Chairman of the House Financial Services Committee Barney Frank said Friday at a hearing on executive compensation issues: "I believe this committee will be recommending abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance."

This represents a turnaround for Representative Frank (D., Mass.), who has been a staunch supporter of Fannie Mae and Freddie Mac.

Continue reading Rep. Frank: We May Abolish Fannie Mae, Freddie Mac

Rep. Frank: We May Abolish Fannie Mae, Freddie Mac originally appeared on BloggingStocks on Sun, 24 Jan 2010 14:40:00 EST. Please see our terms for use of feeds.

House Financial Services Committee Chairman Barney Frank has a new proposal to regulate bank transactions. Some of it is OK and some of it perpetuates the abuses that brought Lehman and other financial institutions to their knees.

First the OK part. Frank's proposal would require over-the-counter derivatives to be traded on listed exchanges and sold on exchanges or processed through a regulation platform. This is not good enough. We need transparency for each and every trade done by each and every financial institution. That means that all trades must be done on a listed exchange and cleared through a clearinghouse. All of this data can be put on computers and monitored daily. Then if some trader goes beyond established guidelines, he will be shut down immediately.

Continue reading Barney Frank's plan for regulating derivatives comes up short

Barney Frank's plan for regulating derivatives comes up short originally appeared on BloggingStocks on Sat, 03 Oct 2009 12:20:00 EST. Please see our terms for use of feeds.

The U.S. Treasury and Congress are putting pressure on the Fed to disclose its governance policies.

Almost three months ago, on June 17, the Obama administration proposed a regulatory overhaul including a "comprehensive review of the Fed's ability to accomplish its existing and proposed functions."

There is some confusion as to why the Treasury is undertaking this task. The Fed was created by Congress to be independent of the executive branch and Congress.

Continue reading The Fed under fire! Geithner wants to study Fed governance

The Fed under fire! Geithner wants to study Fed governance originally appeared on BloggingStocks on Wed, 23 Sep 2009 13:20:00 EST. Please see our terms for use of feeds.

Ben Bernanke has pledged $12.3 trillion to help the banks and financial institutions. Where is all this money going? Much of it is going directly into the banks' accounts, hidden from the public.

This is how the game works. The Fed is Wall Street's biggest customer, buying massive amounts of mortgage-backed securities from banks. Now the Fed is being Mr. Nice Guy and publishes in advance the securities it intends to buy. Mr. Rip Off, the bank, simply raises the selling price to the Fed. The inflated prices produce huge profits for the banks. Of course the Fed knows all this is going on. This is simply a backdoor method of funneling government money into bank coffers.

Continue reading Wall Street bankers make tons of money trading with the Fed

Wall Street bankers make tons of money trading with the Fed originally appeared on BloggingStocks on Mon, 03 Aug 2009 12:40:00 EST. Please see our terms for use of feeds.

Continue reading Closing Bell: A 1,000 S&P scares the bears (AMZN, XOM, EXPE, GE, HOG, SYMC)

Closing Bell: A 1,000 S&P scares the bears (AMZN, XOM, EXPE, GE, HOG, SYMC) originally appeared on BloggingStocks on Thu, 30 Jul 2009 16:00:00 EST. Please see our terms for use of feeds.

This morning, Goldman Sachs decided it a prudent move to upgrade General Electric (NYSE: GE) to Buy from Neutral and elevated the stock's price target to $15 from $13 per share. The reason for the upgrade was comments from U.S. House Financial Services Chair Barney Frank. The congressman seemed to indicate that there was support for regulatory reform that would "not mandate the separation of GE Captial."

The brokerage firm now estimates a 25% chance that GE Capital will be separated from GE, which could cost shareholders $40 billion, earlier the estimate was at 50%.

Continue reading Goldman Sachs upgrades General Electric

Goldman Sachs upgrades General Electric originally appeared on BloggingStocks on Thu, 30 Jul 2009 10:40:00 EST. Please see our terms for use of feeds.

Outspoken congressman Barney Frank has no shortage of critics, and they're sure to be out in force today. This morning, The Wall Street Journal reported that the chairman of the House Financial Services Committee, along with his colleague Anthony Weiner, is actually recommending that Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) relax their lending standards on condominiums.

The controversial request follows a decision by both Fannie and Freddie to tighten mortgage-lending standards for condos. In March, Fannie said it would no longer guarantee mortgages on condos in buildings where fewer than 70% of units have been rented, up from its previous benchmark of 51%. Freddie is due to implement similar measures in July. In a letter to the CEOs of both mortgage lenders, Reps. Frank and Weiner expressed their concerns that the higher standard "may be too onerous," and asked the lenders to "make appropriate adjustments" to their approach.

Continue reading Barney Frank encourages Fannie, Freddie to relax lending standards

Barney Frank encourages Fannie, Freddie to relax lending standards originally appeared on BloggingStocks on Mon, 22 Jun 2009 10:40:00 EST. Please see our terms for use of feeds.

