Financial Regulatory Reform Bill of 2009 [Debating]

[Southern Senator North Carolina Yankee]

To be completely honest, I really don't understand this stuff    Unless someone presents some reason not to, I'll probably vote in favor.

You guys are killing me here.

I really would prefer this to be seriously reviewed. It should have has much focus and consideration as the Stimulus and Health Care bills we passed, had.


REMEMBER SENATOR'S YOUR LAZINESS HERE COULD ALLOW THIS CRISIS TO OCCUR AGAIN IF I MISS SOMETHING!!!!!!!!!!!!!.

You here that, second recession, maybe depression. Translation: GET TO WORK!!!!!!!!!!!!!!!

[Vepres]

What is your reasoning for requiring investment banks to have at least 25% of their assets on hand or in liquid securities, Yankee?

[Southern Senator North Carolina Yankee]

What is your reasoning for requiring investment banks to have at least 25% of their assets on hand or in liquid securities, Yankee?

The reason is because of Opaque financial statements. You have a firm with a lot of money invested in MBS, CDO, CDS and other deritives connected to the housing bubble. With mark to market acounting all of these assets, when a decline in value occured, every dollar lossed had to be writted of as a loss on the both the cash flow statement and on the Net worth in the Balance statement. A declining Net worth makes it difficult to get loans or sell bonds, needed to pay for the flow of red ink on the cash flow statements. Also, assets not related to the Housing bubble had been moved onto the open market and even the modest declines from Jan 2008-Sept 2008 meant that if those stocks were sold they would be sold at a loss and again Mark to Market accounting meant they would be be written off as a loss on the financial statement and a the balance sheet. So you rob peter to pay paul, you still can get credit, and the firm is screwed overall. With a 10:1 leveraging limit you have $1 for every $10 lent which is still very risky but significantly less so then current leves. By requiring that 20% to 25% be in liquid assets or cash instead of on the market, they could access them without it having such an effect on the business.

[MaxQue]

To be completely honest, I really don't understand this stuff    Unless someone presents some reason not to, I'll probably vote in favor.

You guys are killing me here.

I really would prefer this to be seriously reviewed. It should have has much focus and consideration as the Stimulus and Health Care bills we passed, had.

Well, it is hard when we don't understand one word on two.

[Franzl]

I think Yankee knows a lot more about this topic than any of us in the Senate really. At least he makes that impression

[Fritz]

I think you need to dumb this down for us, Yankee.  We're a bunch of idiots.

Seriously, only soon-to-be Senator Badger has given any meaningful input to this discussion.  Beyond that, Maxque and Marokai came in with adding the credit unions, Purple State has expressed some concern about the timing, and Vepres asked a pertinent question.  Most of the people posting in this thread have not even been Senators.  Franzl, Afleitch, and myself have posted in the thread, but not in any meaningful way.  Where are Hashemite, Hans, and Tmth?

Explain this, in simple, laymens terms that even Sewer Socialist could understand   And give your explanations line by line of the bill.  Your last response to Vepres is a good start on exlpaining one of the lines.

[Southern Senator North Carolina Yankee]

I think you need to dumb this down for us, Yankee.  We're a bunch of idiots.

Seriously, only soon-to-be Senator Badger has given any meaningful input to this discussion.  Beyond that, Maxque and Marokai came in with adding the credit unions, Purple State has expressed some concern about the timing, and Vepres asked a pertinent question.  Most of the people posting in this thread have not even been Senators.  Franzl, Afleitch, and myself have posted in the thread, but not in any meaningful way.  Where are Hashemite, Hans, and Tmth?

Explain this, in simple, laymens terms that even Sewer Socialist could understand   And give your explanations line by line of the bill.  Your last response to Vepres is a good start on exlpaining one of the lines.

Well that could be difficult.

I realize, that I am basically the financial wizard of the Senate, and its primarily because since 2008 I have been obsessed with discovering the true causes and the true criminals who f**ked me and the whole country. I have spent a lot of time on wikipedia reading up on this, on the economic board reading everything from the doomsday scenarios of Sam Spade and Beet, to the rosy predictions of Jmfcst, and on yahoofinance reading articles.

