DERIVATIVES ESCAPE REGULATION

MOST POPULAR ARTICLES

DISCOUNT FOR EARLY BIRD REGISTRATION RUNS OUT ON JUNE 22

CLICK HERE TO REGISTER FOR 2 DAY GARFIELD CONTINUUM CLE SEMINAR

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE

RESTLESS CONSUMERS GROW WEARY OF BANK CONTROL OVER REGULATION

“Regulators have missed more than two dozen deadlines for new Dodd-Frank rules, which cover a swath of topics, be it consumer protections in mortgage lending, bank responsibilities for dealing with city governments, or future resolution powers for troubled financial institutions. The legislation was the government’s main response to the financial crisis, and it is supposed to rein in Wall Street and reduce the kind of risk that led to the market implosion three years ago.”

 

EDITOR’S COMMENT: As the 2012 campaign starts to heat up and the campaign contributions start to flow, the Banks are growing in influence in Washington even as they lose the confidence of the American people. Legislators and regulators alike are feeling the pressure to bow to Bank money-peddling. The loser is not just the American Consumer, it is the nation itself. World civil unrest, revolution and dire physical and financial circumstances pile up fueled by the continuation of Wall Street illusions despite the consequences to people — including their ability to find food and shelter, But the Banks, owned by shareholders but whose existence confers benefits on management without risk, continue their game of pretending that the $600 trillion in derivatives is real.

Here is a synopsis of the situation: We have $50 trillion in actual currency issued by all the governments of the world. Wall Street has issued $600 trillion in “cash equivalent” derivative products whose value can only be measured in currency — which is 1/12th of what Wall Street issued. The derivatives, derive their value from currency denominated assets like mortgages. The mortgages are not in any pools despite Wall Street’s assurances to the contrary. Hence, the investors who are holding or trading within the $600 trillion bubble of fake cash equivalents,are holding nothing. Central Bankers, regulators, legislators are scared to death and they are being paid off by Wall Street to keep the $600 trillion pressure on the world’s population.

The fear is that the sky will fall if the the truth be acknowledged. The truth is known by everyone who has any interest in the subject but nobody is doing anything other than kicking the can down the road. Nobody wants to admit that they are allowing a lie to be lived and promoted in our midst. The $600 trillion is no more real than any other fictional character. The courts are slowly but surely grinding their way to the truth of this essential factor. In the meanwhile we stay distracted from real policy based upon real economics.

The fact is that not only are derivatives fake, but the debt on which they purportedly derive their value is largely nonexistent. But as long as the myth is perpetuated, the wealth stays with a few hundred people around the world pulling the strings of the world’s purse. Legally and factually, the wealth was never transferred from the people and withheld courts will eventually arrive at exactly that conclusion sending the megabanks crashing down — only to discover that the sky that was supposed to fall, was left undisturbed. The entire process is going to take decades to work out but those who persist in litigation will get their rewards far earlier than those who remain ignorant or apathetic about their personal economic status.

Hundreds of thousands, perhaps millions of people, who think they defaulted on mortgage obligations will discover that there was no default, there was no mortgage and the foreclosure was a fake. As the enormous title problems are sorted out, those who move now, will be rewarded by a shift of wealth that brings them from being broke to being comfortable. It is highly probable that the collateral benefit to borrowers will result in a fairly wealthy middle class, as all loans come under scrutiny as a result of the false securitization scheme. Consumers will emerge out from under the fake mountain of debt caused by inflated mortgages, unconscionable student loans, auto loans, and other consumer loans. Until that day of redemption, we shall continue to suffer.

Still Writing, Regulators Delay Rules

By

Regulators overseeing financial reform are delaying many of the planned changes in the $600 trillion market for complex securities known as derivatives because they are running drastically behind schedule in writing their new rules.

The Securities and Exchange Commission said on Wednesday that market participants would not have to comply with many aspects of derivatives reform scheduled to take effect in mid-July. It declined to specify how long the delay would be in the equity derivatives it oversees.

The announcement follows a similar statement on Tuesday from the Commodity Futures Trading Commission, although that agency imposed a year-end deadline for many of the changes in the derivatives it oversees.

The idea of changing the deadline had been divisive at the commodities commission. The two Republicans on the five-commissioner board had wanted to create an extension without a deadline. The Democrats, however, wanted a specific date to keep some pressure on the group to complete the rule writing, according to three participants in the meeting.

The commissioners ultimately agreed unanimously on the extension, but the dispute illustrates the political divide that has been brewing in Washington for months as regulators work to roll out hundreds of rules required by the Dodd-Frank financial reform legislation of last summer.

Though the Dodd-Frank measure was passed with bipartisan support, it has come under fierce criticism from many Republicans as well as some Democrats with financial constituents, who have urged regulators to slow the rule writing. Republicans are also trying to shave financing from agencies like the Securities and Exchange Commission and the Commodity Futures Trading Commission, which now have a larger workload in writing and enforcing scores of new rules.

Gary Gensler, the Democratic chairman of the trading commission, testified in Congress on Wednesday about the agency’s limited resources. In an interview, he pointed out that the derivatives market is seven times the size of the futures market, which his agency has long overseen.

“This agency has been asked to take on a very expanded mission,” he said. The decision this week to push back the derivatives deadline, he added, “was not about delay. It was just giving the market the certainty while we’re completing the rules.”

Regulators have missed more than two dozen deadlines for new Dodd-Frank rules, which cover a swath of topics, be it consumer protections in mortgage lending, bank responsibilities for dealing with city governments, or future resolution powers for troubled financial institutions. The legislation was the government’s main response to the financial crisis, and it is supposed to rein in Wall Street and reduce the kind of risk that led to the market implosion three years ago.

