Lawmakers Seal Deal On Historic Wall St Reform

Lawmakers delivered a win for the Obama administration when the reached an agreement on the historic Wall Street reform bill after a 21 hour-long session debate. The bill is meant to institute tighter restrictions, more oversight, and hedge profits of the financial industry.

As this article from Reuters.com explains, the legislation represents the most sweeping financial rules revamp since the 1930s. The bill is expected to get final congressional approval next week although the new rules will not be implanted for months.

The legislation would set up a new financial consumer watchdog, create a protocol for dismantling troubled financial firms and mandate higher bank capital standards, all in an effort to avoid a repeat of the 2007-2009 credit crisis that hammered the economy and triggered taxpayer bailouts of floundering firms.

To secure agreement, lawmakers reached deals in the final hours on the most controversial sections, which restrict derivatives dealing by banks and curb their proprietary trading to shield taxpayer-backed deposits from more risky activities.

Banks will be allowed to keep most swaps dealing activity in-house, although the riskiest trading would be pushed out into an affiliate. They will also be permitted small investments in hedge funds and private equity funds.

The concessions could lessen the impact on bank profits.

The KBW bank stock index, which registered its worst performance since October last month, was 1.6 percent higher in late-morning trade, with both Goldman Sachs Group Inc and Morgan Stanley, two of the banks that will be most affected, showing gains.

5 Lies The Big Banks Keep Telling Us

The federal bank bailouts and financial crisis are hot topics currently on the minds of many. Regarding the topic, it seems like every day we hear more excuses from CEOs. However, taxpayers are becoming fed up with big banks and the lies they are telling. MSN Money published a great article this morning highlighting the five most common lies big banks are telling us all and I highly recommend reading their full list here.

It's tough to head off the next disaster if you don't understand why the last one happened -- an insight that's apparently lost on Wall Street.

Instead, as I watch banker after banker being grilled on how the mortgage mess happened, they seem to repeat a lot of the excuses I've heard for more than a year. Such as "No one knew." Or "It was everyone else's fault."

Although there's a little truth in each excuse, no excuse is completely honest. "If we're going to avoid these mistakes, it really starts with an honest assessment of what's happened," says Phil Angelides, the head of the Financial Crisis Inquiry Commission, an investigative panel charged with identifying to causes of the credit crisis.

The excuses also muddy the waters at a critical time. The nation is just starting to recover from the meltdown. Financial reform has finally taken center stage in Washington. We need to know what truly went wrong to keep this from happening again.

Big lie No. 1: No one could have known

Consider this scenario: You work at the top of a key bank on Wall Street. You hire the smartest guys from the best schools. You get paid big bucks to know your business better than anyone else. And warning signs are everywhere. When it goes bad, can you really say you didn't know?

Continue reading at MSN Money.com…

Wall Street's Bonus Baby Steps

After U.S taxpayers sacrificed billions of dollars to bail out Wall Street, the rescued financial institutions promised to cut executive bonuses and extravagant business expenses. However, data shows that many of the same companies that we bailed out earlier in the year, are planning to give out hefty bonuses in the first few weeks of the New Year. As this story on CNN Money.com explains, many of the major banks in this country are showing no signs of reducing their executive bonuses.

Under pressure to prevent another meltdown, Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500) have been cutting back on cash bonuses and insisting on so-called clawbacks -- arrangements that allow companies to reclaim past bonuses when there is employee misconduct.

Yet for all their supposed reform-mindedness, the banks show no sign of pulling the emergency brake on the great compensation escalator.

A year after taxpayers saved the finance industry from collapse, the big banks will hand out billions of dollars in bonuses in the coming weeks -- at a time where unemployment tops 10% and many people are still losing their homes to foreclosures. To say this rankles in some quarters is an understatement.

"There is a need to show restraint considering the unusual circumstances of the past year or so," said Tim Smith, a senior vice president at socially responsible investment firm Walden Asset Management in Boston. "That's what you're not seeing right now."

Continue reading at CNN Money.com…