators added a new threshold that limits the scale of margin that can be forgiven.
The FDIC’s Gruenberg opposed the change to swaps rules, arguing that it removes a critical protection for banks. Fed Governor Lael Brainard reiterated that concern, saying in a statement that she dissented from the Fed’s approval because she fears the deregulatory move “could again leave banks exposed to the buildup of risky derivatives.”
Hooray!
What can possibly go wrong with fewer restrictions and less margin required on derivatives?
Mish
I am wondering whether this was approved just so the banks can make more money, or is there a bigger problem building behind the scenes that might have come to light if it wasn’t approved?
“free up an estimated $40 billion for Wall Street banks,”
…
We all know how this will turn out.
The up to $40 billion will be returned to shareholders in some fashion lickety split. There will be no clawbacks when empty pocketed banks turn to Uncle Sam for mega bailout.
Ain’t Amerika Grand! Profits privatized Losses socialized … just the way the elites want it.
It might be a good idea to separate banking functions from trading. Let’s call it Glass-Steagall.
Or, instead of insisting on always doubling down on dumb when it becomes obvious dumb don’t work: Just get the government out of banking altogether. No Fed, no FDIC, no awareness whatsoever, whether some stall on a street corner lends money or sells lemonade.
I can straight up guarantee that if you do the latter, banks will never again get $40billion of other people’s money from any deal. Hence, that problem is effectively solved.
While, if “we” instead “pass the 95,000 page gobladygook act” they will continue to do so, forever and ever. By wasting billions hiring lawyers to read the idiocy, and then find out how they now qualify for their $40billion of stolen loot. No doubt by the same trite old nonsense that their problem is “liquidity” and not “solvency.” Since the idiot army seem to have been sufficiently indoctrinated and dumbed down to fall for the sham that the two are in any way different, anywhere outside of formal accounting.
Is there anyone that doesnt believe we have a defacto nationalized banking system ?
We have a de facto nationalized anything “system.”
No substantively different from any other totalitarian state, aside from our dialect of Newspeak calling what has historically been branded “nobility” or “party members”, “bankers”, “investors”, “public servants” and “property owners.”
But beneath that thin veneer of childish propaganda, the underlying economic organization is exactly the same. Hence so is the economic results.
FED worst than Covid-19. See the experiment with monkeys for laughs. I think the elite overproduction theory in it is a complete bollocks: the well is so poisoned and skewed that no capable, intelligent being want to get involved. Explains the choices you’ve got.
I still miss those Community Chest cards from 2009 that read “bank error in your favor, collect $700B”. The Monopoly man looking astounded at his good fortune was always good for a laugh!
Global dollar shortage means US can print without inflation at expense of exports. But when foreign demand for dollars drops for any reason, Fed will be against the wall with interest rates at zero. We’ll see massive inflation as those dollars flow back in. Only reason treasuries even have yield right now is foreign demand for dollars. Fed can control nominal yield curve but they can’t control inflation.
11 years have gone by and people are still betting against the fed. when will y’alls learn? DNFTF
BTW, Morgan Stanley was rumored to be behind the Fed’s (Not!) QE. GUESS WHO IS MANY TIMES FAR AND AWAY THE LEADER IN CREDIT SWAPS? YEP, MORGAN STANLEY YET AGAIN! Can we cut to the chase and just call Jamie Dimon our Fed Chief??
‘want’ ‘when your’
WT* are safety guidelines for if you waive them when you get to when they’re needed? TOTAL legislative and regulatory hypocrisy. And you won’t taxpayers to bail this out whenyour Swiss cheese ring-fence melts?? They’re lenders don’t get that latitude. F’ that BS.
I see this stuff and keep saying “It was only 10 years ago!! Are we this stupid? Yes, yes we are.”
Just in time for the rapidly expanding money supply! Yippee!
We’ve been told over and over, “no one can time the market!” This latest idiocy, combined with 1. several years of increasing “us versus them” social conflict that’s accelerating; 2. a pandemic; 3. near record setting call buying, and; 4. general complacency that cash is trash, makes this look like a good time to stand aside.
I think another leg down equal to or greater than the last one is coming, and soon. I don’t mind a low return from T-bills (for now). My new goal is safety and capital preservation.
This will end very badly. May take longer than anyone thinks but when it does blow it will be a doozy.
Tokidoki … Dow 1,000,000?
2,000,000 is more like it.