David Kirkpatrick

February 24, 2010

The Fed’s borrowing $200 billion …

… to prep for raising the interest rate.

November 24, 2009

Is the Sarbanes-Oxley Act on its last legs?

Looks like it. In this topsy-turvy political world Sarbox was ushered in by a GOP-controlled Congress and is being systematically gutted by a Democratic Congress. Of course one the unintended consequences of Sarbox was an untenable burden on small business. Wall Street was going to motor along, accounting firms were going to bank and Main Street was going to take it on the chin once again.

From the link:

The House Financial Services Committee has approved an amendment to the Investor Protection Act of 2009 to allow most companies to never comply with the law, and mandating a study to see whether it would be a good idea to exempt additional companies as well.

Some veterans of past reform efforts were left sputtering with rage. “That the Democratic Party is the vehicle for overturning the most pro-investor legislation in the past 25 years is deeply disturbing,” said Arthur Levitt, a Democrat who was chairman of the Securities and Exchange Commission under former President Clinton. “Anyone who votes for this will bear the investors’ mark of Cain.”

Those who favored the amendment saw it differently. They were simply out to help small businesses, which would be burdened by having to report on whether they maintained acceptable financial controls, and to have auditors check on whether those controls worked.

There are other threats to Sarbanes-Oxley as well.

November 5, 2009

No more Sarb-Ox for small business?

This should be welcome news.

From the link:

Small businesses would be granted a permanent reprieve from complying with part of the Sarbanes-Oxley corporate reform laws, under a draft U.S. House of Representatives bill discussed on Tuesday.

Small companies have not had to comply fully with the rules since the Sarbanes-Oxley law was approved in 2002 in response to the Enron and WorldCom corporate scandals.

Companies with a market capitalization below $75 million have argued that they faced disproportionately higher costs compared with larger companies and have convinced regulators to delay compliance at least five times.

The Securities and Exchange Commission is now requiring small companies to report on the effectiveness of their internal controls as of June 15, 2010.

But Republicans, hoping to thwart this SEC requirement, introduced an amendment on Tuesday to a House Financial Services Committee draft bill to do just that.

January 8, 2009

Banks still aren’t lending

Remember that big ‘ole bailout of the financial sector, that little exercise in corporate socialism, that was supposed to thaw the credit freeze and get money flowing freely once again? Like pretty much every move taken by an inept Fed, our tax dollars are sitting in the coffers of banks and not flowing anywhere.

We may be in uncharted waters economically, but the bailout ought to be a public outrage. Our money, really our future, was taken from us forcefully by an incompetent government agency and handed to banks which are now doing nothing more than hoarding the dollars.

Nice.

From the link:

Despite all the government’s best efforts in recent months, big banks still aren’t lending money freely. One sign of the crunch: New loans to large companies slumped 37% in the three months ending Nov. 30 from the preceding three months. “Banks are being extremely cautious,” says Edward Wedbush, chairman of the Los Angeles brokerage Wedbush Morgan Securities.

The industry is getting flak for hunkering down. After all, the Treasury has injected $187.5 billion into the nation’s largest banks, including Citigroup (C), Bank of America (BAC), and JPMorgan Chase (JPM). The recipients of taxpayer money, say critics, should be required to open up their coffers. “The bad news [is] Treasury has no way to measure whether taxpayer funds are being used to increase lending,” Representative Barney Frank (D-Mass.), chairman of the House Financial Services Committee, said in December. “The much worse news [is that Treasury] does not even have the intention of doing so.”

Banking chiefs defend their position. They argue that the government funds are designed to shore up capital and support lending, but that they have no obligation to make new loans. “It’s not a one-to-one relationship,” says BofA CEO Kenneth D. Lewis. “We don’t write $15 billion in loans because we got $15 billion from the government.”

Right now there’s little financial incentive to make fresh loans. In the current unease, new corporate loans are immediately marked down to between 60¢ and 80¢ on the dollar, forcing banks to take a hit on the debt. It’s more lucrative, then, for them to buy old loans that are discounted already.

November 20, 2008

The Fed is dreaming …

… of happy bunnies and warm milk.

Or, in other words, who believes this horseshit anymore? Really.

From the link:

Taking care not to declare victory, the chairman of the Federal Reserve and the secretary of the treasury told Congress on Tuesday that the unprecedented rescue efforts over the past eight weeks appear to have prevented the collapse of financial markets and returned them to a semblance of normalcy.

Reviewing the progress of the Wall Street rescue package that Congress passed Oct. 3, Fed Chairman Ben Bernanke said that stability had returned after the surprise decision to inject $250 billion into U.S. banks and thrifts, coupled with the Fed’s decision to bypass banks and lend directly to U.S. corporations in need of capital.

“These actions, together with similar measures in many other countries, appeared to stabilize the situation and to improve investor confidence in financial firms,” Bernanke told the House Financial Services Committee.

Defending his implementation of the rescue effort, Treasury Secretary Henry Paulson said success must be judged by what hadn’t happened instead of what had.

In the old west Paulson and Bernanke would have been rode out of town along with their spilling bag of snake oil by now.

November 19, 2008

Congress wants bailout answers …

… and Paulson is taking the heat. Rightfully so. This whole thing is a disgrace.

I was against it from the get-go, and now that it’s a done deal Paulson and the Treasury Department seem to be no better than a room full of drunk monkeys in handling the process. I wouldn’t let Paulson manage my sock drawer at this point.

From the link:

Members of the House Financial Services Committee grilled Paulson for not doing enough to help distressed homeowners and for failing to force banks that get some of the bailout money to specifically use it to bolster lending to customers, one of the prime reasons behind the rescue package.

“It is essential” that some of the bailout money be used to ease foreclosures, said the panel’s chairman, Rep. Barney Frank, D-Mass., a key player in shaping the package that Congress passed and President George W. Bush signed into law Oct. 3.

Amid fits and starts in the administration’s rollout and direction of the program, “I have to say at this point that public confidence in what we have done so far is lower than anybody would want it to be, to the point where it could be an obstacle to further steps,” Frank lamented.

In a break with the administration, Federal Deposit Insurance Corp. Chairman Sheila Bair, made a fresh pitch for using $24 billion of the bailout pool to help Americans at risk of losing their homes. House Speaker Nancy Pelosi is urging Paulson to support the FDIC plan.

“As foreclosures escalate, we are clearly falling behind the curve,” Bair warned the panel. “Much more aggressive intervention is needed if we are to curb the damage to our neighborhoods and broader economic health.”