Here's S&P excuse during Senate testimony:
Under our methodology, we would potentially no longer factor in government support if we believed that once large banks are broken up, we would not classify these banks as having high systemic importance.
Here's Taibbi's response to that:
S&P writes about having to factor out the implicit government backing of big banks as though that would be a bad thing. But if implicit government support is the only thing keeping the ratings of these companies even as high as they are now, that means they really should be rated lower, in a true free market. And Standard and Poor's is, what – against admitting that? It's nuts.
On the other hand, the Brown-Vitter TBTF bill is supported by the Independent Community Bankers of America, that is ostensibly sick and tired of borrowing at higher rates and having a constant institutional disadvantage compared to Wall Street banks.
If the voting public continues to pay attention to the TBTF problem then we'll win, because both the far Left and far Right and everybody in between supports ending TBTF, ideologically. But if we get distracted, then the TBTF lobbyists and the corrupt institutions like S&P will cut and gut this bill in the Senate. They don't mind sounding absurd and hypocritical to protect their advantages with the status quo.
Stay tuned, everybody!....
UPDATE (05.04.2013): For those who are interested, here's a summary from my man Ritholtz of the Brown-Vitter 'TBTF' bill:
- Stricter capital requirements on megabanks, defined as institutions with over $500 billion in assets.
- Six U.S. banks — JPMorgan Chase., Citigroup, Goldman Sachs, Morgan Stanley, Bank of America and Wells Fargo — meet the TBTF criteria.
- Eliminates risk-weights as part of a capital assessment (less reliance on unreliable ratings).
- Does not rely on ratings agency grades.
- Removes off-balance-sheet assets and liabilities as different class — they are treated as if they were on-balance sheet.
- Requires derivatives positions to be included in a bank’s consolidated assets.
- Requires capital cushion that a bank hold be liquid.
- Mandates capital measures be more transparent.
- Eliminates Basel III as a regulatory requirement.
- Restores competition to industry by removing competitive disadvantages mega banks have over smaller and regional community bankers.
By Matt Taibbi
May 1, 2013 | Rolling Stone:
No comments:
Post a Comment