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SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

theintercept.com

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Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#151

Post by Karunamon »

notch898a wrote: post #146
Karunamon wrote: post #128

Earlier quoted context omitted.

A bank failed, and then only because they were doing unwise things with their holdings. Where are all the other failed banks as a result of the long-standing fiscal policy?

If the bar you're setting is looking for failed banks exacerbated by fed policies, look no further than the great depression. Now we could move the goal posts to something else, but the question you ask is not hard to find examples of. > doing unwise things In retrospect anything that causes a failure is going to be characterized as "unwise." You could say the wisest thing would be to create a 100% reserve ratio by p…

The problem with blaming the government for this failure is that only one bank seems to have been affected. Since we are talking about sector wide regulations and policies rather than anything that targeted this specific institution, it is evidence strongly in favor of the problem being with the bank, not with the environment. Were this is a problem with law or interest rates or something like that, we would expect to see a lot more collateral damage.

Instead, the only thing we see is a single bank that failed due to voluntarily tying up too much of their capital in instruments that cannot be easily liquidated.

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#152

Post by [deleted] »

bobby_bbb wrote: post #127
mjhay wrote: post #33

Earlier quoted context omitted.

Biden could reinstate them by EO, just like how Trump cut them. He hasn't though. There is a bipartisan consensus that the safety of the rail system is less important than rail company profits.

" There is a bipartisan consensus that the safety of the rail system is less important than rail company profits." Any of us can buy railroad stocks and become - in your mind - wealthy. Perhaps the more important value being protected was, if the railroads stop working, many of us stop eating. Same reason we subsidized food production, fuel, etc. Our societies have grown too much to be able to go back to life without…

[deleted]

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#153

Post by kevviiinn »

Bloating wrote: post #67
whitemary wrote: post #25

Earlier quoted context omitted.

A sovereign state in a capitalist society is a capitalist state. A capitalist state always serves, in aggregate, the interests of the capitalist class. Karl Marx showed us how this works 150 years ago and nobody has challenged this part of his analysis to my knowledge. I am familiar with the delusional American libertarian fantasies, but that's just ideological denial. They haven't done any actual analysis of how a g…

And every instance of communism has devolved into authoritarianism. I take capitalism, thank you

Capitalism is just authoritarianism under corporations, if you think it's so much better then I've got a bridge to sell you

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#154

Post by johndhi »

jszymborski wrote: post #143
zainhoda wrote: post #139

Earlier quoted context omitted.

I conducted Dodd-Frank Act Stress Tests for one component of a large bank. For a $400B portfolio I was able to do it with a team of 4 people including myself plus a $100k/year license to Barra and it takes about a week of the whole team’s focus. The thing is, we were already employed by the bank to run risk management and the bank already had the subscription to the software. So from the bank’s perspective it was clo…

> If a bank says that stress tests are too expensive to run, that means that absent regulatory requirements they would perform no risk management. This feels so damn true about almost every megacorp belly-aching about regulation.

Just chiming in as a lawyer who works for a fairly big corporation.

You're imagining a scenario where one set of clearly written and fairly interpreted rules applies to your core business. You're excluding scenarios where there are fifty states and two hundred countries wildly swinging back and forth from idiotic legislation drafted to apply to three companies (Google, Facebook, Amazon) that is impossible to apply to everyone else.

Imo the situation I describe is worthy of belly aching. I don't work in finance so I guess theoretically the US banking system could be easier to comply with than everything else - but I definitely disagree that everything else is easy to comply with.

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#155

Post by slantedview »

BurningFrog wrote: post #115

There are hard tradeoffs here, and one failed bank doesn't mean the wrong choice was made. As I remember it, the reason for weakening these regulations was that Dodd-Frank is/was extremely expensive to comply with, and that created a banking sector where only the biggest banks could survive and it made no sense to start any new banks.

> the reason for weakening these regulations was that Dodd-Frank is/was extremely expensive to comply with

It would be a lot easier for banks to comply with a reinstated Glass Steagall law, but banks don't want that either. The problem is really just that the banks don't want any restrictions, but as this situation shows, restrictions exist for good reason.

