Thread: Lawsuit Challenges Constitutionality of Dodd-Frank

You knew this was coming. Dodd-Frank is every bit as slovenly-written as ObamaCare.

http://www.powerlineblog.com/archive...dodd-frank.php

A federal agency with no Congressional or judicial oversight. Sounds tyrannical to me.

I am more concerned about this (since we're speaking of banking) because it will limit choice in banks. That agency you've mentioned above (which you should be in more detail about) is supposed to "help" consumers against big business. You don't like regulation, but you also need to understand and take into consideration the perks and preferences some of these banks get from the Fed (another entity that should be shut down).

I don't think the agency does help people, it just wastes money. Can they show people helped? Naw. Ooops...digressing again. See below:

http://www.pbs.org/wgbh/pages/frontl...-requirements/

In a potential strain on many of the nation’s smallest lenders, the Federal Reserve will seek to hold U.S. banks to a new capital standard that more than triples the amount they must currently set aside to guard against losses.

The proposal, which Fed governors approved Thursday by a 7-0 vote, would bring each of the nation’s more than 7,000 banks into compliance with international finance standards known as Basel III. The rules would require banks to maintain a 7 percent capital cushion relative to the value of their total assets — up from standards that can currently run as low as 2 percent.

“Capital is important to banking organizations and the financial system because it acts as a financial cushion to absorb a firm’s losses, while reducing the incentive for firms to take excessive risks,” Federal Reserve Chairman Ben Bernanke said in a statement. “With these proposed revisions to our capital rules, banking organizations’ capital requirements should better reflect their risk profiles, improving the resilience of the U.S. banking system in times of stress, thus contributing to the overall health of the U.S. economy.”

The Basel rules are designed to make the global financial system more resilient to potential shocks, but because many smaller banks have relatively limited exposure to international markets, many in the industry believed the Fed would hold them to a lower bar.

In order to meet the new requirements, small and mid-sized banks will need to raise approximately $10 billion by the time the rules would take affect in 2019, Fed officials told MarketWatch. By comparison, the largest 19 U.S. banks have a capital shortfall of $50 billion, the same officials said.

The Fed’s vote comes as smaller banks continue to adjust to dwindling profits. Lenders with $1 billion or less have seen their share of industry assets fall to 10 percent from 31 percent since 1992, according to data from the Federal Deposit Insurance Corporation.

Much of that decline can be attributed to the shrinking share of smaller lenders within the overall industry. In the wake of the financial crisis, the bulk of the government’s $700 billion Troubled Asset Relief Program went to aid larger institutions, leaving many smaller banks vulnerable. As Nobel Prize-winning economist Joseph Stiglitz told FRONTLINE earlier this year:

It almost never fails. These silly bureaucracies that are supposed to "help" consumers almost always end up increasing costs to, and limiting the choices of consumers.

"I'm from the government, and I'm here to help."

Originally Posted by Zosiasmom

I am more concerned about this (since we're speaking of banking) because it will limit choice in banks. That agency you've mentioned above (which you should be in more detail about) is supposed to "help" consumers against big business. You don't like regulation, but you also need to understand and take into consideration the perks and preferences some of these banks get from the Fed (another entity that should be shut down).

I don't think the agency does help people, it just wastes money. Can they show people helped? Naw. Ooops...digressing again. See below:

http://www.pbs.org/wgbh/pages/frontl...-requirements/

International banks had been fearing tougher liquidity rules...

Banks win more flexible liquidity rules from Basel
6 January 2013 -

International financial regulators have eased rules on minimum quantities of cash and liquid assets all banks must hold, set to take effect in 2015. The agreement, by the body that oversees the Basel Committee on Banking Supervision, is an attempt to make banks less vulnerable to runs. The new "liquidity coverage ratio" will be phased in from 2015 and take full effect four years later. Analysts say the rules just announced are more flexible than a draft version. The new rules are part of efforts to prevent financial shocks such as those prompted by the 2007 run on Northern Rock in the UK, or by the 2008 collapse of Lehman Brothers in the US.

Banks will have to hold enough cash and easily sellable assets, to tide them over during an acute 30-day crisis. The final version of the rules updates a draft version put forward more than two years ago. Analysts had warned that over-stringent standards could reduce lending and stifle economic growth. The new version allows banks to hold a broader range of eligible assets, including some shares, corporate bonds, and high-quality residential mortgage backed securities. It also gives them more time to comply with the new standards.

The head of oversight body's head, Mervyn King, said the timeframe ensures the rules "will in no way hinder the ability of the global banking system to finance the recovery". BBC business editor Robert Peston says the oddity is that most banks currently hold considerably more than the new minimum requirement - because leading central banks have injected massive amounts of liquidity into the financial system through "quantitative easing".

But this simply reflects the depressed times we live in, our correspondents says. The new rules would force banks to hold vastly more liquid assets than they did in 2007 when big banks barely had enough cash to meet demands for repayment from relatively small numbers of depositors and creditors, our correspondent adds. They are part of the broader "Basel III" package of reforms, which will require lenders to set aside more capital to absorb losses. The Basel Committee brings together representatives regulators from 27 nations.

http://www.bbc.co.uk/news/business-20928354