Wall Street's Global Race to the Bottom
Monday 04 October 2010
by: Robert Reich, Robert Reich's Blog | Op-Ed
Wonder what’s happening with bank reform? Watch your wallets.
Having created giant loopholes in the Dodd-Frank law recently passed by Congress (keeping “customized” derivatives underground, for example), fighting off attempts to cap the size of the biggest banks, and keeping capital requirements relatively modest, Wall Street is now busily whittling back the rest through regulations.
Squadrons of lawyers and lobbyists are now pressing the Treasury, Comptroller of the Currency, SEC, and the Fed to go even easier on the Street.
Their main argument is if regulations are too tight, the big banks will be less competitive internationally. Translated: They’ll move more of their business to London and Frankfurt, where regulations will be looser.
Meanwhile, Wall Street is warning Europeans that if their financial regulations are too tight, the big banks will move more of their business to the US, where regulations will be looser.
Two weeks ago, after the Basel Committee on Banking Supervision (a global financial regulatory oversight body) came up with a new set of rules to toughen bank capital and liquidity requirements, European officials threatened to get even tougher. They approved a new system of European regulatory bodies with added powers to ban certain financial products or activities in times of market stress.
This prompted Lloyd Blankfein, CEO of Goldman Sachs, to issue — in the words of the Financial Times — “a clear warning that the bank could shift its operations around the world if the regulatory crackdown becomes too tough.”
Blankfein told a European financial conference that while Europe remains of vital importance to Goldman (with less than half of the bank’s business now generated in the U.S.), the introduction of “mismatched regulation” across different regions would tempt banks to search out the cheapest and least intrusive jurisdiction in which to operate.
“Operations can be moved globally and capital can be accessed globally,” he said.
So the race to the bottom is now official. Wall Street will set up its casino wherever financial gambling is least regulated.
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Comments
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Just can't take Reich
Tue, 10/05/2010 - 14:17 — VW Slave Labor (not verified)Just can't take Reich seriously, you know, him and that NAFTA thing. The OCC, by the way, is a US Agency [owned] by the Banks. Obama's "successful" Financial Reform, nearly DOA of any serious regulation, turns out to be drowning in lobbyists. Who'd ever guess that?
Let the super bankers go
Tue, 10/05/2010 - 16:01 — lookforthetruthmike (not verified)Let the super bankers go elsewhere, please!
Better yet, ask them to go. Since they will never face justice here. Then ban them and their affiliates from doing business in this country, and Europe. Maybe they could find a small deserted island, easy to secure. Allow their lobbyists, faithful politicians, and Tea Bagger friends to join them. Give them all an even bigger tax break, no pesky regulations.
I don't know how we'll manage without them. No more LBO's , hedge fund farms, buy outs, sell outs, blown up municipalities , deceived investors, subsidised dollar-shorting super-leveraged food and oil speculators, etc. Not to mention charging 30% on credit cards while borrowing at .25% or suppressing prices on IPO's while rewarding friends with shares. How WOULD we do without them and those who keep tailoring the world to their liking?
I do think it will be easier for us to learn to do without them, than for any them to get a conscience.
That's my dream, and I'm sticking to it.
I agree with "Let the Super
Tue, 10/05/2010 - 17:15 — Anonymous (not verified)I agree with "Let the Super Bankers Go."
I say let the US get together with Europe and make sure our regulations are the same. And IF these corporations find themselves on an island, let them eat be there all by themselves.
US and Europe consumers need to work towards ending relationships with them and use local bankers for everything.
Money can hurt them too, and right now the greedy monsters seem to think they are invincible, and in charge.
This problem has a simple
Tue, 10/05/2010 - 17:49 — Anonymous (not verified)This problem has a simple solution; namely, a uniform international code for the banks. It the establishment of a uniform international code should prove to be impossible, then it would be appropriate to establish standards for all banks that transact business in America no matter where their headquarters might be located.
Under no conditions, however, should be turn the banks loose once again. We know how that turns out.
I agree with getting rid of
Tue, 10/05/2010 - 18:12 — Anonymous (not verified)I agree with getting rid of the super banksters.
No recovery of any kind is possible while these criminals still operate.
Send them to Pakistan or Guantamino or anywhere
All the banking regulation
Tue, 10/05/2010 - 20:03 — Erich Von Freemason (not verified)All the banking regulation in the world can't stop the FED from destroying our economy.
Get the message to Congress.
Tue, 10/05/2010 - 20:41 — Anonymous (not verified)Get the message to Congress. Get the message to the President. Shout the message to everybody. Banks are Hell and Republicans (plus those 31 Democrats - whoever they are) are the Devil.
Congress and the President need to bail out the US infrastructure and the jobs - NOT the banks. Are you listening Mr Obama?
The lack of initiative from
Tue, 10/05/2010 - 21:47 — Destroying Country (not verified)The lack of initiative from Black Nixon is appalling, This presidency has to be the greatest setup since Bush was appointed in 2000. He has done nothing!
