The point that I am surprised that the bill, given the Congress we have and the political influence of the banks, is as good, relatively speaking, as it is, didn’t seem to me to be a very controversial one. But I got challenged on it and spent most of my time on Dylan Ratigan’s MSNBC show defending that narrow point. It’s entirely possible that those good pieces get scrubbed in conference, and that was where I was heading before Mr. Ratigan sought clarification. That wasn’t really the point I wanted to make.
But I did learn something from today’s program, outside of the fact that I really have to iron this shirt: at one point they threw a caption up that said “Pelosi wants to start conference June 8.” I hadn’t heard that before, and I can’t find anything on the Google about it. But it makes sense, as the House and Senate have a lot to do next week, and then they have a district work period the following week; June 8 would basically be the first day back, though informal talks could happen between now and then.
Now, what’s happening on June 8? It’s the day of Blanche Lincoln’s primary runoff against Bill Halter. So if the conference doesn’t start until that day, she can claim all she wants that her “tough” derivatives title “will pass,” contrary to the belief of pretty much everyone following the issue.
Pretty sneaky, Congress.
(Oh, and it’s Dayen. Five letters. Most misspelled short surname in the English language.)
UPDATE: This is somewhat related. Here’s a story about the Masters of the Universe and their fear that Congress hasn’t killed something that would marginally affect their bottom line yet.
Wall Street banks, surprised that the Senate’s financial overhaul passed with language that could curtail their derivatives trading, are now hoping the rule can be killed in Congressional negotiations.
Lawmakers have been telling Wall Street the Senate provision would fail, “but it passed, so people are nervous,” said Paul Miller, analyst at FBR Capital Markets in Arlington, Virginia. “The problem is that everybody in Congress wants it out, but nobody wants the responsibility of taking it out.”
At least not until after June 8. But everyone is openly talking about when and how, not if, section 716 gets killed.
Raj Date is awesome, by the way:
The Securities Industry and Financial Markets Association, which represents JPMorgan and other large derivatives dealers, estimated the provision would require banks to find as much as $250 billion in new capital for the subsidiaries.
“It’s hard for me to come up with what’s a worse argument than that,” Date said. “That’s tantamount to saying, ‘Well, we’re undercapitalized today and we prefer to remain undercapitalized, thank you.”
I am completely unsympathetic to the argument that the banks would have to properly capitalize themselves. Better they find their own money rather than get subsidized by taxpayers – through FDIC depositor insurance, through the Fed discount window, etc.