BETTER MARKETS: Financial Reform Newsletter


 

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Financial Reform Newsletter
July 10, 2014

As the media reports that more Wall Street settlements are coming, Better Markets continues to fight for accountability on Wall Street and at the Justice Department, urging a federal court to require DOJ to tell the American people what JPMorgan Chase did in causing the 2008 Financial Crisis: Pushing forward with its lawsuit against DOJ for granting blanket immunity to JPMorgan Chase in an historic settlement without any transparency, oversight, accountability or judicial review, Better Markets filed a legal brief in court arguing that the American people have a right to know what JPMorgan Chase did in contributing to the worst financial crash since 1929 and the worst economy since the Great Depression. (Read our complaint here and the financial times editorial about it here.)

Six years after derivatives ignited and fueled the financial crash in 2008, the SEC finally passed a derivatives rule, but opened a loophole Wall Street loves: The SEC voted on the first in a series of rules to regulate “cross-border” derivatives trading. However, as Better Markets’ Dennis Kelleher said in a statement, the agency’s “incomplete” rules “are a step forward for financial reform, but two steps backwards in failing to protect U.S. taxpayers from Wall Street’s overseas derivatives gambling.”  Better Markets’ concerns over the SEC action were echoed by an editorial in the New York Times, calling the adopted rule “custom built for evasion.”  The SEC still has more work to do on derivatives and lots more to protect the American people from Wall Street and another expensive financial crash.  The signs aren’t good, but we’ll be watching the SEC and fighting for strong rules that would deny Wall Street any more loopholes. (Here’s more detail on the loophole and here’s more information on the broader cross border issue.)

We applaud President Obama for recognizing the need for further action to reign in Wall Street and protect the American people: During an interview for National Public Radio, the President said: ” …we have to continue to see how can we re-balance the economy sensibly, so that we have a banking system that is doing what it is supposed to be doing to grow the real economy, but not a situation in which we continue to see a lot of these banks take big risks because the profit incentive and the bonus incentive is there for them.” Better Markets immediately offered the Obama administration a list of actions it could take to better protect taxpayers, American families and the economy from falling victim again to Wall Street’s recklessness.

Top Wall Street Executives want to do the right thing and the government, especially the SEC, must act to support them: During a recent senate banking committee hearing, Jeffrey Sprecher, the ceo of Intercontinental Exchange, and the owner of the New York Stock Exchange, expressed deep concerns over the current complexity (and oversight) of the stock market. These issues, many related to high frequency and high speed trading (HFT), have gained prominence due to the book “Flash Boys,” as we’ve detailed. Now in the wake of that intense debate, here is a leader of the U.S. and international equity and derivatives markets who wants to do the right thing, end the unfairness of our markets, protect investors and begin to restore the confidence of the American people in Wall Street.  It’s past time for the SEC and the rest of the government to support those in the private sector who want to do the right thing by ending the rules, policies and practices that allow predators, greed and distorted incentives to threaten our markets.

Better Markets Coverage:

SEC Limits Derivatives Trading by Foreign Branches of U.S. Banks NY Times, June 25, 2014

SEC Extends US Swaps Clampdown to Guaranteed Affiliates Bloomberg News, June 25, 2014

U.S. House votes to loosen derivatives’ regulations with CFTC bill Reuters, June 24, 2014

The next financial crisis is brewing right now, and regulators are missing it Fiscal Times July 3, 2014

Opinion: An opportunity missed rather than a case settled Financial Times, July 1, 2014

Better Markets pushes ahead with JPM suit Politico July 9, 2014

Group says court must decide $13B JPMorgan Deal’s Fairness Law360.com July 9, 2014

How Obama can rein in Wall Street without going through Congress Washington Post July 3, 2014

Articles of Interest:

Elizabeth Warren says the U.S. economy is rigged. Many conservatives agree Washington Post June 27, 2014

Bogle pitches federal retirement oversight Wall Street Journal June 23, 2014

U.S. justice seems to fall harder on foreign companies NY Times July 1, 2014

Another failure to regulate derivatives NY Times July 3, 2014

Citigroup said to be close to settling inquiry into mortgage securities NY Times July 8, 2014

 

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