WOULD SOMEBODY PLEASE
Tue, 10/05/2010 - 22:24 — TARHEEL (not verified)WOULD SOMEBODY PLEASE IDENTIFY THESE CREEPS?.... WE NEED A CAMPAIGN OF SHAME.... REVEAL JUST WHO THESE PEOPLE ARE AND LET THEM FACE THE WRATH OF THE MASSES! GREENWICH WILL NEVER BE THE SAME.
Where ever the banks go, the
Tue, 10/05/2010 - 22:41 — Race to Goldman Sachs (not verified)Where ever the banks go, the reality is they are probably there already. They have the money and influence and have already bought our Government. Get ready for more austerity measures. Durbin, 2009 "Banks own this place"
The Hyper-banks care
Tue, 10/05/2010 - 23:01 — Anonymous (not verified)The Hyper-banks care absolutely NOTHING about the health of local economies anywhere on this planet and, in fact, consider them throw-away entities in their quest to amass and control the value of capital and the value of labor on a global scale. However, history has proven that this over-reaching paradigm is inevitably doomed, from the Roman Empire to the colonialist European era. Eventually, the global system will implode from spreading its control too thin. We are living this moment.
Wed, 10/06/2010 - 03:24 —
Wed, 10/06/2010 - 15:18 — Erich Von Freemason (not verified)Wed, 10/06/2010 - 03:24 — TARHEEL (not verified)
"WOULD SOMEBODY PLEASE IDENTIFY THESE CREEPS?"
I don't have a complete list, but Alan Greenspan and Barney Frank would have to be at the top of it.
Ahh, this is why Goldman,
Wed, 10/06/2010 - 17:33 — Anonymous (not verified)Ahh, this is why Goldman, Citibank, and two others have set up shop in Iran as of late! Now it makes sense!
The best casino capitalism, and economically "...the cheapest and least intrusive jurisdiction in which to operate" is Iran, of course! Where else can you launder the best, most efficient oil-rich, nuclear-ambitioned money in the world!!!
Race to the bottom, indeed!!!!
Right on Freemaggot,
Thu, 10/07/2010 - 00:43 — Green Acres (not verified)Right on Freemaggot, Greenspan attempted to deflect blame, a onetime oracle turns out to be a pompous tool. He presided over the housing bubble, but ultimately he's just a suit who gave speeches. When will we ignore these people?
Ordinary citizens like most
Thu, 10/07/2010 - 16:47 — Anonymous (not verified)Ordinary citizens like most of the correspondents here need to go well beyond kvetching about banks, the evils of big business, Wall Street and so on. So far we have lacked a plan and no one is in government is helping. Yet there are millions of us who are both hurt and outraged by the banks and Wall Street and the corporate world. Here's practical plan. First close your account at Citibank, Wells Fargo, or wherever, and shift all your funds to a bank that has a stronger ethical sense, that cares for its customers, and doesn't get into debt by gambling with our money and then using more of our money to bail themselves out. Such good banks exist. I've just left Wells Fargo after 30 years and transferred to one such , written to WFC and told them why. (There is great pleasure in writing such a letter.) Next, we should find out all those mega firms that keep the banks going. It would be relatively easy to compile a list. Maybe Walmart would be at the head, then McDonald's. I don't know. Anyway, the idea would be, in a systematic and concerted way to boycott one of those firms for a week each by refusing to do business with them of ANY kind for that period. Let them know what we are doing and why. No gas from BP for a week, and so on. They will start listening. They will certainly not listen to our rhetoric as such. It has no teeth. Maybe we could try another alternative, that is, we could institute a kind of national fund consisting of billions of dollars out of our pockets. That fund will be run by the most ethical men and women we can find and its purpose would be to buy elections the way that corporations do now. We would have more money than the corporations and get our own candidates in power. Do the math. There are about 100 million of us. It's possible. However, that plan, for a host of reasons, is not likely to work. So let's try the first idea: take power away from the banks by threatening the businesses that support them. If they don't listen, we will make the boycott last two weeks. What say? Anyone like the idea?
If someone has a better plan I am sure we all would like to hear it.
No, Anonymous on 10/7 at
Wed, 10/13/2010 - 15:16 — Frances in California (not verified)No, Anonymous on 10/7 at 21:47 - I sure don't have a better plan than yours; but yours impacts too many low-wage people who need REAL alternatives to working at such Sucking Void companies. Oh, yeah! The tax cuts for the rich were supposed to make the rich invest in human resources . . . yeah . . . right! No, I've devolved in complete frustration to "Heat up the tar, y'all".
Oh, one more thing,
Wed, 10/13/2010 - 15:18 — Frances in California (not verified)Oh, one more thing, Anonymous on 10/7 at 21:47, before you heat up the tar, FIND OUT WHO'S PAYING COMMENTER WHO CALLS HIMSELF ERICH VON FREEMASON. He's a total troll.
Wed, 10/13/2010 - 20:18 —
Fri, 10/22/2010 - 13:06 — Erich Von Freemason (not verified)Wed, 10/13/2010 - 20:18 — Frances in California (not verified)
Why is it so hard for you to believe that some people value freedom? And, why do you want to tar-and-feather those who believe in freedom?