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#156

Post by downrightmike »

ryandrake wrote: post #149
jszymborski wrote: post #143

Earlier quoted context omitted.

> If a bank says that stress tests are too expensive to run, that means that absent regulatory requirements they would perform no risk management. This feels so damn true about almost every megacorp belly-aching about regulation.

Exactly. But also for smaller companies whining about government regulation. The “regulation” is what’s expensive, not the government part. If they can’t afford government regulation, they can’t afford self-regulation either, unless their idea of self-regulation is “do nothing and keep the money.”

“do nothing and keep the money.” That's the best definition of deregulation I've seen.

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#157

Post by dspillett »

ryandrake wrote: post #149
jszymborski wrote: post #143

Earlier quoted context omitted.

> If a bank says that stress tests are too expensive to run, that means that absent regulatory requirements they would perform no risk management. This feels so damn true about almost every megacorp belly-aching about regulation.

Exactly. But also for smaller companies whining about government regulation. The “regulation” is what’s expensive, not the government part. If they can’t afford government regulation, they can’t afford self-regulation either, unless their idea of self-regulation is “do nothing and keep the money.”

> “do nothing and keep the money.”

Or “do nothing until someone(s) else gets stung/slapped, and hope that it is someone/someones else not you, so you are around to learn from the mistake”.

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#158

Post by fundad »

fwungy wrote: post #129
admax88qqq wrote: post #113

Earlier quoted context omitted.

Because fundamentally the US government can print money to pay US debt. You can't print money to pay off your household debt. It's a different beast altogether subject to entirely different rules and incentives than household debt.

Yes, and we the taxpayers get the privilege of paying interest on the money that is printed based on our nation's creditworthiness. The debt can never be paid. It's by design.

With tax revenue on growing wages.

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#159

Post by notch898a »

Karunamon wrote: post #151
notch898a wrote: post #146

Earlier quoted context omitted.

If the bar you're setting is looking for failed banks exacerbated by fed policies, look no further than the great depression. Now we could move the goal posts to something else, but the question you ask is not hard to find examples of. > doing unwise things In retrospect anything that causes a failure is going to be characterized as "unwise." You could say the wisest thing would be to create a 100% reserve ratio by p…

The problem with blaming the government for this failure is that only one bank seems to have been affected. Since we are talking about sector wide regulations and policies rather than anything that targeted this specific institution, it is evidence strongly in favor of the problem being with the bank, not with the environment. Were this is a problem with law or interest rates or something like that, we would expect t…

1000 people are forced to roll a 10,000 sided dice. They roll a '1' and they die.

At the end one person is dead.

Clearly since that one person followed the sector wide regulation and polices rather than anything that targeted that specific person, it is evidence strongly in favor of the problem being with that person, not the dice game. Were this a problem with the game or the dice or something like that, we would expect to see a lot more damage.

Instead, the only thing we see is one person who lost the dice game voluntarily rolling the dice at the improper starting position and velocity that cannot be easily rolled to the correct number.

Clearly this isn't the same, but the logic you've used doesn't parse and in any case the full fault is unlikely to be fully the fault of government nor the bank. And it remains to be seen if the dice game is over...

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#160

Post by cjalmeida »

roenxi wrote: post #150
zainhoda wrote: post #139

Earlier quoted context omitted.

I conducted Dodd-Frank Act Stress Tests for one component of a large bank. For a $400B portfolio I was able to do it with a team of 4 people including myself plus a $100k/year license to Barra and it takes about a week of the whole team’s focus. The thing is, we were already employed by the bank to run risk management and the bank already had the subscription to the software. So from the bank’s perspective it was clo…

Doing the stress tests isn't where the cost would be coming from; the issue is more about the distraction of making sure that compliance is in place. I'd draw an analogy to having breakfast. If we legally required people to have breakfast every day, that would actually be quite expensive. It'd go from a reflex to something that has to be considered, we have to spend a little bit of time creating evidence that we had…

That’s an incredibly bad analogy. A more apt one would be lobbying FAA to give up pilot mandatory rest time for regional jets (eg. ERJs) as “they’d be too expensive compared flying with wide bodies 777”
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