from Summit Notebook:
Unlikely alliance: Congressman Barney Frank and the Tea Party
At first glance it would appear that Congressman Barney Frank and lawmakers backed by the Tea Party movement would have little in common -- one is a liberal Democrat, the others are conservative Republicans.
Look again.
Frank said his quest to reduce military spending will probably attract Tea Party lawmakers who campaigned on a platform of fiscal discipline, even to cuts in an area that typically meet strong resistance from Republicans.
"I think the notion of nation building, of America enforcing stability over the world ... is wasted money because it doesn't work," Frank told the Reuters Future Face of Finance summit. "I think there's some potential alliance there."
Frank also sees another area in which the Tea Party might be allies -- any attempt by the Republican majority in the House to roll back reforms on derivatives in the wake of the financial crisis. "If they were to try to roll back derivatives regulation legislatively, yes, the Tea Party people would be allies of ours," he said.
What about their ideological differences? "You learn to work with people that you don't have anything in common with," Frank said.
The former chairman of the House Financial Services Committee says being in the minority now has its moments.
Think brussels sprouts and cauliflower are agricultural commodities? Think again.
While the financial bailouts tossed to automakers, banks and other groups during the recent economic crisis left a funny taste in the mouth of some Americans, one former U.S. regulator hopes efforts to prevent another panic doesn’t go rotten.
The U.S. Commodity Futures Trading Commission is immersed in drafting dozens of rules to assist it in increasing oversight of the once opaque over-the-counter derivatives market, widely blamed for exacerbating the recent financial crisis.
Among the rules it must craft is what the definition of an agricultural commodity is? Of course, corn, cotton, soybeans and livestock, among other items, fall into this realm.
But what about those “other foods” such as brussels sprouts, artichokes, cauliflower, or anything with curry? A former CFTC chairman says they are “abhorrent to American sensibilities” and should be banned.
“Like every U.S. citizen, there are certain agricultural commodities that are abhorrent to me,” said Philip McBride Johnson, who is now with the law firm Skadden, Arps, Slate, Meagher & Flom.
In a comment letter to his former agency, he said there is a “natural link” between defining an agricultural commodity and a provision in a law that requires the regulator to protect the public by forbidding the listing of certain products that “are abhorrent to American sensibilities.”
Clearly banned under this act are financial products based on wars, terrorism, and assassinations. If Johnson has his way, regulators will be able to protect consumers from a dozen foods that don’t mesh with his palate.
Washington Extra – Slipping away
The Democrats’ chances of retaining control of the House of Representatives are slipping away. Our latest Reuters/Ipsos poll suggests that Republicans are poised to win around 227 seats and Democrats about 208 seats in next month’s election. Unemployment is top of the agenda for voters, and there is no good news coming on that front between now and November 2 (the next reading on the jobless rate doesn’t even come until the Friday after the election). That means there is very little chance that Democrats can pull off a late surge.
Also slipping away is President Barack Obama’s approval rating, to a new low in our poll, with much of the decline coming from his own Democratic supporters. His handling of the economy remains a leading cause of the drop. Again, any hope of energizing the Democratic base now looks slim.
More interesting is the race for control of the Senate. Ipsos says the poll numbers suggest Democrats will win 52 seats to 48 seats for the Republicans, the same margin predicted by the poll of polls compiled by Real Clear Politics. But a number of races are still very close.
Here are our top stories from Washington today…
Republicans likely to take House at election
American voters unhappy at high unemployment are set to oust Democrats from control of the House of Representatives in November, a Reuters-Ipsos poll projected. The national poll found that Americans plan to vote for Republicans over Democratic candidates by 48 percent to 44 percent, an edge that will likely give Republicans around 227 seats in the House to 208 for the Democrats.
Their all ready to go to work, but it’s to late, they had four years to do some work.
from Summit Notebook:
FDIC Chair Bair: think before you point that finger…
The latest blame game circulating in Washington on financial regulation may end up with those who point fingers finding that they have three fingers pointing back.
During the debate on tightening financial regulations, there have been some backhanded jabs at regulators with the implication that perhaps they were asleep at the wheel. Just this morning on NBC's "Today" show, Democratic Senator Claire McCaskill said Wall Street had been creating things just to bet on -- "they were like the casino, but they had less regulation than Las Vegas."
Well hold on. Who's fault is that?
We asked Sheila Bair, chairman of the Federal Deposit Insurance Corp.
She said when it comes to regulating many of the complex over-the-counter derivatives, the blame actually fell into the lap of Congress which decided against putting them under the oversight of the SEC or CFTC or insurance regulators. And in fairness to Congress, the Federal Reserve and Treasury condoned that action, she said.
"On derivatives, Congress did that," Bair said at the Reuters Global Financial Regulation Summit. "That's all history now."
The CFTC does regulate exchange-traded derivatives such as futures and options, but it's the over-the-counter stuff that's unregulated.
from Summit Notebook:
CFTC’s Gensler explains the present with the past
Gary Gensler, chairman of the Commodity Futures Trading Commission, likes to go to the past -- sometimes as far back as 1,000 years -- to explain the financial situations of today.
For example, derivatives existed for 145 years, since the Civil War, and they became regulated in the 1930s, he said at a Reuters Global Financial Regulation Summit in explaining that derivatives need regulation.
If you only want to go back a couple hundred years, Gensler had this to say: "Somebody in the 19th century invented street lights, somebody invented stop signs, somebody invented traffic lights."
And that probably raised costs just like regulation of derivatives may do. "Just like a street light protects you from dark and dangerous highways, we need something to protect us from the dark and dangerous market that right now is over-the-counter derivatives," he said.
Asked about the Goldman Sachs trader who's been in the headlines in recent days, Gensler said he would not comment on any specific firm, but he reached back even further for explanation. "For thousands of years there's been good people, there's been bad people."
Gensler, a former partner at Goldman, was asked how he felt about the firm that he left 13 years ago showing up in the headlines these days.
"My daughter called me up one day and said daddy you're in Rolling Stone magazine," Gensler said, adding that she said it was not a favorable article.
from Summit Notebook:
Reuters set to spotlight financial regulation in DC
The fight over new rules that will dramatically change Wall Street and financial markets is approaching the finish line in Washington, with both lawmakers and the financial industry making last-ditch efforts to put their stamp on the reform effort. Reuters will be hearing from the key players in the debate on April 26-29 during the 2010 Reuters Global Financial Regulation Summit.
Top regulators, watchdogs, lawmakers and stakeholders will provide their perspectives on how this landmark legislation will impact banks, investors, traders and consumers. The talks will focus in on proposals for a strong new consumer agency, strict oversight of derivatives and attempts to end the perception that some financial firms are “too big to fail.”
