James Pethokoukis

More reasons to mock the Fed’s plan to regulate Wall Street pay

September 18, 2009

My Reuters amigo Christopher “Black” Swann goes after the Fed plan to curb Wall Street pay — with a vengeance. Here is a bit, but read the whole thing. Your brain will thank you:

A terrible week for financial regulatory reform

September 18, 2009

After a big speech by the POTUS and the leak of a Fed proposal to monitor and curb Wall Street pay (really, pay at thousands of banks), what has changed about Too Big Too Fail, erratic Fed monetary policy and U.S. housing policy? They’re the true villains of the financial crisis. You want to limit leverage and raise capital requirement? Fine.  But the WH is taking its eye off the ball, I think …

The Fed’s dangerous plan to regulate Wall Street pay

September 18, 2009

The Obama administration wants the Federal Reserve to be the maximum regulator of the American financial system. As Treasury Secretary Timothy Geithner told the Senate Banking Committee, “The Federal Reserve is best positioned to play that role. It already supervises and regulates bank holding companies, including all major U.S. commercial and investment banks.”

Should the Fed determine pay at 5,000 banks?

September 18, 2009

Talk about a phenomenally bad idea. According to the WSJ:

Policies that set the pay for tens of thousands of bank employees nationwide would require approval from the Federal Reserve as part of a far-reaching proposal to rein in risk-taking at financial institutions. … Under the proposal, the Fed could reject any compensation policies it believes encourage bank employees — from chief executives, to traders, to loan officers — to take too much risk. Bureaucrats wouldn’t set the pay of individuals, but would review and, if necessary, amend each bank’s salary and bonus policies to make sure they don’t create harmful incentives.

They myth of Lehman, part two

September 15, 2009

John Taylor has maintained that it was the government’s reaction to Lehman that freaked out financial markets. Now Luigi Zingales and John Cochrane make a similar pitch in the WSJ:

The president’s speech on Wall Street

September 14, 2009

First, the great Stan Collender:

But the real purpose of the speech was to refocus the financial services reform debate in Washington.  The president may have been speaking to Wall Street executives, but the real audience was members of Congress, especially Democrats, some of who in the next few weeks will be marking up various pieces of financial services regulation legislation.  He had to show that the general issue hasn’t gotten lost in the health care debate and to say that the effort is still needed even if things seem to be better (“Normalcy cannot lead to complacency”).

More on Free Market Day

September 14, 2009

Barry Ritholtz responds to my previous post:

While I love the idea of Free Market Day, I have to disagree with the typical post-mortem assessment of Lehman. This was not a binary choice; The Lehman decision was not an either/or situation, limited to a gladiatorial thumbs up/thumbs down.

Get ready to celebrate Free Market Day

September 14, 2009

At a House Financial Services Committee hearing just after Lehman Brothers filed for bankruptcy protection a year ago, the committee chairman, Barney Frank, suggested that September 15, 2008 be commemorated as Free Market Day, since Lehman was allowed to fail and free markets allowed to work. Frank then added that because AIG was bailed out the next day, “the national commitment to the free market lasted one day.”

First financial reform, then healthcare

September 9, 2009

I think this is a pretty smart piece of political analysis from my friend Barry Ritholtz:

Another banking crisis would not be good

September 4, 2009

Curious Capitalist Justin Fox notices that time is running out on financial reform: