Thanks DDay, sounds similar to Dean Baker’s Financial Transaction Tax. I agree the costs will be high. AFAIK, high-frequency-transactions are frequently not a transaction. They’re tentative trades, searching for a price they want in the milliseconds before a transaction is finalized.

Wall Street/hedgies will whine about all the liquidity they provide.

Missed all that liquidity during the Flash Crash. They all sat it out.

It’s a smart move and imho high frequency trading tax is a better name than the financial transaction tax. It better gets across that this won’t cost the small investor anything.

The EU has had a transactions tax discussion for years – I do not recall if any countries have one at this point – but it is a great idea.

HFT folks and their canceled trades point out the need in any such tax to access a portion of the tax regardless of whether the trade is completed.

A logical and needed tax and not a hard tax to implement, or discuss – so I doubt it will get passed. A bit like ending the cap on wages used for Social Security payroll deductions or benefit calculations or the extension of that payroll rate to investment income for both tax and benefit calculation. Massive fairness, solves problems, easy to implement – so it will not get done.

OK – not affecting small traders is a crock in my opinion – but “small not affected” is the selling point under Obama (see no increase in taxes for under $200,000 folks idea) -

Just as we need to give up the $4 Trillion that Clinton rates provide, taking only 700 billion over 10 years so as to avoid “small” taxpayers, perhaps the HFT tax only works as a hard if not impossible to implement fee for canceled trades.

I suspect a HFT fee – as opposed to the easy to implement tax on transaction placement and on transaction completion – is just a ploy to avoid the idea altogether – much like the public option stopped discussion of single payer as we passed the Heritage/Dole GOP Health Ins “reform” now called Obamacare.

On my way to The Nation Magazine office in Manhattan (where I work as an intern), I walked into a press conference being held at New York Penn Station. He and Rep. Nadler and a couple other leaders in Congress were presenting news that the state of New York had just been given access to $58 million in funds that Florida refused to take. The money is supposedly going to be used to revamp and revitalize rail transit in New York (including upstate New York). The funding would also have a benefit to parts of the northeastern US.

I report this because I have a suspicion that this money may be used to make Schumer’s “no-ride” list a reality. I wonder how much of this funding will actually improve rail and help bring about projects that can make it possible for more communities to have access to high speed rail and how much of this funding will be used to fund “security theater,” theater that can in some cases have a really repressive impact on people’s lives.

The Senator from Wall Street is not proposing a HFT tax out of his good heart. HFTs compete with market makers who are the big banks.

I’ve already stopped flying because of the no-fly list and other terror theatre, and if they institute a no-ride list for the trains I won’t ride either.

It’s my understanding that the tracks in the Northeast corridor are fairly screwed up even in the best of times, so it probably doesn’t take extreme actions to cause derailments along the way. (And i believe Amtrak is a ‘tenant’ on the tracks from New Haven to New York and probably all the way to Boston)

(Note: I commuted from Hartford to New York weekly via Amtrak for most of Y2K)

I am not a fan of the TSA, but I do not see why only air travel should be singled out for exceptional passenger screening procedures. Having a “no-ride list” is a logical extension of current security theater. It won’t be long until cars are searched before entering the interstate.

Flash crashes look to me like a fairly frequent occurrence based on the steady parade of those I have seen reported at ZeroHedge.Com. Nevertheless, I really like papau @ 3‘s idea of the tax on transaction placement and on-transaction-completion which means serious bucks.

Meanwhile, it’s quite the disgusting contrast to watch the States approach terror theater as an excuse to put more “brown people to better use” and have more chain gangs: “Arizona’s Plan: Build Border Fence With Online Donations and Prison Labor” (CommonDreams.Org, by Paul Davenport, May 9, 2011).

We don’t need no steenkin’ security theater, period.

So much for freedom of movement. What’s next? The security trolls saying “Paperz Pleaze?” / German/Russian accent

When did we as a nation become such scaredy cats?

We don’t need no steenkin’ security theater, period.

I agree but it does seem reasonable to have some sort of passenger screening procedure. I just am not convinced that so-called ‘gate rape’ is the solution.

