Posts Tagged ‘Dodd-Frank’

Banking and finance roundup

  • Calvin’s refuge: how Swiss banking confidentiality undermined state despotism [Matt Welch, who also discusses how the gruesome FATCA law is proving to be the first component of an multilateral effort by OECD governments to curtail account privacy]
  • Dodd-Frank compliance costs and the rapid decline of community banks [Marshall Lux and Robert Greene/Kennedy School, Carrie Sheffield, Jeff Sovern with a scoffing view; WSJ]
  • “The IRS seized $242 million based on suspected structuring in more than 2,500 cases from 2005 to 2012.” [Jacob Sullum, new Institute for Justice report (PDF) by Dick Carpenter II and Larry Salzman and summary] More: new structuring case against Dubuque, Iowa widow raises question of whether feds have really followed through on promise not to press structuring charges where income is otherwise legal [AP/WHEC]
  • “House Investigators: DOJ Forced Banks to Donate to Left-Wing Groups” [Joel Gehrke, NRO]
  • “FDIC retreats on Operation Choke Point?” [Todd Zywicki] Rep. Luetkemeyer likely to keep up the pressure on regulators [Kevin Funnell]
  • “Fed Officials Accused of Perjury in AIG Bailout Trial” [Lawrence Cunningham, Concurring Opinions]
  • “Standard & Poor’s Settlement Shows Futility Of Fighting Government Policy” [Daniel Fisher, earlier]

A Dodd-Frank reform menu, ready to go?

Jim Hamilton’s World of Securities Regulation has a list of seven bills “amending the Dodd-Frank Act [that] passed the House in the 113th Congress by a bi-partisan vote, sometimes an overwhelming bi-partisan vote, but were never taken up [by] the Senate.” Topics of the bills include: exempting from SEC registration venture capital and SBIC advisers; exempting advisers to private equity funds when not over-leveraged; requiring study of effects of non-conforming U.S. standard on derivative credit valuation adjustment (CVA) capital requirement; clarifying handling of centralized treasury units (CTUs); removing indemnification requirement imposed on foreign regulators; coordinating regulations on cross-border derivatives transactions; and curbing Volcker Rule application to debt securities of collateralized loan obligations.

Banking and finance roundup

  • House Oversight Committee report finds evidence FDIC used Operation Choke Point to strangle access to banking for lawful but disliked businesses [St. Louis Post-Dispatch, Bloomberg, report, Kevin Funnell, HalfWheel (cigar shops), Pete Kasperowicz, The Blaze (guns), Joe Adler/American Banker (critical views)]
  • “Fallout for the S.E.C. and the Justice Dept. From the Insider Trading Ruling” [Peter Henning, NYT DealBook, on challenges to previous cases; earlier]
  • Congress finally trims Dodd-Frank, with a nose hair clipper. Imagine what Sen. Warren will say if it takes up a scalpel or axe [Michael Greve; but see A. Barton Hinkle defending Warren’s position; Matt Levine (“not worth caring about”)]
  • Did tax policy set out to make life tough for American expatriates, or does it just seem that way? [Neil Gandal, WSJ on FATCA, FBAR, etc.]
  • “Like other federal agencies, the SEC has long been good at publicizing its initial accusations of wrongdoing …not so good at letting the public know when those accusations turn out to be unfounded or an overreach” [Russell Ryan via Bainbridge, more on SEC press releases on enforcement actions]
  • A market with next to no entry: “If Primary Bank, Mr. Greiner’s proposed firm, wins approval, it would be only the second new bank the FDIC has cleared in the U.S. since 2010.” [WSJ]
  • “The only people who benefit from shareholder litigation over M&A deals are lawyers. Period. End of discussion.” [Stephen Bainbridge; related, Steve Bradford via Bainbridge (“Delaware’ entire fairness standard morphs into a tax on deals for the benefit of plaintiff lawyers”), earlier here, etc.]

An agenda for financial regulation

Steve Bainbridge has a wish list for reforms to financial and securities law in the new Congress, especially the damaging Dodd-Frank and Sarbanes-Oxley laws. Included: repeal of conflicts minerals disclosure, “say on pay,” and pay ratio disclosure; more leeway for public companies to opt out of various regulatory obligations to shareholders that their own shareholders have not contractually seen fit to impose; and litigation reform.

Meanwhile, my Cato colleague Mark Calabria points out that there “are numerous protectors of the status quo in both major political parties,” which may frustrate the relatively free-market instincts of the responsible committee chairs, Sen. Richard Shelby and Rep. Jeb Hensarling. “But at least financial regulation is unlikely to get any worse.”

“Should the SEC be prosecutor, judge, jury, and executioner?”

