“Banking in the United States” on The Daily Caller

Full document available in PDF Given the role played by the financial sector in the Great Recession of 2008-2009, the case for reform of the financial sector is strong. The Obama Administration has proposed that a key element of reform should be the creation of a new and independent Consumer Financial Protection Agency, whose primary mission would be to look out for the interest of consumers. Advocates of this approach argue that it was the proliferation of deceptive, unfair, and predatory financial products which hurt consumers and ultimately undermined the larger economy. The House of Representatives has passed a sweeping financial reform bill that includes the establishment of a robust agency with rulemaking and enforcement powers. As policy deliberations unfold, the specifics of this proposal deserve scrutiny—especially with an eye toward the policy features which would be most effective in protecting consumers and creating a safer and sustainable marketplace for financial services. (more)

Lending by the banking industry fell by $587 billion, or 7.5 percent, in 2009, the largest annual decline since the 1940s, the Federal Deposit Insurance Corp. reported Tuesday. (more)

In the banking industry these days, failure can be good news. (more)

Five former Treasury secretaries urged Congress Sunday to bar banks that receive federal support from engaging in speculative activity unrelated to basic bank services. (more)

In his recent testimony before the Senate Banking Committee, former Federal Reserve Chairman Paul Volcker said the size and activities of financial institutions should be limited and that financial institutions should be allowed to profit and fail, without any expectation of government support. Volcker’s stance was sobering; current and potential too-big-to-fail (TBTF) policies are corrupting our financial system. (more)

Since the bailout of Wall Street, the populist drum in Washington has been beating faster and louder. The outrage over executive pay is nothing new on Main Street. When taxpayer dollars used to save the skins of executives who put their companies in peril are now getting bonuses- the fury of Main Street can be understandable. In this “new normal” where many Wall Street legends like Peter Cohen are expecting a reshaping of the financial industry based on returning to an environment of a more client-oriented business, the Obama administration has set out an aggressive plan for Congress to reshape the financial system as we know it. But are they tackling the true root causes of the financial meltdown or are they pandering to populism? (more)

One of the interesting things about Washington is the way it always seems to take one step forward then two steps back. One recent example would be when the White House announced that it expected the bailout known as the Troubled Asset Relief Program (or TARP) to cost $200 billion less than originally projected. With our federal budget looking to run a $1.5 trillion deficit this year, I was happy to hear about these savings. (more)

It’s almost too bizarre to believe, but banks that received taxpayer money because they had toxic assets on their books have actually been buying more toxic assets from other banks, to sell back to the very government that provided them assistance. (more)