IMO, we need to tax and track Daytraders/Flashtraders not only for the tax benefits but for security. Anybody can flashtrade and they can also crush our economy by doing it!

Gee, Chuck: the machinegun-toting National Guardsmen grab-assing and hitting on girls and holding up the columns (leaning on them) while on their guard posts on the PATH train platforms aren’t enough? How much is that costing us in salary, benefits and retirement credits for them?

I’m with the General. I’m not necessarily averse to a no-ride list for trains.

We don’t need no steenkin’ security theater, period.

Agreed. But what are we going to do to stop it. Name one thing we have stopped. Face it people they have stolen our money, lied to us repeatedly to start wars where corps steal more of our money, take away our freedoms and sell it to us as keeping us safe, steal elections, ignore the rule of law, send only the poor to prison, get caught selling drugs to the mexican cartel, invade afghanistan and help it become #1 again in exporting heroin. I mean the list goes on.

It seems to me if we have been powerless to stop all this, how are we going to stop an attack at a train station etc from them rolling out full ID papers just to leave your house? If there is a cyber attack, how will we stop them using that to shut down/restrict the Internet?

Protests don’t work. Voting does not only work, but it allows them to say we gave them authority. And, it is not just happening here, it is happening in all countries that once had a strong middle class. In the UK right now they are dismantling the entire system set-up 60 years ago to help the middle class. The great experiment ‘social mobility” is being shut down in rapid speed in countries all over the world.

That is what is happening

What’s next – the bus? Public transpo in general?

Keep on keeping on. Soon it’s YOUR freedom of movement restricted, and you won’t like it.

BTW, there’s a giant database problem with the current no-fly list. Consider how many more people ride the train in the NorthEast Corridor.

HFTs compete with market makers who are the big banks

The big banks are the creators of the HFT. Following the repeal of Glass Steagall, The Banksters knew there was money in HFT. So they immediately got to work hiring PhD statisticians to write the HFT programs. If you’re arguing that two PnL Centers (market maker and HFT) are competing with each other, I agree. But suggesting that HFT and The Big Banks are mutually exclusive is incorrect.

Passenger screening goes on at every hotel and common carrier via surveillance of financial transactions (what do you think insurance and credit card companies are?) and more and has for decades before 9-11 and worked just fine because we had some semblance of law enforcement and less corruption of the system. Now we have massive personal global surveillance 24/7 and physical search points are already at common carrier (e.g., ferries, bus terminals) inside the US. Peruse EPIC.Org, Wired.Com, EFF.Or, ACLU.Org and EmptyWheel archives for loads of info. Also, the procedures for being able to even go in and out of the country have become more restricted with no public input over the last 10 years and again recently. For some reason, many Americans are ignorant of the former actual procedures in the past versus what actually goes on now, or, should I say, what passes for security procedures.

But I’m not on a no-fly list. They might as well look at all they want. My only concern is how well it’ll work. I have no worries. If it isn’t effective, then why do it? If it is, then it should seriouslyu be considered.

As for whether this is a bait n switch by Schumer, I agree. First, he is a well-known Corporatist. Second, his idea is probably an impossibility.

Why impossible? At the moment he describes a “trade and cancel.” But as soon as the law is signed by the POTUS, Wall Street will change the vernacular.

For example, instead of “selling” a stock, Wall Street now “shorts” a stock. Same thing to any one who understands banking. But in the eyes of the law, it’s probably different. I recall hearing about a case of insider trading maybe a decade ago. If I recall correctly… *at the time* someone was accused of insider trading. He was accused of selling stock. But when it came to judgment day, he was guilty of nothing more than executing “puts” and was innocent. Of course, it’s the same thing. But not in a legal context.

It’s the same thing as Obomba’s “kinetic action” that’s not a war.

Schumer is trying to appease the base, but he’s not serious. Wall Street owns him. He probably got the idea from Jamie Dimon and Lord Loyd Blankfein.

Let’s see, extra-judicial killing ok with you per the OBL threads, and “papers please” to board public transportation.

Got it.

