Review Of The Financial Reform Bill – The Baseline Scenario


immigration agree with you guys for you guys with james kwok james is
the one of the writers of the baseline scenario he’s in my opinion will top experts in
the field in financial industry in reform and regulation james thanks for joining us again we
really appreciate it’s a predator and opens filled last we talked we were talking about
what could happen in financial reward bill but now finance reform bill has
passed and i just kind of want to get overview
here as to what went right and what went wrong uh… so so let’s get started prep what what do
you think without up sides of the financial reform bill that was passed
her well i mean that’s not a lot in the bill that i
think that reads that i mean i think that it can to fish isn’t someone who
got slapped in general what’s good about it to
provide from new regulatory powers that were missing both in the lead up to the
crisis and during the crisis in with the new for i think the most you know most obvious you could bring in the bill at the
consumer financial corruption dereliction at least in the interim being headed by
a list of law and that i mean probably looking to go out of commission
but if you know it’s a new agency whose mandate is to protect consumers from
what i think we all know with us predatory and dangerous financial for
them for that wonderful mother provisions that give regulators from
from needed power so one of the big issues and left click
this was the confidence of chemical if banking regulators or responsible for
making sure that the given bank detail and by the way one way that makes a very
different philip politic delivered good customers but regulators did not have i’d have a
mandate of the information to watch out for the fifth time as a whole filled the builder for him to help in
that area for example there’s going to be more visibility into
derivative so we shouldn’t have forty of what happens they are g were a turkey happy method vision on one
part of the housing market and nobody even knew about it really arm event to promote a turn for the week
for superbowl cowell which put some limits on the ability of tank to engage
in proprietary trading hedge fund and so on
so and it’s not a strong if it could be but correctly some steps into a correction i think just just not
enough applause all right so let’s talk about those for
so the consumer protection agency out one at saint axle step forward that
you have to they’ve got the right person running it for now it’s always with
warren joe what we really got to be happy with that and she did a brilliant
move today actually ke aswell both holly per trance the wife of general petraeus in making sure that uh… that crooked credit agencies don’t
ripped off to belittle too today you have any better because of the
holiday transcriptional instrument inflicted good move my standpoint both
substantively and and politically tough principally because you know we want to protect people in
the military farm you know credit card get a loan from you
know various kinds of of predatory behavior and a lot of people they prefer not to
fight it to join the military with a lot of the young love them don’t have the
benefit a lot of a lot of education and experience and the world and and the kind of a captive audience of
living on his military bases says substantively that’s good politically it’s good because uh… military that reading out and fun
info in some ways and protecting it it’s service members who for example the military etc uh… more quickly dealership on payday
lending and we have in the economy of the whole went quickly
that you know that the conundrum further the
opponents of confirm affection because everybody wants to you know what people
in the military felker and it’s a good it’s a good move it’s
also a good thing it’s a good twice by warm of eight you know for sure public step to make right and to get an ally like that on
your site things growing actually episodes inc urged me that she’s not going to be right on the
substance but that you can be savvy enough to be able to get some reforms
through by getting the right allies et cetera yet so that’s definitely a good
way right at one oh wait a proprietary trading average tomorrow’s game saying
things that the loopholes in that are so large that they’re really going to be able to
do just about almost the same proprietary
trading they were doing before how true or untrue is that is that an
exaggeration why do you think it really comes as well
i think we don’t know anyone who is in perfect or a adult worker include depend on how the
regulatory agencies first of all late tools implemented impeccably jalan
whatever reinforcement i’m getting to it you know talking
control get to about the question of regulatory incentive i mean i am worried about the cause of
this report because but they’ll try to get you a couple
example goldman sachs lost a few hundred million
dollars in the fricken quarterly here and the bank of the whole did it but
they laughed a few hundred million dollars on one specific trade which is that they were betting that
volatility in the market would go down to the federal till he was op so why does it matter well link booked that loss of customer facing
trading now despite regulating and that matters because customer facing trading is not is not covered by the doors all that no
limit on that for as long as you can say to trade with the customer you can do it and you know by definition when you’re
doing proprietary trading appropriating with customers arm a fellow that that
loophole police walls the role i did not work yet could only competition reforming yet the aircraft between the than for the will of the
difficult to allow to do what’s called market makers like the market making
