"I’m shocked about how tough it’s gotten."
"The old rules have been totally reversed."
~ Recent quotes from Wall Street.
I take this as a good sign. Unlike the proposed climate bill, which is being supported by energy companies, and Health Care Reform, with which insurance companies are grudgingly cooperating, the financial reform bill currently being debated in the Senate is starting to raise some serious alarm on Wall Street:
Paul Miller, of FBR Capital Markets, said investors and the financial industry haven’t fully grasped the full power of the legislation. He said the bill could have a material impact on bank earnings. "I’m shocked about how tough it’s gotten," he said.
This is how we know the bill still has a chance of being good.
The "shock" that Wall Streeters are starting to feel is due mostly to the United States Senate not doing something that it usually does--watering down a House bill:
"The old rules have been totally reversed," said Brian Gardner, a research analyst at Keefe, Bruyette and Woods. "The world we’re all used to living with — which is the House overreaches and the Senate cools it down — is not true."
One of the things that's got them quaking in their boots is the Brown-Kaufman Amendment, which seeks to break up the big banks:
Now senators, including Sherrod Brown (D-Ohio), Ted Kaufman (D-Del.), Carl Levin (D-Mich.) and Jeff Merkley (D-Ore.), have much tougher amendments on the size and scope of big banks.
"We have just started talking with Republicans," Merkley said of an amendment he is backing with Levin. "Several of the folks I've talked with are very interested in the issue. This is not a liberal-conservative issue."
Another source of worry is some unexpectedly tough rules on derivatives that were recently added:
As the bill has advanced, lobbyists have seen their battles get harder. Two weeks ago, financial, energy and agriculture lobbyists were looking at a variety of nuanced changes to regulations of the multitrillion-dollar market for complicated financial derivatives. Then came Senate Agriculture Committee Chairwoman Blanche Lincoln (D-Ark.).
Her bill wound up being much tougher than most had expected. Bank lobbyists were forced onto their heels.
When's the last time you read a sentence like that? "Bank lobbyists were forced onto their heels".
Much remains to be seen, of course, regarding the bill that eventually emerges. Any one of the tough amendments being offered, such as the Brown-Kaufman amendment, can be voted down. Lincoln's tough derivatives language can still be watered down. It's still the Senate, after all, where good ideas go to die.
But as of this moment, it's got Wall Street actually fearful of what might pass. It's been a very long time indeed since that's been the case. We need to keep up the pressure on our Senators to ensure that the right people remain nervous.
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And here's a bit more to fray their nerves--Sherrod Brown is talking tough:
Sen. Sherrod Brown (D-Ohio) Friday said he believes the final version of the Senate's financial regulatory overhaul will be more robust than the House's version.
"It's going to be tougher than it is now," Brown said in an interview to air on Bloomberg's "Political Capital" Friday evening. "It's going to be tougher than the House bill. It'll come out of conference. It'll be something I'm proud to vote for and something the president is proud to sign."
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More proof that Wall Street's askeered--h/t to Mark701 in the comments for this story from Huffington Post entitled Wall Street Turns on Democrats (and not in the sense that it turns them on):
Republicans collected about three-quarters of the political contributions from the New York City financial industry, 76 percent, in March. About two-thirds went to Republicans in February. A slim majority went to Republicans in January. By comparison, the industry gave at least three quarters of its contributions to Democrats over the same period in 2009 and 2008, and two-thirds to Democrats in 2007.
Follow the money.