-I don't trust a man who talks about ethics when he's picking my pocket.- Time Enough For Love - Robert A Heinlein
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Chemists Have Solutions .
You don't have a problem with the 5 Trillion dollars of GSE debt that was shifted over the the Treasuries balance sheets when Fannie and Freddie were declared insolvent ?
But TARP was a problem for you ?
Most of TARP was payed back.
Fannie and Freddies debt is being shifted over to the FEDs balance sheet and will continue to have detrimental repercussions for years to come.
This is why Warren outside of Liberal circles is a laughing stock.
She's referring to Section 716 of Dodd Frank, which would require banks to book their derivatives in subsidiaries that are not their insured depository institutions and pushes these financial instruments outside of their banking operations. Reading her statements and listening to her words, she asserts (wrongly) that after this bill is passed, any financial institution will again be able to use any derivatives within their banking operations. However, 95% of derivatives are already not governed by Section 716 of Dodd Frank, which includes FOREX swaps, Cleared CDS and the more popular interest rate swaps. The only swaps you cannot used are equity/commodity derivatives and uncleared CDS.“Now, the House of Representatives is about to show us the worst of government for the rich and powerful,” she continued. “The House is about to vote on a budget deal, a deal negotiated behind closed doors that slips in a provision that would let derivatives traders on Wall Street gamble with taxpayer money and get bailed out by the government when their risky bets threaten to blow up our financial system.”
Also, forcing depository institutions not to use derivatives doesn't make the problem go away. The banks that heavily used derivatives, by notional amount, held 0 deposits at all, such as AIG, Lehman Brother, Goldman Sachs, just to name a few. Sure, if a bank like Citigroup (who lobbied for the provision) uses explodes using CDS, that hurts everyone, but that is going to happen whether this section 716 is on the books or not.
And, I'm fairly certain Elizabeth Warren knows this. She was interviewed in the Documentary 'Inside Job' saying that she doesn't remember a single provision implemented in Dodd Frank that would actually help prevent another financial crisis. If I find the clip I'll show it, but she helped implement Dodd Frank. She must have known that it didn't completely eliminate swap trading, and she probably doesn't realise that swaps were mostly ultilised by investment banks and insurance companies, not depository institutions. So she is either clueless, or lying.