I have ridden Amtrak from Fl. to NYC and I can tell you this. The CSX tracks are terrifying should be on somebodies list. But a no ride list ? Get serious. More likely scenario would be something on the tracks themselves.

They are horrible and have on more than a few occasions been responsible for rail mishaps. Fortunately few involving passengers.

I do like the idea of a trade tax though.

It’s a multi-prong approach: Catherine Austin Fitts on Tape Worm Economics with a sublink to the Popsicle Index.

But I’m not on a no-fly list.

You know that? Really? (ACLU.Org, June 29, 2010).

well, if i am on one, it’s all a big mistake

You and Ted Kennedy.

This is indeed a serious problem, and the serious question serious people are asking is, how many terrorists running from one side of the car to the other would it take to derail the train? I say bravo to the no-ride list, and we should put college fraternity members on it too. And traveling salesmen. And any group whose members weigh on average over 200 pounds. And athletes, particularly gymnasts.

This would be a fucking stupid idea if an apple fritter thought of it. What is Charles smoking?

Schumer’s attempt to stand in support for our nation’s credit rating would be more credible if he weren’t widely regarded as Wall Street’s doormat.

His critiquing of Boehner in the House when he sits in the Senate and needn’t take gruff back from Boehner directly, or directly jeopardize a floor vote or any other compromise made with him isn’t the height of political courage.

Schumer addresses an important point; others need to address it, too, and act on it.

A no-fly-train-bud-ride-walk-hitchhike rule sounds great. Puhleeze.

The government has not shown itself competent to vet the names on the “fly” list it has. It hasn’t demonstrated that it uses the information it has gathered responsibly, narrowly and solely in relation for legitimately and generally recognized national security purposes.

It hasn’t demonstrated that it credibly oversees its significant outsourcing of services related to this, such as in assuring the public that involved companies do not misuse personally identifiable information for related or unrelated commercial gains.

Why legitimize an expansion of authority when we have no idea how responsibly the authority already given is being wielded?

Athenae is upstairs!
Late Night: Spring Cleaning

I yearn for the good old days when I could buy a plane ticket, run to the gate, and get on the plane without anyone getting in my face. I’m more than happy to take my chances. I damn well don’t need the US government protecting my ass.

Our trillion dollar a year police state has ruined life in this country. Checkpoints, bag checks, and the hundreds of security personnel are a total bring down.

Accepting their intrusions is surrendering to their sledge hamnmmer. I have a greater chance of getting hit by lightening than in a terrorist attack. The keeping us safe bullshit is an excuse to treat us like suspects and ferret out whoever they choose.

Does Chuck want to frisk everyone getting on the NYC subway at rush hour? Maybe he’s not talking about the subway? How about frisking everyone as they board Metro-North or the Harlem line during morning rush hour?

His “idea” borders on absurd. But hey, I’m sure the MSM will give him press. So it’s a “win” for him.

I do not follow – seems history is changed in your post

Glass-Steagel had some rules for trading desks at depository institutions – the repeal treated depository institutions the same as Greenspan was already treating investment banks who were not under Glass-Steagel to begin with.

So the trading desks existed before Glass-Steagel – as well as after. Hard to blame HFT trading on the repeal of Glass-Steagel.

