The Fed wants to increase regulation of shadow banking. Financial firms that are not regulated but could pose a risk to the economy, such as money market funds, will be under closer scrutiny because of Dodd-Frank.
Some hedge funds register with the SEC even though they don’t have to, for increased transparency.
RBC takes on the Commodity Futures Trading Commission: Royal Bank of Canada has been sued by the CFTC for accusations that it made illegal futures trades to take advantage of tax breaks for equities. RBC says it did nothing wrong. Christine here: I find it interesting that this involves a Canadian bank and they’ve decided to fight with the CFTC instead of settling with them. I haven’t seen many stories about an American bank that stood up and said it wasn’t going to pay up because it did nothing wrong.
President Obama wants to implement the “Buffett Rule.” Christine here: I think this is a terrible issue to focus on for reelection. It seems to me like it’s a populist approach that Democrats think will attract people who are mad at Wall Street. However, I think there are so many other problems in this country, nobody wants to pay higher taxes, and there are a lot of voters who identify with Republicans (that should be voting Democrat) and will vote Republican on this issue.
Edward DeMarco still cold to the idea of principal reductions. Christine here: DeMarco is under a lot of pressure from the Democrats to reduce principal on government backed loans. He’s been stuck on the moral hazard issue, but now he says his office went back again and found that principal reductions will save the Treasury $1.7 billion dollars! $1.7 billion might be a drop in the bucket to politicians, but this is taxpayer money he’s playing around with. The loans they back are made to taxpayers and the taxpayers pay his salary. I wouldn’t be surprised if next week he totally changes his position, championing the cause of principal reductions, under all the political pressure. Smart people change their mind in light of new facts and information — let’s hope he’s open to initially being wrong on this issue.
NY AG Schniederman objects to BoA’s mortgage bond settlement for $8.5 billion, saying investors should recover more.