Receiving Wide Coverage ...
Happy Anniversary, Dodd-Frank: The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law three years ago Sunday, and to mark the anniversary, the Washington Post reports on the progress of the financial regulation overhaul. "Federal watchdogs were tasked with writing 398 rules to flesh out the law, but they have missed 62 percent of the deadlines set by Congress," the Post says.
The New York Times editorial board notes that last week's confirmation of Richard Cordray as director of the Consumer Financial Protection Bureau, the agency created under Dodd-Frank "can build on its already notable accomplishments." "Other projects can be ramped up because Mr. Cordray's confirmation removes lingering legal uncertainty over the bureau's reach," the editorial adds.
Former U.S. Sen. Ted Kaufman, D-Del., opines in commentary published by the Huffington Post that "the act has not delivered on its promise to fix the problems that caused the financial meltdown of 2008-09."
"You would think that by now at least that problem would have been addressed. But it hasn't been. Our biggest banks are bigger now than they were in 2008," Kaufman says, adding "What would happen if any or all of them were in extreme financial trouble?"
UBS to Settle Fannie, Freddie RMBS Lawsuit: Swiss bank UBS says it has reached an agreement in principle to settle a lawsuit over residential mortgage-backed securities it offered to Fannie Mae and Freddie Mac from 2004 to 2007, according to the Associated Press.
The lawsuit was one of 17 that the Federal Housing Finance Agency filed in September 2011 in its role as conservator of the government-sponsored enterprises. The lawsuit against UBS concerns some 23 MBS deals worth approximately $6.4 billion that Fannie and Freddie purchased from the bank. Others, including Citigroup, have reached similar settlements.
The full cost of the settlement, which still needs final approvals, would be covered by previous provisions and those taken in the second quarter, Bloomberg notes. The settlement announcement comes as UBS said its second-quarter profit beat forecasts, posting net profit of 690 million francs ($734.4 million), Reuters adds.
The true cost of bank bailouts can be a mixed bag for central banks. In the throes of a banking crisis, attention "tends to focus on the headline numbers involved the money at risk much more than on the likely, or indeed ultimate, net cost to the provider of financial support," and "the costs generally prove less onerous than originally feared," notes the FT.
For example, the U.S. Treasury netted a $5 billion gain from its bailout of AIG and another $4.5 billion from its investments in Citigroup and Bank of America, the report says. Meanwhile, the British government's investment in Lloyds Banking Group is close to breaking even, while its stake in Royal Bank of Scotland is still a losing venture.
In past economic downturns, like the Asian financial crisis of the 1990s, the Hong Kong Monetary Authority made $90 billion off its investment of $118 billion in 1998. "Viewed in this light, the lender of last resort plays a critical yet ultimately profitable role in the face of banking or sovereign debt crises," the FT concludes.
New York Times
Special exemptions granted by the Federal Reserve Bank have resulted in financial institutions buying up infrastructure used to store and deliver commodities across markets that include oil, wheat, cotton, coffee and others, which "have brought billions in profits to investment banks like Goldman, JPMorgan Chase and Morgan Stanley, while forcing consumers to pay more every time they fill up a gas tank, flick on a light switch, open a beer or buy a cellphone," the Times reported Sunday.
In the case of Goldman Sachs' acquisition of one of the country's largest metal warehousing companies, a fleet of trucks shuffles 1,500-pound bars of aluminum between 27 industrial warehouses, which one former forklift driver called "a merry-go-round of metal." According to the Times, the Goldman subsidiary engages in this aluminum can-can to lengthen the time it can charge rent to store the metal and exploit pricing regulations set up by an overseas commodities exchange, resulting in higher prices and longer delivery times so much so that Coca-Cola and many other manufacturers avoid buying aluminum from the unit.
Reuters: The banking industry is taking a new and less antagonistic approach to dealing with the slew of new regulations it faces in a move that would indicate that "Wall Street today tacitly acknowledges that it can tweak but not undo reforms," Reuters reports.
"Bank executives, lawyers and lobbyists now portray themselves as concerned parties trying to help stretched technocrats, who face the task of writing hundreds of complex rules to regulate high finance," the story adds.