So under Glass Steagal commercial banks could offer some aspects of investment advisory services, brokerage activities, securities underwriting, mutual fund activities, investment and trading activities, asset securitization, joint ventures, and commodities dealing, and they could offer deposit instruments that are similar to securities (prohibited were the business of ‘issuing, underwriting, selling, or distributing, at wholesale or retail, or through syndicate participation, stock, bonds, debentures, notes or other securities’, with some important exceptions. These exceptions include U.S. Government obligations, obligations issued by government agencies, college and university dormitory bonds, and the general obligations of states and political subdivisions. Municipal revenue bonds (other than those used to finance higher education and teaching hospitals), which are now of greater importance than general obligations, are not included in the exceptions, in spite of the attempts of commercial banks to have Congress amend the Act. In 1985, however, the Federal Reserve Board decided that commercial banks could act as advisers and agents in the private placement of commercial paper. Section 16 permits commercial banks to purchase and sell securities directly, without recourse, solely on the order of and for the account of customers. In the early 1970, the Comptroller of the Currency approved Citibank’s plan to offer the public units in collective investment trusts that the bank organized. But in 1971 the U.S. Supreme Court ruled that sections 16 and 21 prohibit banks from offering a product that is similar to mutual funds. In an often quoted decision discussed at length in section IV of this chapter and in Chapters 2,3,4 and 5, the Court found that the Act was intended to prevent banks from endangering themselves, the banking system, and the public from unsafe and unsound practices and conflicts of interest. Nevertheless in 1985 and 1986 the Comptroller of the Currency decided that the Act allowed national banks to purchase and sell mutual shares for its customers as their agent and sell units in unit investment trusts. In 1987, the Comptroller also concluded that a national bank may offer to the public, through a subsidiary, brokerage services and investment advice, while acting as an adviser to a mutual fund or unit investment trust. Since 1985 the regulators have allowed banks to offer discount brokerage services through subsidiaries, and these more permissive rules have been upheld by the courts. Thus, more recent court decisions and regulatory agency rulings softened the 1971 Supreme Court’s apparently strict interpretation of the Act’s prohibitions. Sections 20 and 32 refer to commercial bank affiliations. Section 20 forbids member banks from affiliating with a company ‘engaged principally’ in the ‘issue, flotation, underwriting, public sale, or distribution at wholesale or retail or through syndicate participation of stocks, bonds, debentures, notes, or other securities’. In June 1988 the U.S. Supreme Court (by denying certiorari) upheld a lower court’s ruling accepting the Federal Reserve Board’s April 1987 approval for member banks to affiliate with companies underwriting commercial paper, municipal revenue bonds, and securities backed by mortgages and consumer debts, as long as the affiliate does not principally engage in those activities. ‘Principally engaged’ was defined by the Federal Reserve as activities contributing more than from 5 to 10 per cent of the affiliates total revenue. In 1987, the DC Court of Appeals affirmed the Federal Reserve Board’s 1985 ruling allowing a bank holding company to acquire a subsidiary that provided both brokerage services and investment advice to institutional customers. In 1984 and 1986 the Court held that affiliates of member banks can offer retail discount brokerage service (which excludes investment advice), on the grounds that these activities do not involve an underwriting of securities, and that ‘public sale’ refers to an underwriting).

So there were rules under GS but commercial banks did engage in activities considered to be investment banking prior to the repeal of G-S including prop trading. But there is no evidence that prop trading created the losses that resulted in the need for bailouts. Therefore it’s questionable how curtailing ALL prop trading would protect the financial system for future shocks.

It was the lack of regulation – under Greenspan for Investment Banks that lead the way to disaster, and later under Bush for all other banks – NO REGULATION, not GS repeal, caused the problems. Greenspan regulated – failed to regulate – the failed banks (Bear and Lehman) who were NEVER UNDER GS because they did not engage in commercial banking.

Yup. In my post-WWII youth, I recall seeing at least one movie on TV in which the good guys are passengers on a train and the SS came through the cars asking for papers and asking questions about where are you going, who do you work for, etc. And sometimes, they’d drag people off the trains. That’s what’s coming.

Bin Laden won: he got Bush to shred the Constitution, which was hardly difficult. The Dems are just following the pattern now.

I was speaking to HFT, which is computerized. Prop trading is not necessarily computerized. And it’s the automated part that, as I understand it, led to the “flash crash” that seemed to be the point of Schumer’s comments and this post.

As for whether GLBA (Glass Steagall) enabled — or the timing was coincidental — is largely irrelevant to me for purposes of this discussion. Circa 1998 – 2000 also saw huge improvements in technology. So maybe that’s when the HFT grew, independent of GS?

Regardless, I don’t believe the Corporatist Schumer for one second when he talks of reigning in Wall Street. If it means pain for Wall Street, then Chuck will fight it… not necessarily straightforwardly (because he wants to look good), but he will fight it… even if it’s in the form of a stalking horse to distract us.

Btw, I’m no expert on HFT. I just play one on The Internets!