And Geithner-like characters keep popping up, while appointees who are unlike the president get ousted. At the Federal Deposit Insurance Corporation, the outspoken Sheila C. Bair was replaced with the low-profile Martin J. Gruenberg. Gary S. Gensler, the tough chairman of the Commodity Futures Trading Commission, didn’t get nominated for a second term. In his place, we got a Treasury official whose cipher of a record was almost treated as a virtue by the Obama administration. The new head of the S.E.C.,Mary Jo White, has been disappointing on regulatory questions.
Favored Obama appointees seem to share certain qualities: They work within the system, they don’t like to ruffle feathers or pick fights, and they keep their profiles low. They are technocrats.
.. Mr. Geithner says he wanted to do what was right: consolidate the banking and securities regulators and plug holes in the system. But the president’s advisers seem to compete to see who can bow more quickly to what they perceive as the political realities of the moment.
After Fed, Bernanke Offers His Wisdom, for a Big Fee
Mr. Bernanke has agreed to speak with a Middle Eastern bank,private equity firms and trade associations, as well as at investment bank get-togethers, charging his hosts fees that range from $200,000 in the United States and $400,000 for engagements in Asia. While he has dined with hedge fund managers at small events arranged by investment and brokerage firms including JPMorgan Chase, some Wall Street firms have balked at the high fees.
“Chairman Bernanke decided after he left office, like most good civil servants, that he wanted to make a little bit of money and did the dinner circuit,”
.. “At those dinners he gave credence to the idea that the Fed believed in lower potential G.D.P. and lower potential inflation,” Mr. Novogratz said.
“I think that got through to the market and that was kind of the accelerator of this giant trade in fixed income that has happened,” he added, referring to an unexpected rally in government bonds.
The Right Way to Control the Banks
Rather than interfere with how banks operate, as does the Volcker Rule or proposals to break up large banks, such requirements restrict only the way banks finance themselves.
.. Some analysts think the costs of the financial crisis in the United States are more than $13 trillion, almost a full year’s GDP.11
.. Such implicit and explicit subsidies for banks that are thought to be too big and too important to be allowed to fail enable them to borrow more cheaply. Bank of England calculations reported by Andrew Haldane, its director for financial stability, show that these subsidies for the world’s twenty-nine most significant banks accounted for roughly half their profits from 2002 to 2007.
Banks Prevent Transparency on Derivatives
So why are the banks doing this? In short, they are trying to avoid other derivatives regulations that are unrelated to the push-out rule.
Specifically, the banks want to reduce the impact of new rules, also part of Dodd-Frank, that aim to improve pricing transparency in the derivatives markets.
.. One interpretation of all this is that Wall Street simply dislikes the transparency rules more than the idea of pushing out swaps.