[Franzl]

I offer the following Amendment.

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Since there has been no objection, and you are the sponsor of the bill, this amendment is considered adopted.

[Southern Senator North Carolina Yankee]

I ask unanimous consent that the word "instrument" in the previous amendment be changed to "instruments".

Can you guys aleast review it for grammar mistakes that I made, if the content is above your head?

[Southern Senator North Carolina Yankee]

Okay. As Fritz suggested

Section 1 is basically establishing a gov't agency that will step in when certain companies that are

1. Large and have the potential to bring down the entire economy were they to collapse

2. Are in bankruptcy or on the verge of bankruptcy.


This agency will then be able to do one of three things or a combination of the three.

1. Find a buyer and sell the company to someone else.

2. Organize a debt(loans and bonds outstanding) for equity(shares of stock) swap. Where the debtors are given shares at a certain price to prevent them for calling there bonds/loans and putting the company under.

3. Liquidate the company and then sell off the healthy parts on the open market to companies that want them and then creating a shell company to house the bad assets and previous liabilities) and the judges can deal with tying up the loose ends.

No taxpayer funded bailouts would be used, while at the same time systemic risk is avoided.

In the future we need to look at modifying anti-trust laws to break up companies that get too large no matter there economic condition like AIG being broke up in say 2005, before any bad stuff could happen.

Section 2 just finishes up the establishment of this Resolution authority, creates guidlines for administration, and paying for the agency.


Section 3 Is explained here: https://uselectionatlas.org/FORUM/index.php?topic=105674.15


Section 4 removes a loophole created in the 2000 passage of the Commodity Futures Modernization Act of 2000 that left the derivitives at the heart of the collapse unregulated.

Section 5 Creates a Consumer Protection Agency similar to the one proposed in RL but in a much more limited role and all the basically do is offer an "un-biased" rating of secruities, deritives etc and regulate companies that are in the financial ratings industry. Part of the reason for the widespread proliferation of all this junk paper(bad assets) was that it was rated as AAA by the likes of Moody's, Standard and Poors, etc. The ratings industry is also lightly regulated and to make matters worse most of the formulas used to grade financial instruments are proprietary and thus secret. So this will provide an objective agency from from financial or political influence to grade securities and regulate the existing ratings industry.

Section 6 removes the "Morale Hazard" created in the legislation passed by Senator Hans, which basically amounted to corporate welfare and had the risk of encouraging risky investment on the taxpayers dime if they didn't pan out. No offense to the Senator, but the risk of failure is what reduces and restricts risky investments in the market, take away the risk and it will create a rash of corporate irresponsibility. I will note that it just amends that act, it doesn't repeal it.

[Fritz]

Thank you for doing this, Yankee.  This is much clearer.

Overall, good work.  Badger had raised some concerns regarding section 3 that still need to be addressed.  He ascertains that you have the right ideas, but your numbers are off.  I am certainly in no position to determine what the numbers should be.  The GM's response was not helpful, either.  I believe we need to determine specifically what amendments to make to section 3 before moving forward.  Badger, you out there?

I would also like to hear a response from Hans regarding section 6.

[Purple State]

Thank you for doing this, Yankee.  This is much clearer.

Overall, good work.  Badger had raised some concerns regarding section 3 that still need to be addressed.  He ascertains that you have the right ideas, but your numbers are off.  I am certainly in no position to determine what the numbers should be.  The GM's response was not helpful, either.  I believe we need to determine specifically what amendments to make to section 3 before moving forward.  Badger, you out there?

I would also like to hear a response from Hans regarding section 6.

I wish I could do more. Regulation of financial instruments is over my head.

[Badger]

Thank you for doing this, Yankee.  This is much clearer.

Overall, good work.  Badger had raised some concerns regarding section 3 that still need to be addressed.  He ascertains that you have the right ideas, but your numbers are off.  I am certainly in no position to determine what the numbers should be.  The GM's response was not helpful, either.  I believe we need to determine specifically what amendments to make to section 3 before moving forward.  Badger, you out there?

