In ominous news for change we can believe in regarding financial system reform, Bloomberg is reporting that
Obama’s Bank Revamp May Stall as Congress Tackles Rival Issues:
The Obama administration’s revamp of U.S. banking and market regulations may be stalled into next year as Congress and the president set health-care reform and climate control as domestic priorities.
The ability of banks to repay U.S. aid and raise capital without government help may signal the economy is rebounding, easing pressure for sweeping change in financial rules. A delay this year may push the political debate into the 2010 congressional election campaign. . .
Obama’s regulatory proposals may be scaled back because lawmakers and the public perceive the financial crisis has abated and support for more aggressive options has faded, said Peter Solomon, founder of investment bank Peter J. Solomon & Co.
“Regulation’s going to be the same thing,” said Solomon, 70, counselor to the U.S. Treasury in the Carter administration. “There’s really been no fundamental change; there’s been a papering over, and this is it again.”
No surprise. Big Finance has raised big money and the stocks have been conveniently moved up. The stocks can now drop or be "dead money", and the toxic assets can be ignored and written off over time. Since Wall Street does not desire reform, let's call the whole thing off. What's $12 Trillion or so in financial subsidies, grants and guarantees amongst friends?
The undead bank holding companies swim on, providing an ongoing drag to the rest of the real economy.
Be sure to watch Citigroup stock. It is holding above $3. Many institutions cannot own a sub-$3 stock. If it goes below $3 for a sustained period, the next leg of this crisis may be upon us.
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