Saturday, April 4, 2009

Tough New Regulations

I've told my very liberal friend who, after seeing this Blog, complained that bankers were lunching in the White House, while the CEO of General Motors was pushed out by President Obama.
I tried to assure him that tough regulations for banking were coming. But are they really? When will they go into effect? And what will they look like?

Leaving the auto industry aside for now, let's take a look at what needs attention on Wall Street and Main Street. First, a little background for this mess. The dot com bubble came, then the housing bubble. Each bubble burst after sending the stock market on a tear. Fed Chairman Greenspan would appear in Washington, mumble some phrases for pundits to translate and interpret. And the market would respond. Is this any way to guide our business climate?

For decades conservatives attacked any sort of economic planning by the central bank or the federal government - "industrial policy" it was called. Oh no! We don't pick winners and losers. Industrial Policy has no place in our Free Enterprise System. Rather, let there be Competition, Free Trade, and Globalization.

Let's just export our Manufacturing. Let's expand the Financial Sector - Insurance, Investment, new Financial "Products." Emphasize other sectors, like Pharmaceuticals, Entertainment, Telecommunications. We learned to make money out of money.

We can also export our computer data entry, our back office jobs, like reading X-rays! If we can lower our costs - get work done cheaper outside of our borders, won't we all be better off? So we can buy more inexpensive stuff?

Our Corporate Chieftains went to Canada for car parts and assembly. To Mexico for leather luggage and shoes. To Japan for electronics. To Haiti and Thailand for garments. Then to China for everything Wal-Mart sells.

So what about banking regulations? We have just looked at the bubbles bursting, the jobs disappearing, and the consumer-led recession. If you lost your salary you can't pay all the bills or go shopping very often. OK, here's my Banker's list of new regulations:
1. Separate again the banks that receive deposits and loan money to their customers, from the investment houses that create bonds and trade them.
2. Prohibit "securitization." Bundling home mortgages and credit card accounts into "securities" to be traded, was an invitation for fraud and theft. As a nation, we have been tricked and subjected to larceny.
3. Define and then limit the so-called "Hedge Funds," supposedly created to manage large risks in the marketplace.
4. Do nothing about executive compensation - except require U.S. corporations yearly to publish the ratio of total CEO income to the average income of employees subject to overtime. (non-managerial) It's a start. Are you still ready for change?

1 comment:

corporatebully said...

RBC Bank President Gordon Nixon - Salary $11.73 Million


I'm a commercial fisherman fighting the Royal Bank of Canada (RBC Bank) over a $100,000 loan mistake. I lost my home, fishing vessel and equipment. Help me fight this corporate bully by closing your RBC Bank account.

There was no monthly interest payment date or amount of interest payable per month on my loan agreement. Date of first installment payment (Principal + interest) is approximately 1 year from the signing of my contract.
Demand loan agreements signed by other fishermen around the same time disclosed monthly interest payment dates and interest amounts payable per month.The lending policy for fishermen did change at RBC from one payment (principal + interest) per year for fishing loans to principal paid yearly with interest paid monthly. This lending practice was in place when I approached RBC.
Only problem is the loans officer was a replacement who wasn't familiar with these type of loans. She never informed me verbally or in writing about this new criteria.

Phone or e-mail:
RBC President, Gordon Nixon, Toronto (416)974-6415
RBC Vice President, Sales, Anne Lockie, Toronto (416)974-6821
RBC President, Atlantic Provinces, Greg Grice (902)421-8112 mail
RBC Manager, Cape Breton/Eastern Nova Scotia, Jerry Rankin (902)567-8600
RBC Vice President, Atlantic Provinces, Brian Conway (902)491-4302 mail
RBC Vice President, Halifax Region, Tammy Holland (902)421-8112 mail
RBC Senior Manager, Media & Public Relations, Beja Rodeck (416)974-5506 mail
RBC Ombudsman, Wendy Knight, Toronto, Ontario 1-800-769-2542 mail
Ombudsman for Banking Services & Investments, JoAnne Olafson, Toronto, 1-888-451-4519 mail

"Fighting the Royal Bank of Canada (RBC Bank) one customer at a time"