I would also like to hear a response from Hans regarding section 6.

I am. FWIW from a mere Senator-elect:

The 10-1 cash to loan ratio proposed isn't as vast a change from current law as I thought; NCY pointed out the standard leveraging limit was recently as low as 13-1, whereas I'd (mis)recalled it being higher. Still, that's a huge drop. A bank with a million in assest could previously extend $13 million in loans and credit, but now is limited to $10 million they can loan. While I agree the standards need tightened, I don't believe a near 25% reduction in available credit is what the economy needs now.

I know my vote probably isn't needed on this proposal as it'll likely be passed or defeated before my swearing in, but is there some room for compromise on these numbers NCY?

RE: Section 5, in what specific ways is the proposed consumer protection agency more limited than the real life proposal? Just as importantly, why?

I would also like to hear from Franzl on Section 6 and review the original law before stating an opinion.

[Bacon King]

Okay, since this bill has survived through three changes in Senate leadership, things have naturally gotten a bit confusing.

Senator NCYankee, could you please clarify as to whether your amendment posted in reply #4 of this thread is still being offered? I would assume not because your friendly amendment in reply #23 seems to be a reworded version of the preceding amendment but I'd prefer you state it explicitly just so everything makes sense.

Also, Senator NCYankee, your friendly amendment proposed in reply #33 is adopted.

Now, pending the above clarification, the only amendment at hand is the one posted by then-Senator Marokai Blue in reply #15. I can open a vote on it when any Senator calls for it. It is quoted below for your convenience.

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[Southern Senator North Carolina Yankee]

The one in reply 4 is withdrawn in favor of reply 23's.

Thank you for doing this, Yankee.  This is much clearer.

Overall, good work.  Badger had raised some concerns regarding section 3 that still need to be addressed.  He ascertains that you have the right ideas, but your numbers are off.  I am certainly in no position to determine what the numbers should be.  The GM's response was not helpful, either.  I believe we need to determine specifically what amendments to make to section 3 before moving forward.  Badger, you out there?

I would also like to hear a response from Hans regarding section 6.

I am. FWIW from a mere Senator-elect:

The 10-1 cash to loan ratio proposed isn't as vast a change from current law as I thought; NCY pointed out the standard leveraging limit was recently as low as 13-1, whereas I'd (mis)recalled it being higher. Still, that's a huge drop. A bank with a million in assest could previously extend $13 million in loans and credit, but now is limited to $10 million they can loan. While I agree the standards need tightened, I don't believe a near 25% reduction in available credit is what the economy needs now.

I know my vote probably isn't needed on this proposal as it'll likely be passed or defeated before my swearing in, but is there some room for compromise on these numbers NCY?

RE: Section 5, in what specific ways is the proposed consumer protection agency more limited than the real life proposal? Just as importantly, why?

I would also like to hear from Franzl on Section 6 and review the original law before stating an opinion.

Write an amendment chaning it to 13-1 then. There is definately room to compromise. I just want strict standards because unlike other industry, we need the financial industry and we can't afford to do a Tarp every five years or something. So we have to fix it long term. Even some monterists now accept this that that financial industry is an exception to the low regulation theme.

I am not exactly sure what all the real life Consumer protection agency does. All I know is that the one in this bill focuses primarily on grading investment options, and also regulating the private sector ratings industry. Basically a "Public Option" to compete with Moody's, Standard and Poors etc whose faulty grades of AAA+ gave the misimpression that MBSs were a safe investment.

If you want to expand its powers, I will gladly introduce any proposed amendments for you.

[Bacon King]

So noted, Senator Yankee. I can open a vote on Marokai's amendment as soon as someone calls for it. This is because (I'm fairly certain, anyway) that his amendment reached its debate time threshold before he resigned so a vote has been due on it, regardless of his non-sponsorship of the amendment after leaving the chamber. If anyone disagrees feel free to challenge.

