Wall Street: All eyes on the banks
Filed Under (Stock Market) by Fred Chan on 21-03-2011
Tagged Under : banks, wall street
All eyes will be on Washington and the banking system this week, right where they’ve been for months.
Wall Street Reform Bill passed
Filed Under (World Finance) by fred on 01-07-2010
Tagged Under : House of Representative, US Lower House, wall street
The US Lower House voted 237-192 Wednesday to pass a sweeping package of reforms to the financial regulatory system, moving the bill a step closer to the finish line.
But the Senate isn’t likely to take up the measure until the week of July 12. And it’s not clear whether Democrats have secured the votes they need.
After more than 18 months of negotiation and debate, the bill aims to strengthen consumer protection, shine a light on complex financial products and establish a new process for shutting down giant financial firms in trouble.
“We will pass the toughest set of Wall Street reforms in generations,” said House Speaker Nancy Pelosi, D-Calif.. “It reflects transparency and accountability…and this legislation makes common sense reforms that ends the error of taxpayer bailouts.”
House Republicans voted overwhelmingly against the bill, saying it would usher in an era of too much government regulation, and stymie job growth and credit availability.
“This is the financial equivalent of Obamacare,” said Rep. Spencer Bachus, R-Ala., referring to the health care reform measure passed earlier this year.
Democrats won’t make their self-imposed deadline of passing the bill by July 4, due to a delay in finding a different way to pay the $19 billion tab for the measure and Senate commemoration of the late Sen. Robert Byrd, D-W. Va.
On Tuesday, Democratic leaders agreed to pay for the bill by hiking the premiums big banks pay for FDIC insurance on commercial deposits and ending the Troubled Asset Relief Program (TARP) – which aided failing banks, insurers and auto firms – a few months early.
That plan replaced what was already in the bill – assessing big banks and hedge funds – because key moderate Senate Republicans, especially Sen. Scott Brown, R-Mass., didn’t like the idea of passing a new “tax.” The assessment had been tacked on in the final hours of a grueling 20-hour negotiating session last week.
Senate Democrats need Brown and a few other moderate Republicans to get the 60 votes needed to end any filibuster against the measure. The death of Sen. Byrd on Monday and opposition by Sen. Russell Feingold, D-Wis., leaves the Democrats with a maximum of 57 votes toward passage.
In a statement Wednesday, Brown suggested he was pleased that the bill no longer taxed banks. But he stopped short of endorsing the bill, adding he’d review it over the recess.
Another moderate Republican, Sen. Susan Collins, R-Maine, said Wednesday the change made her “inclined to support” the bill. Collins was one of four Republicans who voted for the Senate version of the reform bill in May.
The Wall Street reform bill spends money by creating a couple of new federal agencies. Ensuring the bill doesn’t add to the already ballooning federal deficits was integral to winning conservative Democrats in the House.
President Obama on Wednesday criticized Republicans voting against the bill during a town hall meeting on the economy in Racine, Wis., calling them “out of touch with the struggles facing the American people.”
The bill’s passage is a major victory for the White House, although many of the toughest provisions were weakened over the past month.
For example, measures that would prevented large banks that take commercial deposits from owning hedge funds now has a loophole allowing limited risky investments. And auto dealers will not face increased oversight for auto loans they issue.
Still, consumer advocates maintained that the bill was a victory for Main Street and consumers.
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Wall Street’s bonuses up 17%
Filed Under (Business News) by fred on 24-02-2010
Tagged Under : wall street
New York State Comptroller Thomas DiNapoli said Tuesday that Wall Street bonuses jumped 17% last year, to an estimated $20.3 billion, as profits in the financial services sector rebounded.
The average taxable bonus for securities industry employees in New York rose to $123,850 in 2009 from $112,000 the year before, according to estimates from the comptroller.
At Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500), and JPMorgan Chase (JPM, Fortune 500) overall compensation increased by 31% in 2009. Average compensation rose by 27% to more than $340,000.
The rebound in bonus payments comes amid a sharp increase in Wall Street profits, which could reach an “unprecedented” $55 billion for 2009, DiNapoli said.
That would be nearly three times greater than the previous all-time record annual profit, but follows a $42.6 billion loss in 2008.
The bulk of the increase in profits came from broker-dealer operations, which brought in a record $49.9 billion through the first three quarters of 2009.
Despite the increase in compensation and profits, bonus payments remain below record levels of just a few years ago. In 2007, for example, bonuses totaled nearly $33 billion.
“It’s still not back to historic levels,” DiNapoli told reporters at a press conference in New York. “It’s down by about 30% compared to the numbers in the bonus pool prior to the downturn and the great recession.”
DiNapoli said the financial services industry is “vital” to New York’s economy, but he acknowledged the massive bonuses are a “bitter pill” for most Americans.
“There’s a lot of resentment against the industry over its role in the global economic meltdown,” DiNapoli said in a statement. “Taxpayers bailed them out, and now they’re back making money while many New York families are still struggling to make ends meet.”
Wall Street firms received billions in government bailout funds in 2009 as the financial crisis crippled the industry and the economy sank into one of the worst recessions on record.
The report notes that most of the big financial firms have said that their top executives will receive stock options and other forms of deferred compensation for 2009 in lieu of cash bonuses. DiNapoli also pointed out that Wall Street lost over 30,000 jobs last year, though the industry added about 3,900 jobs in the final three months of 2009.
The estimates, based on tax collections reflecting cash bonuses and deferred compensation for which taxes have been prepaid, do not include bonuses paid by Wall Street firms to their employees outside of New York City. The figures do not include stock options that have not yet been realized or other forms of deferred compensation.
The report also said that the estimated bonus pool for 2010 is a third less than the amount paid two years ago, which was the previous most profitable year. DiNapoli noted that estimating the size of the bonus pool was made more difficult this year by unprecedented changes in compensation practices.
“We do have to acknowledge that there have been some changes in compensation,” the Comptroller said. “Not all of it is cash and up front.”
The rebound in bonus payments could be a boon for New York state, which is struggling to close a massive budget deficit.
On Tuesday, DiNapoli said lower tax collections, among other things, could cause New York’s budget deficit to balloon to more than $2 billion this year.
“There’s some good news from a revenue perspective for New York State’s tax revenues,” DiNapoli said. “But the other message is that Main Street has not benefited from this.”
