Financial

GE Capital: Smaller Is Just Better

Earlier this week, the Financial Stability Oversight Council (FSOC) removed GE Capital from its list of systemically important financial institutions (or SIFIs).  How big a deal is this?  Big.  And not so big.  And a little bit scary.  Let’s back up a bit to see why.

FSOC is a new entity created by Dodd-Frank.  Its members are the heads of the federal financial agencies, with the Secretary of the Treasury serving as Chair.  In comparison to other similar bodies, which only advise the president, FSOC has broad authority to act.  Chief among its tools is the ability to designate an entity as a SIFI, and to impose stringent oversight and regulatory requirements on it thereafter. 

The SIFI designation and attendant oversight have been promoted as a means to end Too Big to Fail.  Many people, myself among them, have questioned how labeling entities as systemically important and putting them under greater oversight can possibly end Too Big to Fail.  Isn’t a SIFI designation essentially the same as slapping a big “TBTF” label on the thing?  Well, here’s where GE Capital’s story gets scary.

Why Wall Street Loves Obama

wall streetWas it just me, or did there seem to be a whole lot of applause during Obama’s Wall Street speech?  Remember this was a room full of Wall Street executives.  The President even started by thanking the Wall Street execs for their “warm welcome.”

Obama Bank Tax Is Misguided

Perhaps I am a little confused, but didn’t the Obama Administration tell the American public only months ago that TARP was turning a profit?   But now the same administration is proposing to assess a fee on banks to cover losses from the TARP. Maybe President Obama is coming around to the realization that the TARP has indeed been a loser for the taxpayer. He appears, however, to be missing the critical reason why: the bailouts of the auto companies and AIG, all non-banks. This is to say nothing of the bailout of Fannie Mae and Freddie Mac, whose losses will far exceed those from the TARP.

Predictions for 2010

I was just listening to the December CatoAudio interview with Tom Palmer and Ian Vasquez about the fall of the Soviet empire 20 years ago, and Tom mentioned that even as late as October 7, 1989, when the East German government held a gala celebration of its 40th year in power, no one anticipated that within a month the Wall would open and communism would come to an abrupt end in eastern Europe.

$98 Billion in Improper Payments

The Obama administration and its allies in Congress want the federal government to expand its role in subsidizing health care. We are told that this expansion will restrain rising health care costs. But an OMB report yesterday that the government made $98 billion in improper payments last year – $55 billion of which came from Medicare and Medicaid – ought to raise suspicions about that claim.

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