Prof. Bainbridge flags this disturbing Wall Street Journal piece:

The Securities and Exchange Commission is increasingly steering cases to hearings in front of the agency’s appointed administrative judges, who found in its favor in every verdict for the 12 months through September, rather than taking them to federal court.

Previously, the agency had tended to use the ALJs (administrative law judges) for relatively cut-and-dried enforcement actions, while taking more complex or cutting-edge disputes to federal court. Now, following the Dodd-Frank expansion of its powers, it prefers ALJs even for many complex and demanding cases arising from charges such as insider trading. Defendants enjoy a range of protections in federal court that are not provided in administrative litigation, including juries as well as the presence of federal judges who are independent of agency control, held to a more demanding ethical code, and drawn generally from higher and more sophisticated circles within the legal profession. Read the entire Bainbridge commentary, with followups linking Henry Manne (adjudicatory actions are ways to avoid the more demanding process of rulemaking) and Keith Bishop (current system open to constitutional challenge?).

Banking and finance roundup

Banking and finance roundup

  • Still money left in that piggy bank: Justice Department shakes $1.7 billion out of J.P. Morgan because its custody wing kept handling a primary Bernie Madoff account while a distant equity desk grew suspicious of him, in what “looks a bit like a tax on bigness and integration” [Matt Levine, Bloomberg; NPR].
  • Legacy of TARP one of cronyism and lawlessness [Mark Calabria, USA Today]
  • NYT assails a couple of academics as mouthpieces for Wall Street, Felix Salmon has a bit to say about that [Reuters, EconBrowser, Bainbridge, Pirrong] Daniel Fisher on a possible tie-in with Times reporter David Kocieniewski’s earlier piece flaying Goldman Sachs over aluminum warehousing [Forbes]
  • “Court Receptive to Overturning SEC’s Conflict Minerals Disclosure Rule” [Fed Soc Blog]
  • “Target Breach — Are Dodd-Frank ‘Swipe Fee’ Price Controls to Blame?” [John Berlau, CEI “Open Market”] “Volcker Rule Overshoots Wall Street to Hit Utah” [same]
  • “CFPB and Disparate Impact” [Hester Peirce, Point of Law]
  • “It might cost you $39K to crowdfund $100K under the SEC’s new rules” [Sherwood Neiss, VentureBeat via @jerrybrito]
  • Here’s a novel proposal for corporate governance: use the rules agreed upon by the original parties to the transaction [Hodak]

Banking and finance roundup

  • J.P. Morgan and the Dodd-Frank system: “With Wall Street’s capable assistance, government has managed to institutionalize and monetize the perp walk.” [Michael Greve, related from Greve on the self-financing regulatory state]
  • Harvard needs to worry about being seen as endorsing its affiliated Shareholder Rights Project [Richard Painter]
  • Under regulatory pressure, J.P. Morgan “looking to pull back from lending to politically incorrect operations like pawn shops, payday lenders, check cashers” [Seeking Alpha]
  • Rare securities class action goes to trial against Household lending firm, HSBC; $2.46 billion judgment [Reuters]
  • Car dealers only thought they were winning a Dodd-Frank exemption from CFPB. Surprise! [Carter Dougherty/Bloomberg, Funnell]
  • “Memo to the Swiss: Capping CEO Pay is not an Intelligent Way of dealing with Income Inequality” [Bainbridge]
  • American Bankers Association vs. blogger who compiled online list of banks’ routing numbers [Popehat]

“Whistleblowers coming from compliance departments”

Much more rewarding to act as a government informant than to help the employer address the problem: “Allegations of wrongdoing within a company often surface in the compliance department, which often is involved in internal investigations and receives employee complaints. Like other employees, compliance staff can under various statutes submit information on potential wrongdoing for whistleblower awards or claim retaliation for raising concerns about alleged wrongdoing.” [WSJ via CompliancEX]

Banking and finance roundup

  • “Dodd-Frank and The Regulatory Burden on Smaller Banks” [Todd Zywicki]
  • Side-stepping Morrison: way found for foreign-cubed claims to get into federal court? [D&O Diary]
  • “Alice in Wonderland Has Nothing on Section 518 of the New York General Business Law” [Eugene Volokh, swipe fees]
  • “Financial Reform in 12 Minutes” [John Cochrane]
  • Why the state-owned Bank of North Dakota isn’t a model for much of anything [Mark Calabria, New York Times “Room for Debate”]
  • Regulated lenders have many reasons to watch SCOTUS’s upcoming Mount Holly case on housing disparate impact [Kevin Funnell]
  • Cert petition: “Time to undo fraud-on-the-market presumption in securities class actions?” [Alison Frankel]