Tag Archive: Financial Industry

Corzine on bankers: “right down there with politicians”

The Telegraph has an interview with former Governor Corzine talking about why he believes that the US should regulate its investment bankers. An original sponsor of Sarbanes-Oxley, he seems flummoxed by opposition to it now that he’s back in the money world. Hearing that people have gripes with the law, he said:

“It’s hard to believe that they do,” he continues. “It was a good Act and I think it will last a long time. If anything, I think it didn’t go far enough.”

Corzine went on to talk about the role the financial services industry played in helping to cause the financial crisis we are facing:

“I think bankers are an easy target but some of it is justified and some of it is not. It’s true that being a banker isn’t the most popular profession. It’s right down there with politicians.

“There were many mistakes made, some of them in the arena of how capitalism works. But there were a lot of complicit elements in that, including regulators who weren’t necessarily committed to regulation.”

Corzine talked about how he feels that regulatory reforms are still needed in order to deal with the excessive leverage and insufficient liquidity and controls that led to the financial crisis. It doesn’t seem like people have learned from the economic difficulties yet and truly reformed the industry as Corzine is calling for. Hopefully someone will listen if people within the industry itself start calling louder for reform. He also gave his take on the bill making its way through the Senate Banking committee that would rein in investment banks. The article is a pretty good read with some interesting commentary from Corzine, who doesn’t go very easy on his piers in the industry.  

I didn’t realize that Wall Street was in NJ’s 3rd Congressional District

We have written more than a few posts on Rep. John Adler’s siding against the public option and true health care reform (as opposed to health insurance reform).

We have repeatedly noted that, in positioning himself this way, Adler has not only alienated his base – the base that he shouldn’t automatically rely on in 2010 – but also will NEVER get republican votes or avoid republican Party attacks.  In fact, he is still one of the targeted seats by the republican Party for 2010.

So now, we recently found out that Rep. Adler was one of a group of Democrats who met with Wall Street executives (including JP Morgan Chase and Goldman Sachs) last fall – at the very time they were pushing to weaken legislation that would regulate the financial services industry:

In mid October, members of the New Democrat Coalition (NDC), a caucus of pro-business Democrats, traveled to New York City. According to an emailed itinerary for the trip drawn up by an event planner working for the group and obtained by TPMmuckraker, members met on October 12 with executives from Goldman, and the following day with execs from JP Morgan. Sandwiched between those events was a fundraiser for the New Dems, and a meeting with CEOs from Marsh and McLellan Companies, a consulting and insurance firm.

Based on the itinerary, the Goldman meeting was to be attended by Reps. Joe Crowley and Scott Murphy of New York, and Gabrielle Giffords of Arizona. The JP Morgan meeting was to be attended by Reps. Crowley, Murphy, Melissa Bean of Illinois, John Adler of New Jersey, and Jim Himes of Connecticut — a former Goldman banker. Crowley serves as NDC’s chair, and Bean as its vice chair.

Regulation of the financial services industry is pretty much accepted as necessary to help avoid the same abuses from prior deregulation and a repeat of the mess that was made over the past few years.  Former Federal Reserve Chairman Paul Volcker and former International Monetary Fund economist Simon Johnson both agree that this is imperative.  Yet, Adler and other Democrats were more interested in strengthening their Wall Street ties, as evidenced by the itinerary here, which shows Adler as confirmed to meet with $5 billion TARP recipient JP Morgan Chase.

The big pushback was on the regulation of derivatives, which a quick google search will show was a big reason for the crisis, and what happened as a result of Adler (and his counterparts’) efforts?

While the House Financial Services Committee was tweaking the reform bill proposed by the Obama Administration this summer, the New Democrats pushed back on key regulatory issues. One of the biggest: derivatives, the complex financial instruments that helped spark the global financial crisis. Most derivatives are traded in murky over-the-counter deals. The Obama administration wanted to push some of them onto regulated trading platforms. But that would have crimped one of Wall Street’s most lucrative businesses: The top five U.S. commercial banks, including JPMorgan Chase, Goldman Sachs, and Bank of America, were on track through the second quarter to earn more than $35 billion in 2009 trading unregulated derivative contracts, according to a review of company filings with the Federal Reserve and people familiar with the banks’ income sources. So JPMorgan, along with Goldman Sachs and Credit Suisse, lobbied McMahon, Bean, and other New Democrats to temper the proposed rules.

And look at who two of those companies are – JP Morgan Chase and Goldman Sachs – the two that Adler and his “New Democratic Coalition” members met with.

Looks like Adler is “banking” on his actual constituency in his District not knowing or caring where his loyalties lie.

Greenstein wants more oversight of Financial Industry

Saying she wants to find ways to help prevent the problems that sparked the economic meltdown, Assemblywoman Greenstein says she will explore more options for state oversight:

“This crisis does not stem from inadequate oversight at the state level, but that doesn’t mean we shouldn’t do more to fill the gaps,” said Greenstein (D-Middlesex), the Assembly Judiciary Committee chairwoman. “It’s important that we ensure our attorney general has the right tools to protect the public from those who would play games with their investments and retirement savings.”

During her testimony last week, AG Milgram suggested some changes including:

Milgram suggested requiring investment advisors with five or fewer clients to registering under the state’s securities law. Such advisors are currently exempt, allowing some advisors, including hedge fund managers, to go unregulated.

The attorney general also proposed bringing variable annuities under the state’s securities law. A variable annuity is a contract with an insurance company in which the insurer makes periodic payments from a range of investment options. Milgram said the state often receives complaints about annuities, but lacks regulatory authority.

Finally, Milgram proposed clarifying the authority of the state’s Bureau of Securities chief to assess monetary fines for violations under state law. Milgram said some argue the chief lacks this authority under state law, though case law decisions have held that he does have this authority.

Greenstein says she plans to introduced the needed legislation as soon as possible so stay tuned.