means that some people want to buy from thing from who want to tell it’s good to
have a middle man but if you’re really doing market making
difficult septic bid in the aft prices so that the
market will clear but what that means that if a lot of people come to you and they want to by volatility you should put the plates hoti so that
you’ll find people on the other side but you can sell it but instead goldman had a position they
had a and they had an idea about what you’re talking about would do and they’ve had to put accordingly so
they they the knowing we took on the flip but they did it incompetently customer
facing trade that is and that is a tricky thing for loophole
could be very data native posse cajun people will buy tools in touch with him
to limit unsightly into the we had a little more
there but but try to simplify it to trip because i’m not sure that i understand
it is is gorman supposed to do say look jolla
subi something bob also sell something they make a market right ami and they
set a price of the jonah bob can come to an agreement they take some sort of
commission fee etcetera further jarvis are they that’s normal
that’s what they’re supposed to are they now say all right john would like to buy this
goldman sachs is going to sell right so are they on the other side of
the trade if remove bobcat and they’re doing the training themselves yet
they’ve been doing that on the end of the bank to do that for a long time and
unprincipled it nothing wrong with that appear to be attacked economic when somebody wants to fill for
playing with john wants to call for price they may not find bob forfeited that
infant seidler trade so their job did the job of a middleman it too if the fed to places in such a way that
you know they can do to deal with with the first time but they have a reasonable degree of
confidence that they can do that confided somebody else tube that they
can salatiel and they’re making money from the split between those and up that’s perfectly normal but it’s very hard to differentiate it’s very hard for it to two different feedback farm situation when you are a consciously
placing bets with john and bob dot nona last year being careful and
goblets are correct and that’s why we have yachts but the fact that they are
snell calling that not provided training which is definitely is proprietary
trading means that the loophole in my opinion
this while the rule and it looks so the audience understands the why this is
dangerous is that if they were doing their own
trading i don’t care that religion on our bob they lose their opening ok
restraint what but if you’re taking money that that if this not even in
colva sax keys ballistics citibank that you put money into citibank set or
citigroup and citigroup than bill gates that money ending gambles with it and he
makes about with john are bob wall that’s that’s the problem write-up preparative group the purpose of the vocal with this if you are a government-backed
institutions you can’t engage in in proprietary
trading if you’re not but the price the portable look if you’re not backed by
the government official hedge fund you can do whatever you want and for that the principal but i think
that it went into it and that’s a problem and implementation of an option
of a problem can be solved ourselves elsewhere one out of two so far said that was good
to revert spent that so they were supposed to he’s clearing house but i read new york
times article i don’t know if you read it about idly was i trust in they were
supposed to be these these fat clearing house that’s right yep and they’ve been totally co-opted by
the tax anatolia taken over dep so in essence we’re not really going to get
transparency at all the banks surveyed to decide what we see in dole scene
there during stream yet well that yeah aneta could be careful uh… undercut united concluded that
moved to the group of regulations and the to differ with regard to the
transparency i mean one thing is that do what’s right i’m
pretty sure we are getting if the regulators look transparencies
what it means that there are requirements that if you trade in the stuff you have to
tell the regulators about their positions and that’s why we might be able to afford to appear
very edgy issue now the issue you bring up is probably more important and that’s a problem and that flat the crank out of the first say about what derivative actually have
to go through the crevice there will develop you know what can
remain over-the-counter you know in the dark
welcomed would have to physically houses evie as you know at afoot articles like
that pickling houses at marcia co-opted by
the banks and philip a larger principle that is the
problem with that historically have security for the pride
of the industry the industry has been self-regulate so
yet do we do have the f_t_c_ but yes if you talk it over see what’s called finra which is to be the national cathedral document securities dealers so what we’ve got were perpetuating that
inference that the clearing houses are now the first line of regulation for
president and i through thought they are actually
point waiting the wolf which thought to be approved by the f_t_c_ so it’s a long way of saying that that
yes that the point of view changes including how to uplift pride put transparency to people who actually have to by in tel aviv market that’s a good chance left that goal will not be achieved so i would say that one toddler div div performed or valuable in another part one of the list of of uh… not of not
doing what articles all right but lott i mean to give it to a young audience a sense
of how little we’ve done here in my view not i’d would have banned some of the
durocher yet obviously not all the data that is of great value in durham is
trading it done the classical way right right that russo let me ask you to make
a credit default swaps could that still happen which is just simply sample yet we couldn’t have been trying to put
the profitability appropriate applause would not actually going to change the way the financial system work we’re just going to you’ll have more cops and we’re going to
give them to come and so yeah and indeed there was no attempt to
change the the nature of the activities that these banks engage in that i think i was a mistake
with the with no no time to change the structure the
industry no time to change the nature of the yet to these just the kind of methods that that you know martyr better regulators or if you’re
going to find them but i’d like to know are going to be able to tulane and nifty
and again it’s it’s a little bit you know to look at
the bit of the um… cue that apple mentality like witches lap mentality of do none of the
administration conflict you know and i think these are the real
good people who are president before a valuable service and occasion they got a little bit out
of control so we need to have titles on the etc and i think that the kind of aptly you know underestimate the degree to
which systems actually topic not so that we’ve been to have to have a enough
would totally problems comparatively the discussion right and a m assigns
hamburgers no ban on the perimeters et exit transparency that is so transparent and so the system continues as explained
so but not all leverage was ever any limit
on leverage so if you know if i could be a if i can use a
dollar tibet make five dollars were the best or even ten dollars whereabouts it might be okay but if i’m can use it
for thirty forty the nest you know just simple math those who know the
sasser the other sort of triplets no hard limit introductory correctly the conduct of the administration very explicitly wanted to leave up to international dishes now the
international decision to have happen they’re not home life yet but in with all of the uh… bible three accord which is uh… an
agreement of i don’t know from watching twenty and
thirty a country’s about how they’re going to
regulate the financial sector that agreement did increase capital requirement i would say modestly of the template i would fade do not
click them enough um… way to make a point hitler lee i believe on the new regulations banks will have to have about nine point
five percent of the certain correct type of capital alum at minimum and the the which is hired in
the the formal ugly my brother’s about three weeks before collapse on paper at eleven percent capital so meeting the levinson capital means
they have about a nine to one leverage ratio clearly if women in september two thousand anne would have cleared the new capital requirements it seems
like i dared to capitol climate for not high enough for capital requirements are
not pay an effective means to ensure you know fifty of banks and
fifty of the financial times soaked too quick loss on that and again i’m just
thought we were trying to do is quite series with the baseline scenarios a
great blog that talks about this summit in their in seventh avenue
is somehow missed those interviews i don’t want to get anything wrong right and so in in this case of the of the leverage
in the in the capital requirements uh… is it that that lead to brothers hope what was a fake i mean if you really
have have eleven percent or was i just on paper you see what i’m
saying i do it unfortunately i’m not sure i can give it preferable if
you’d let let me put it to a friend in there’s
evidence that lil with cooking of the book fiddling like so there were about i think in the
playing though with this huge report by the bankruptcy trustee in
the back of the case and he talked a lot about what was
called repo one oh five l of the new for two days which was essentially renan you know during production of light
before the end of a quarter and right after the end of quarter tied promoter
rival for the work from cooking of the book but the prior through even without the
cooking a purple capital it’s really hard to measure because the way it’s
done today effect on you think note the backup for for quick second the whole point of measuring capitalist if they ok things
go bad you want to have a question again against dumb things like that and the fact of the christian you need
to have depends on how likely conduct go bad fundamentally the measurement of capital is somewhat probabilistic and i don’t want to go into details of
why that is and you know i’m sure you’ve heard a lot
about how into in a really bad crisis you can’t truck models but was built doing a good time and that’s what happened women now some extent they’ve gotten a little bit better late
because now everyone it when people go to a model now they have two seven seven
two thousand related to each of the nineties of a model but fundamentally we still have weak politically mission which is that
in in a modern system capital climate for based on the lifting
a finger at that for the lifting of the definite if the product of a model perthnow i got yesterday i think it’s underlying assets are toxic all the numbers are off anyway right is is that part of the problem i mean decreed according to a group of
quickly differently which in fact generally speaking you don’t know but
after to talk to control we cannot be talked with so three weeks before they
turn out to be toxic you may not think that african as and
therefore you won’t realize how much capital you need exactly right that’s
why i think you know they would be tough right exactly so advice disgrace i know
that we bought one off fires yet then i saw a lot harder book if remit looked i believe that if we did
was actually doing what with alleged that with already illegal
but with a legal bernard project legal and i’m sure they all went to jail for
that out all the impasse with pressured their
body got called back to write everyday fall didn’t get the c_e_o_ of lima rose
in gypsy paul that money well also back after dropping out at any time you
know i i do want to make a point that limited obviously i think you know the
pointer making with accurate that that note on the tail and no insignificant heavy them even lost had to give any money back the whole belief that they are one of
the twenty one of the club for the first the representative of the current system
like to point to pickles and what they pay a political reporter billion dollars he lawful when women failed so he was acting in that faith you just made a mistake i wrote a blog post about that a while
back on the missile default because them the undercut solution dot recorder the
paper what he said ok will ya on paper he was worth a billion dollars
for collective and a lot going on unfortunately awkward
but during the poor me told about the cause of million dollars worth of women so if you look at you know crawled in two thousand and not
and competitive pickled in two thousand he would love a lot more in two thousand
and i meet next week club filled the question is if you get all the new york like that
would you do it all over town of course to housed strengths he suddenly because people aren’t there it’s you know the fields of the things you know pull over time they’ve been
paid mainly in stock not in cash like a lot of low-level clarification cash the
field patented oklahoma and they they don’t call the photog and they do have but method exposure to burbank fortune at one of the boom left long ago you know in two thousand five you can
tell all the stuff you you earned in two thousand two thousand and one two
thousand two filled by two thousand and eight dekho
kab told a lot of talk with you there and you know in the first half of the boom
so rhino federico pena arises where i’ve
been talking about what i think is that the number one problem not even
mentioned it in these conversations let alone it getting
reformed uh… which is that we have this huge
loophole in capitalist by public corporation is are run by executives that care more about their own financial
interest than they do about the financial interest of the shareholder guest speaker and so
when u couple that with a all the other problems have been talking about its disaster on top of disaster one last thing though
in progressive this particular finance reform package rating agencies ya can they still that this house all the
same cell structure i had to give the ratings that they are
banks want in order to get more business from the banks air cargo carrier criminal quicken we’ve got to remember to that which is that lapd let’s recap manipulative the attitudes
that lead agent fees are paid by the bank of the the entity that initially the security that they are waiting like
though if you don’t give a triple a_ waiting you won’t get anywhere people that’s the problem al franken of gotta remember to the
current which said that the government there would be had a
rough would be cover mentor non governmental entity somebody else would decide who would
wait heat security being issued and that was kicked out of conference
committee and that the f_e_c_ afoot to conduct study of the issue of conflict of there was a lot of out of the bill
though a lot of spring flood the republican proposals will cut
rejected that from agent he was told to study the issue so yeah i mean credit rating agencies old one one part of the problem of some people
think of a crucial part of a problem that aka bill centriq dot com uh… i harry’s that james thank you so much for parts
famous and it’s great i would love to have you back to talk about when pat one
other thing is just come up but as my conclusion james no rating agency help no real help on leverages no real help in my opinion on through
the lives and uh… it what what east some regulators see some brokers they deal broke a hot analyst goes on there’s no way
sacking a blow against weekly let the system completely intact this is like a friend of the fundamental
christensen quotient thing and uh… and the one thing i
wanted to say the drinks a lot of attention is obviously been
paid to the fact that we had a big crisis he could have another crisis i
agree with all the flat i think that’s another problem which
maybe we’ll talk about another time which is not even leaving aside
collected we have a financial system that doesn’t
do it fundamental job well which to allocate money completely for the
economy needs what happened left in the editors of
allocated money too can uh… subdivision to the desert but
nobody with them today so there’s been a lot of attention paid to the issue of of collective but kind of the further structural issue i
think and and and the reason for that structural issues again goes back to lou
colin tablets which is that how you may have you make
your money exactly exactly and it’s all dot all the way long incentive structures remain in place yeah so are so isn’t in my opinion it’s
in absolute guarantee that it will crack
again it’s only a matter of time the only question is is is it three years of three months is out of
time in in a matter of how that would be if i could even you know you know larry
chimerine said today the company of the crisis every
seven years but the question of how that a ait if you want to know more about
this death which i got the baseline scenarios that fantastic blog uh… andy mail pe dated when net
there’s news on this front obviously james quiet thanks so much for your
through attrition plank road are we’ll be right

29 comments on “Review Of The Financial Reform Bill – The Baseline Scenario”

  1. andiamoci22 says:

    first

  2. cakeape says:

    kwakth

  3. Porky DaPiggy says:

    nice

  4. randall petermann says:

    i know that it seems kind of boring but it is to our benefit to know at least some of some of what is going on

  5. Dmitry Atlasman says:

    @akamal1113 Yeah, so are Karl Marx, Leon Trotzky, Saul Alinsky, or Albert Einstein for that matter. So by the fact that some Jews are successful even in a sh*thole like the American banking system you suggest this as the ages old Jewish conspiracy theory ?? Racist Assholism goes a long way here on youtube I see…

  6. Dmitry Atlasman says:

    @Kooshkoff and some of akamal's friends to blow up the whole thing once it goes haywire … ha ha … ha…..:-/

    Damn that stereotype sh*t is addictive…….

  7. lordcheetah says:

    @akamal1113 There bankers that don't hate regulation?

  8. upplsuckimcool16 says:

    This is sad only 800 people saw this!!!

    I think the new TYT viewers will come to though.. It took me about two weeks to realized I liked the interviews as much as the main channel… Having seen the kids (or whoever) that have been coming on here recently, I doubt they will look similarly.

  9. upplsuckimcool16 says:

    @lordcheetah Looks like all Obama did was add more people to get bought by the system….. Thus giving them bigger guns against US.

    Your analogy was good James…. I think it will backfire… i think it is meant to back fire…. I think it is meant to look like it's going to help but in reality give them even more security in there scheme.

  10. upplsuckimcool16 says:

    @pinochet222 God Cenk brought him to places he tried avoinding time and time again… I FUCKIN LOVE CENK MAN this is why I watch him… This is why I have watched him for years… THIS… Not his best viral videos.. (Although I AM a sucker for the sound board 😛

  11. upplsuckimcool16 says:

    One quarter into this video James realized Cenk don't choose sides and wants to get things fixed no matter WHAT….. 3 quarters into the video James began to like that idea!

  12. romanmir01 says:

    FINRA is a piece of shit. They don't know what they are doing, they are screwing the small firms while the large firms don't even care about them, because they are all on large firms' payroll. That's one.

    Secondly: WTF is gov't doing in banking in the first place?!

    If gov't wasn't in banking in the first place, there would have been HONEST banks out there, NOT "insured" by gov't, so there wouldn't be all this moral hazard in banking, which exists.

  13. romanmir01 says:

    @romanmir01 Fed is setting 0% short term interest (they can't control long term, it's all US bonds, and those are going down as long term interest rates are rising, gov't can't control that).

    Fed and federal gov't are bailing out banks and other private businesses, which are monopolies, while destroying small businesses/startups, it's all wrong, from beginning to the end it's all wrong.

    Gov't has no business 'protecting consumers', consumers need protection from gov't!

  14. romanmir01 says:

    @romanmir01 There should be no BANS on ANYTHING except for ban on gov't fucking up the economy every day!

    Gov't should be BANNED from printing money, from setting short term interest, from doling out corporate welfare AND private welfare, from waging wars, from collecting income taxes, from creating ANY kind of insurance program no matter for a bank or for an individual.

    Gov't is all fucked up and it is killing the economy and people are blind idiots for not seeing it.

  15. romanmir01 says:

    @romanmir01 Using MODELS to set capital requirements.

    What a FUCKED UP way to do business! Totally bureaucratic in nature, totally Keynesian, assumes that somebody has an understanding of all the variables in the economy. Nobody does. Gov't not only doesn't have understanding, they are COOKING THEIR BOOKS THEMSELVES.

    You are upset with banks cooking their books? All gov't books are cooked. CPI – what a joke. What a fucking joke aimed at economic RETARDS.

  16. romanmir01 says:

    @romanmir01 The fundamentals of the gov't regulated economy are completely wrong.

    Gov't cannot regulate market. It must not regulate market. The only correct way for market to work is by complete lack of regulation.

    Not partial lack of regulation + gov't subsidies + gov't insurance + gov't monopoly protection + gov't setting interest rates + gov't printing etc.etc.

