June 01, 2009

Secretary Geithner, Plagiarist

Well, Congress wants to regulate the more than $500 trillion market and asked Treasury to come up with a plan. Secretary Geithner, with tons to do, didn't really have the time. Wall St. had already written a plan that left regulation vague, had no real clearing authority or trade reporting (price quotes). And Geithner decided to just, well, put his name on that plan and submit it.

Wall Street’s largest banks are getting what they want in the U.S. Treasury’s plan to regulate over-the-counter derivatives by making all market participants adhere to the same capital requirements.

Goldman Sachs Group Inc., JPMorgan Chase & Co., Credit Suisse Group AG and Barclays Plc sent the Treasury a plan written in February saying the Federal Reserve should extend bank regulation practices to companies and hedge funds, according to a document obtained by Bloomberg News and confirmed by the Treasury. Corporations, energy companies and hedge funds don’t face capital and margin levels now, while banks do under central bank oversight.

“The banks appear to wish to maintain the intra-dealer market and raise barriers to new entrants to keep the OTC business as compartmentalized as possible and to protect their profitable market conditions,” said Brad Hintz, an analyst at Sanford C. Bernstein & Co. in New York. “The Street’s lobbyists appear to be asking for a ‘club’ structure in OTC trading.”

So, we get restrictions on entry into the market (meaning if you want to buy or sell, you'll have to go through one of the Wall St. banks), vague regulation AND we don't have to report trade information? What's not to love.

Excellent work, Timmy.

Posted by mcblogger at June 1, 2009 12:30 PM

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