Observers say that the two delays this week make sense: with regulators so behind schedule, putting some of the rules into effect could be problematic. Still, regulatory experts warned that delays could be dangerous.

“Sounds like common sense to me,” said James J. Angel, a professor at the McDonough School of Business at Georgetown. “The regulators have this tsunami of work dumped on them, and it’s important to get it right.”

Still, he said, it is unclear whether the banks calling for a slowdown have legitimate concerns.

“You don’t know whether they’re just whining because they’re trying to get a few more pennies or if this is really Armageddon to them,” he said.

At hearings, bank officials have urged regulators to move slowly, saying that the rules will be better if created with greater care and consideration. The industry also has warned against what its officials call the “big bang” approach, under which many rules would take effect at once.

One difficulty is that many rules are related, and some rules drive others. Nowhere is this more true than in the derivatives market, where financial insurance contracts are written to protect against many different risks.

For instance, the rules to impose position limits in some commodities derivatives, like oil contracts, may depend in part on how much money financial players hold in different investments. But the commodities commission has been unable to demand all the data on these holdings — and the banks have not been volunteering — until it has written certain other rules and passed the one-year mark on the law.

The law specified that some derivatives rules would go into effect next month, no matter the status of rule writing, and those are what both financial commissions voted to delay this week.

At the commodities commission, Democrats and Republicans agreed that the July deadline for many rules was untenable because its staffers had not even finished defining terms like “swaps dealer” — an entity that buys and sells a type of derivative.

Jill Sommers, one of the Republican commissioners at the commodities regulator, said in an interview that she absolutely wants the rules to go into effect. But the commission needs to take its time, she said. “We didn’t want a date,” Ms. Sommers said. “We’re trying to makes sure we don’t miss anything. I think we need to be very deliberate.”

One of her opponents in the meeting was Bart Chilton, a Democrat. He said in an e-mail on Wednesday that he worried that having no deadline would take away much needed urgency. “We should be putting the hammer down and making up for lost time,” he wrote. “That means doing what the agency has done: given us a time certain — the end of the year — in which to complete our work.”

The commission has three Democrats, but one, Michael Dunn, has his term expiring this summer. He can stay on beyond that date, but if he chooses to leave, a successor is sure to face fierce confirmation questions in the Senate, where lawmakers are heavily divided on the new rules.

Edward Wyatt contributed reporting.

6 Responses

  1. Gregory, alas who is the true believer who is left in your camp nationally? It isn’t regulation which will be responsible for the 1200 trillion dollar fake,ponzi,pyramid, bogus derivatives market ultimate collapse. The derivatives market is a cancer on the market which should have been cut out in 98 when Born testified. You are advocating that any government regulation – operation on the diseased tissue is the problem It is the cancer that is the problem. Any doctoring of it is not the cause of the cancer. Any delay just allows it to continue to grow.
    http://www.pbs.org/wgbh/pages/frontline/warning/view/?autoplay Asking banks to regulate the disaster they have caused is like asking known cancer cells to play nice. How silly is that? How silly has that been?

  2. […] DERIVATIVES ESCAPE REGULATION MOST POPULAR ARTICLES DISCOUNT FOR EARLY BIRD REGISTRATION RUNS OUT ON JUNE 22 CLICK HERE TO REGISTER FOR 2 DAY GARFIELD CONTINUUM CLE SEMINAR GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE RESTLESS CONSUMERS GROW WEARY OF BANK CONTROL OVER REGULATION “Regulators have missed more than two dozen deadlines for new Dodd-Frank rules, which […] […]

  3. Dear Carrie,

    Your are right ‘What a wonder Cournty United States of America’ was when its citizens cared to protect themselves and the nation.

    What happened?

    Everyone thinks its someone elses responosibility.

    The fact of the matter is we as individuals are more responsible to protect the nation than Congress for it they are not doing their job we must get them out and get in someone who can. And its not Michele Bachmann.

    We can’t stop the bleeding unless we find the defects and cut them out.

    Congress vested the powers.

    We the people whimping out iover what to do ?

    We must bring the facts into the open.

  4. Exactly what Elizabeth Warren has been trying to do—simplify and make it understandable—so that the average person can understand it—total transparency…and they SHUT HER DOWN every step of the way. The banks make money by confusion, deception, and fraud.
    What a friggin’ great country.

  5. Dear Gregory Bryl, Esq: Amen.

    Sanctions against entities have proven so successfully profitable over 21st Century!

    Congress vested powers to federal administrative agencies who don’t look at transactions under sanctions.

    LOOPHOLES let’s close them up so simple any fifth grader could figure it out!

    Let’s see, all disclosures of who owns the mortgage loan be recorded on the lien and a real officer CEO and CFO sign the related documents who can go to jail as the borrower in the event they or anyone inbetween lies.

  6. More regulation is the last thing this country needs. How can you create insane incentives for interlopers to pocket money and then hope that “regulation” will counter such incentives? It will still be cheaper to break the law and settle later, which is what is going on now.

    What is really needed is to have properly aligned incentives in the economy and the marketplace. That means getting the government guarantees (Fannie, etc.) and bailouts out of the market so that banks actually stand to lose money if they make bad loans. The market is perfectly capable of policing itself through proper incentives and self-preservation instinct of the players when the market is not skewed by insane government policies and intervention that eliminate the risk where the risk should always be present.

    There is no free lunch. There is a price for the government-“promoted” low interest rates that drive prices through the roof and make people work for the rest of their lives for cardboard structures that are not worth half the asking price and cost even less to build.

Leave a Reply

%d bloggers like this: