Rebel Traders – Analysis Without The Hype

That is what Senator Bryon Dorgan said on this very day 10 years ago. It was on this day, November 12, 1999 that then President Clinton signed into law the Financial Modernization Act. Contained within that act was the dismantling of the Glass-Steagall Act. The very law that kept “Too Big To Fail” in check was signed away and exactly 10 years later our Government is trying to finds ways to regulate the financial industry after it unleashed a monster just 10 years ago today.

This video from November 1999:

I have written several times in the past about that day in 1999 when Glass-Steagall was wiped off the books. That law prevented banks and investment companies from crossing the line into each others business. But with the destruction of Glass-Steagall came the seeds and fertilizer for what we have on Wall Street today, financial institutions the size of Godzilla and it has taken over Manhattan.

Now that our Government created this monster; which has wiped out trillions of dollars in savings accounts, pension funds, sovereign wealth funds, and the life savings of numerous retired individuals all over this nation the monster is doing everything in its power to keep ‘business as usual’.

The financial regulatory reform draft recently introduced by Senator Chris Dodd is a massive document (1,100 pages) that discusses everything from creating new regulatory departments, increasing accountability, new bank division regulators for the small banks, and lots of mumbo jumbo about how the financial system can be fixed with this draft bill and the problems will never happen again.

<pull my finger>

As Senator Bryon Dorgan so eloquently said on this day ten years ago; “we will look back and say we should have not done this“. He was so right, Washington forgot the lessons of the Great Depression and with the destruction of Glass-Steagall we can clearly and without hesitation say that “they should have never done it”.

When the bill passed the Congress and subsequently signed into law by the President it was not the people of the nation that they were saying how good it would be for, it was how great it would be for the Wall Street firms who would go on to create the biggest financial institutions on the planet who then had the power, the capability, the will, and the desire to suck every dollar from as many people as they can. All the while never worrying about the risks associated with it because the same people they stole from will be the very same ones who will rescue them for they are the tax payers.

Chris Dodd’s financial reform draft is all words with no meat. It was probably written in part by Wall Street themselves and Chris Dodd is simply carrying the torch to show the world that he will reform the system. In actuality nothing significant is in the draft that I can find. The 1,110 page document could easily be reduced to about 20 or 30 pages by simply creating an executive order to reverse the 1999 Financial Modernization Act. But we know that can never happen because you and I don’t have a voice in Washington, D.C. any longer. The only voice they hear is their bosses on Wall Street and they run and control the financial laws of the land.

Just today the Federal Reserve announced new rules on ATM overdraft fees without your knowledge.

The Federal Reserve Board on Thursday announced final rules that prohibit financial institutions from charging consumers fees for paying overdrafts on automated teller machine (ATM) and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.

A big problem however is that the banks would not be required to comply until July 1, 2010. This gives them plenty of time to come up with new ways to add fees to make up for the overdraft fees they will lose. Why wait until July 1, 2010 instead of making effective within a matter of weeks? Because the lobbyists from Wall Street and  K street in Washington hammered the Feds to ‘give them time’. The banks claim that the new rule will take many months of re-programming the systems to adjust for the overdraft fee rules.

<pull my finger>

The only reason is to allow the banks enough time to create new debit fees that will offset the loss in overdraft fees. Similar to the current credit card fiasco that has customers now unable to pay their credit card bills because the banks jacked their interest rates up to 29.99% in many cases. The banks are front running the rules to gauge as many people as they can and in the fastest amount of time possible.

Do you really think Washington listens to the people anymore? Unless your name is Ken Lewis, Vikram Pandit, Lyodd (Lord aka God) Blankfein, or Jamie (the weasel) Dimon then you have not a chance in hell to have your elected officials listen to you. If you want to offer $1,000,000 to his next campaign fund well then he or she will make time for you, but only enough time to verify the check is good and then you will be out the door.

The only financial reform that will work is the breaking up of the banks and financial institutions again. Build a fence between the two and go back to the days when a bank was a bank, nothing more. And investment firms only handled investments and never dabbled into banking. But these institutions are so big now that just the threat of breaking them up will bring a reaction from them that if they go down then the nation will go down. Remember Lloyd Blankfein (Goldman Sachs CEO) said just this past weekend in an interview that Goldman Sachs “was doing Gods work“. I guess no one would dare interfere with God, now would they.

Lloyd Blankfein…. come closer, closer still…  PULL MY FINGER

GMAC Financial Services received the green light from the Federal Reserve to obtain “bank holding company” status on December 24. But, it was contingent on GMAC completing a debt-for-equity exchange and the deadline to meet the 75% conversion of debt holders over to equity was to have been completed by 11:59pm last night.

In an e-mail early Saturday, GMAC spokeswoman Gina Proia did not provide any specifics.

“The offer did expire yesterday at 11:59 p.m. as planned. We have not yet issued final results but intend to in the near term. I have no further comment on the exchange until then,” she wrote.[...]

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GMAC may become a bank holding company after all…

Dec. 15 (Bloomberg) — GMAC LLC investors holding about $10.5 billion of bonds agreed to revised terms of a debt swap designed to help the auto and home lender get financial aid from federal banking programs, their lawyer said.

“The committee has unanimously agreed to support the offer,” said Andrew Rosenberg, partner at Weiss, Rifkind, Wharton & Garrison LLP, in an interview from his New York office. Rosenberg represents bondholders who had balked at the Detroit- based company’s plan to restructure its debt, which was designed to help avert a default.

GMAC, the primary lender to General Motors Corp. dealers, said Dec. 12 it revised the terms of its $38 billion debt exchange offer, including an improved interest rate and a capital contribution by its owners. The swap would pave the way for GMAC to convert to a bank holding company and gain access to U.S. subsidies for ailing financial companies. GMAC extended the early deadline for the exchange to Dec. 16, its fourth extension since announcing the proposal last month.[...]

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