    NO.

    The only way to have a stable economy is to FORBID gov't from participating in it at all, so it can't fuck it up like now.

  17. DoctrinaBytes says:

    @romanmir01 Its that kind of radical free market ideology that will ruin this country even further. Good going!!!!

  18. romanmir01 says:

    @DoctrinaBytes Except that the country is COMPLETELY devoid of any free market ideology, the country is taken over by gov't and their preferred corporations colluding and has nothing to do with free market.

    Both, the gov't and corporations that gov't props up HATE free market, because free market will cost them their jobs, as it should.

  19. Ragitsu says:

    @akamal1113

    Summers is a Jewish surname?

  20. Despicably Irascible Rapscallion says:

    @romanmir01 Be honest, the market CANNOT exist in a free enough state for you. You will always use the government, or some other vague excuse, why your ideology just doesn't work.

    People exist as members of a society. This necessarily forces rules on individuals. Be an adult, and deal with it.

  21. romanmir01 says:

    @johnedwards1968 How about your growing up yourself. USA should stop being a crying child – oh, China is hurting me up the ass. Oh, Europe is not printing enough Euros.

    How about actually doing what USA DID DO during the 19 century.

    Being honest with you? How about you be honest about this simple fact – you cannot wait for somebody to wipe your ass.

    USA WAS the biggest producer and innovator in the world before 1913 – when the Fed was created and USA started on the road of its destruction.

  22. romanmir01 says:

    @Firestorm6X6 You have no idea about my education 🙂 You have nothing to say with regard to my statements, so you are attacking me on the basis of some contrived notion about my education, what a gyp.

  23. lordcheetah says:

    @upplsuckimcool16 I don't disagree.

  24. Despicably Irascible Rapscallion says:

    @romanmir01 What did the US do during the 19th century? They were not a prominent nation internationally until after World War 1 for crying out loud.

    The 10 worst recessions(except for 2) in history for the US, happened during the 19th century! What in the hell are you talking about?

  25. romanmir01 says:

    @johnedwards1968 You are extremely wrong. In 19 century USA was the first country in the world to move towards innovation and automation, usage of machines in the factories, when in fact throughout Europe there was almost a revolution against it (ever heard of the social movement lead by a guy named Ned Ludd?

    Look at what was accomplished during the 19 century: USD was 2x as expensive by the end of it as it was in the beginning. USA was a net exporter of consumer goods, like China today ctd

  26. romanmir01 says:

    @johnedwards1968 There were recessions, more than 10 in USA in 19 century. But the TOTAL improvement of quality of life was immense, I'd argue that 19 century did more in terms of total improvement of quality of life than 20th for USA.

    Look, at the beginning of 19 century most of USA was subsistence farmers, there were pretty much no factories, there was no steam power, no electricity, no radio, no telegraph, no phone, no machines, no airplanes, no trains, no autos, no indoor plumbing, ctd

  27. romanmir01 says:

    @johnedwards1968 only 3 staple foods, people mostly ate 1 time a day, food was expensive and not very good, expensive medical care, expensive clothing, expensive energy, expensive housing.

    During the 19 century the dollar went up as USA became more and more productive. By the end of 19 century USA had: cheap and safe food (safe due to free market's ideas like refrigeration,) indoor plumbing, cheap clothing, energy, communications, cars even. Even airplanes were built first before 1913 (the Fed)

  28. romanmir01 says:

    @johnedwards1968 USA wasn't an imperial nation at that time, it didn't wage wars upon other countries, it was the biggest producer of consumer goods, why else do you think the dollar became MORE expensive and things became CHEAPER during the 19 century?

    Deflation is EXCELLENT for economy, it's jokers like Bernanke that say otherwise. Of-course nobody actually experienced deflation since the 1913, when Fed was created and started printing and setting interest rates and buying gov't debt.

  29. romanmir01 says:

    @johnedwards1968 Most of what USA was during the 20th century was built in 19th, and you are dissing it. Well, no surprise, the entire establishment is aimed at un-educating people about their own history and economy and politics.

    Gov't today exists solely for itself, for its own enrichment by force and threat of violence through the protection racket of monopolies, which are the backbone of all gov't programs AND it exists because it's destroying the currency of the people.

    Get out of USD.

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