[Southern Senator North Carolina Yankee]

I oppose the honerable former Senator and current Associate Justice Marokai Blue's amendment. The reason for this is, after much consideration, the stipulations in Section one really only affect investment banks and hedge funds. They really would have no impact on tradtional banks. In fact, Marokai's amendment may actually lesson the standards on traditional banks and credit unions by making the terms of Section 1 apply to them. Deregulating traditional banks and credit unions isn't a good idea. Thus I urge the Senate to defeat this amendement.

Mr President I ask unanimous consent that the former Senator's amendment be brought to an immediate vote.

[Bacon King]

Senators, there is a vote on the following amendment. Please vote aye, nay, or abstain.

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[Southern Senator North Carolina Yankee]

NAY

[Southern Senator North Carolina Yankee]

Amendment to Section 5:3 All subsequent clauses renumbered accordingly.

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I would like to create some guidelines regarding home lending and predatory lending so the agency will no what to do about them. Anyone have any knowledge of this?

[Fritz]

I might change my mind, but for now, Aye to the amendment.  I am not seeing how this would do any harm.

[Southern Senator North Carolina Yankee]

I might change my mind, but for now, Aye to the amendment.  I am not seeing how this would do any harm.

It might actually lesson regulations on certain banks which isn't what we want. I don't know much about Traditional Banking regulations.

[Badger]

I might change my mind, but for now, Aye to the amendment.  I am not seeing how this would do any harm.

It might actually lesson regulations on certain banks which isn't what we want. I don't know much about Traditional Banking regulations.

How? I'm not sure I read that in the amendment's language, though you obviusly do. Could you please elaborate?

[Badger]

The one in reply 4 is withdrawn in favor of reply 23's.

Thank you for doing this, Yankee.  This is much clearer.

Overall, good work.  Badger had raised some concerns regarding section 3 that still need to be addressed.  He ascertains that you have the right ideas, but your numbers are off.  I am certainly in no position to determine what the numbers should be.  The GM's response was not helpful, either.  I believe we need to determine specifically what amendments to make to section 3 before moving forward.  Badger, you out there?

I would also like to hear a response from Hans regarding section 6.

I am. FWIW from a mere Senator-elect:

The 10-1 cash to loan ratio proposed isn't as vast a change from current law as I thought; NCY pointed out the standard leveraging limit was recently as low as 13-1, whereas I'd (mis)recalled it being higher. Still, that's a huge drop. A bank with a million in assest could previously extend $13 million in loans and credit, but now is limited to $10 million they can loan. While I agree the standards need tightened, I don't believe a near 25% reduction in available credit is what the economy needs now.

I know my vote probably isn't needed on this proposal as it'll likely be passed or defeated before my swearing in, but is there some room for compromise on these numbers NCY?

RE: Section 5, in what specific ways is the proposed consumer protection agency more limited than the real life proposal? Just as importantly, why?

I would also like to hear from Franzl on Section 6 and review the original law before stating an opinion.

I'd like that, but it'll take xome time. I'll see if I can research some stuff starting Monday afternoon.
Write an amendment chaning it to 13-1 then. There is definately room to compromise. I just want strict standards because unlike other industry, we need the financial industry and we can't afford to do a Tarp every five years or something. So we have to fix it long term. Even some monterists now accept this that that financial industry is an exception to the low regulation theme.

I am not exactly sure what all the real life Consumer protection agency does. All I know is that the one in this bill focuses primarily on grading investment options, and also regulating the private sector ratings industry. Basically a "Public Option" to compete with Moody's, Standard and Poors etc whose faulty grades of AAA+ gave the misimpression that MBSs were a safe investment.

If you want to expand its powers, I will gladly introduce any proposed amendments for you.

[Southern Senator North Carolina Yankee]

I might change my mind, but for now, Aye to the amendment.  I am not seeing how this would do any harm.

It might actually lesson regulations on certain banks which isn't what we want. I don't know much about Traditional Banking regulations.

How? I'm not sure I read that in the amendment's language, though you obviusly do. Could you please elaborate?

Well, as I said, the leveraging requirements on Traditional banks might be much stricter already like 9-1 or something and by applying these rules it would have the effect of reducing standards. So I need to look up the current leveraging requirements on Traditional Banks before we do anything.

Sorry BK, but this aint going to a vote for some time.