House passes the Financial Choice Act

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anonymous_coward
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House passes the Financial Choice Act

Kind of hard to find any information on this, as it has been buried by Comey's testimony, but the house passed a Dodd-Frank repeal across party lines.

http://fortune.com/2017/06/07/financial-choice-act/

What it repeals:

  • Volcker rule - prevents banks from proprietary trading (i.e. banks making speculative trades with depositor funds). As you probably already know, bank deposit losses are insured by FDIC, so what could go wrong?
  • Consumer Financial Protection Bureau - now consumers are barred from information about the number of complaints against a financial advisor. Also, removes a provision requiring financial advisors to put their client's interests ahead of their own. (Executive summary: don't use a financial advisor)
  • FDIC's ability to orderly liquidate a failed institution
  • Durbin amendment, which limits fees that are charged to retailers for debit card charges
  • Removes the ability of the SEC to monitor clearinghouses

It's worth noting that Barney Frank himself agrees that restrictions on small banks were too strict:
http://www.npr.org/2017/06/08/532036374/house-passes-bill-aimed-at-rever...

However, he also thinks restrictions on big banks should be stronger, not weaker.

A nice summary of the fixed income market related changes:
http://clsbluesky.law.columbia.edu/2017/05/22/the-financial-choice-act-o...

Obviously this is subject to change... the senate will drafting their own version but I for one am looking forward to the next financial apocalypse!

Tom C
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Politicians of both parties

Politicians of both parties are deeply in debt to the banks, and have been for a hundred years.

(Obama was the biggest recipient of Goldman Sachs money in 2008,)

The "partisan" aspect of the vote reflects political gamesmanship, rather than actual support.

Obama was a master at understanding the corrupt machine, and knew just who to play.

What is laughable is those low-level dem voters who think the party is looking out for them. The Dems have been selling out their constituency since about 1840 or so. All the "big bad banks" talk from the lefties is red meat for their voters, while they take millions from those same big bad banks. GOP-e does the same thing - talk red meat while scr#wing the citizens.

Dodd-Frank fueled the subprime pyramid by making more subprime mortgages possible. Michael Lewis did a great job describing it in "The Big Short," the machine needed more and more subprime mortgages to keep the scam going. It was all fun and games until the first batch went bad.

And, as usual, the guys running the scam got fat paychecks when things were going well, and stuck Joe Citizen with the bill when it went bad.

It's the part of the risk/return formula most people forget.

If politicians wanted to clean up the banking industry they could, but they never will, no matter who is in charge. No industry has a tighter grip on the politicians of all stripes than the banks.

anonymous_coward
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Uhh did you have a typo? Dodd

Uhh did you have a typo? Dodd Frank was signed into law in July 2010 and the Big Short was released March 2010.

Tom C
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Sorry, my mistake. You are

Sorry, my mistake. You are correct.

I was thinking of the per-crisis activities of Barney Frank.

Frank's fingerprints are all over the financial fiasco

View on YouTube

And Dodd-Frank really put the crimp in the financial industry abuses after the 2008 crash.

* eye roll *

anonymous_coward
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Well borrowing has been

Well borrowing has been certainly a lot more difficult since Dodd Frank, speaking from anecdotal experience. I don't know if that is because of D/F or because banks collectively freaked out, but the kind of shenanigans that my mortgage broker used to pull (having a personal relationship with all the appraisers and getting them to "play ball") have been off the table since 2010.

With regard to trading, the D/F clearing requirement (that is, requiring all fixed income derivatives to be sold through clearinghouses) makes a huge difference in the transparency of deals on the books.

Prior to D/F, if an entity got into trouble (Bear Stearns, AIG, etc.), you had no idea what the exposure other entities had to the troubled entity. Banks could be on the verge of collapsing and you would have no idea.

With that knowledge, it allows you to get financing/arrange for private bailouts before the markets attack. (Or even better, allows you to prevent massive overexposure in the first place by leaning on the entity in question before they get into a compromised position.)

Obviously everyone sees the value in this, and that's why it's not being repealed, but I think it's a mistake to not regulate clearinghouses. There's not a lot of competition between clearinghouses (there are only 3 major ones currently - the CME, ICE, and LCH) and they are too public a resource to just let them do whatever.

In any event, the repeal of the Volcker Rule to me is the most absurd because it puts the American people on the hook for the next big bailout.

I don't really care about the CFPB, I think if people are dumb enough to use a financial advisor they deserve to lose their money.

Tom C
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The brokers are still

The banks and brokers are still stealing from us, Dodd-Frank or not.

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