A report today in The New York Post reveals that bailed-out Bank of America (NYSE: BAC) is still doling out millions in bonuses to attract and retain top banking talent. Bank of America is catching heat over the bonus payouts, since it hasn't yet received federal clearance to repay its $45 billion in TARP loans.

Bank of America allegedly shelled out $15 million over two years to keep Fares Noujaim, an alumnus of both Bear Stearns and Merrill Lynch, who now serves as the company's vice chairman of investment banking. Harry McMahon is named as another banker who's been enticed to stay with handsome bonuses.

Continue reading Bank of America accused of shelling out big bonuses to bankers

Bank of America accused of shelling out big bonuses to bankers originally appeared on BloggingStocks on Thu, 18 Jun 2009 14:30:00 EST. Please see our terms for use of feeds.

The real elephant on the table is the fact that as it stands now, the largest banks are organized into bank holding companies, which stand outside current powers. Yes, at present the FDIC can move in and seize a bank, run it for a while before winding them down.The power to seize a major bank is so far not under FDIC authority. Under the Treasury's proposals, such authority would become law for what they call a "systemically important institution." Of course the key question is which banks would be termed "systemically important institutions."

Continue reading Will Congress pass new banking regulations this year?

Will Congress pass new banking regulations this year? originally appeared on BloggingStocks on Mon, 18 May 2009 16:40:00 EST. Please see our terms for use of feeds.

Continue reading House Speaker Pelosi wants 1933 style investigation of Wall Street

House Speaker Pelosi wants 1933 style investigation of Wall Street originally appeared on BloggingStocks on Wed, 22 Apr 2009 15:30:00 EST. Please see our terms for use of feeds.

We hear the name of Barney Frank quite often. He is Chairman of the House Financial Services Committee. His latest mantra is for more transparency in the recent bank "stress tests."

What is so hard to believe is how naive Barney Frank really is. Doesn't he know that we have an underground banking system that regulators do not even touch. The underground banking system is comprised of all the "off-the-books" transactions like CDSs, CDOs, CLOs and all means of convoluted deals that are losing money and do not even show up on "stress tests." For example, JP Morgan Chase & Co. (NYSE: JPM) is holding $87.7 trillion worth of CDSs somewhere off the books.

Continue reading Barney Frank doesn't get it: Stress tests are just the tip of the iceberg

Barney Frank doesn't get it: Stress tests are just the tip of the iceberg originally appeared on BloggingStocks on Thu, 16 Apr 2009 09:20:00 EST. Please see our terms for use of feeds.

According to a report today in The Wall Street Journal [subscription required], Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) -- those twin titans of mortgage mayhem -- are planning to dish out $210 million worth of retention bonuses over the next 18 months. James Lockhart, director of the Federal Housing Finance Agency, explained that $51 million in payouts were distributed in late 2008, with the rest of the bonuses to be disbursed through 2009 and into early 2010.

The news is already raising politicians' ire, since Fannie and Freddie are staying afloat only through the grace of government bailouts. The two lenders reported combined losses of roughly $108 billion in 2008, says the Journal, yet 80% of Freddie's employees and 61% of Fannie's payroll will score retention bonuses based on this bleak operating performance.

Continue reading Fannie Mae, Freddie Mac planning massive retention bonuses

Fannie Mae, Freddie Mac planning massive retention bonuses originally appeared on BloggingStocks on Fri, 03 Apr 2009 12:30:00 EST. Please see our terms for use of feeds.

The subject just won't go away. Some lawmakers want TARP money to go toward stopping foreclosures. That is not exactly what the fund was supposed to be used for, but, by the same token, it was not meant to buy equity in banks. Paulson decided to do so anyway, which opened the door for using the TARP capital for whatever the Congress or Treasury want it to be used for.

According to The Wall Street Journal, "The federal government should devote at least $50 billion of the remaining financial-rescue funds toward a plan to prevent foreclosures, said House Financial Services Committee Chairman Barney Frank Friday."

That may be a noble idea, but it is not practical. The trouble with using government money to directly aid homeowners is that it would be remarkably complex and inefficient. Which homeowners qualify? How do they get their money, or a cut in their obligations? Is the program supervised by some federal agency or by banks? Who is considered needy and who is not?

Bailing out homeowners one at a time a a proposal that makes good headlines. It may help some members of Congress look like champions of the common man. But, the only realistic way to get relief for people having trouble paying their mortgages is to cut taxes or increase national employment. A person without a job, or a person worried about his job is not likely to view paying his mortgage any differently just because the government cuts his monthly payment from $800 to $600. It is still money he does not have.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Barney Frank wants TARP money for foreclosures originally appeared on BloggingStocks on Sat, 10 Jan 2009 13:40:00 EST. Please see our terms for use of feeds.

If you think change -- and big change -- in Washington won't start until the gentleman from Illinois is inaugurated on January 20, think again.

U.S. Rep. Barney Frank, D-Mass. and chairman of the House Financial Services committee, late Friday announced the new, proposed restrictions for the release of the second $350 billion in TARP funds, and some are stunners.

Under Frank's bill:

• The pay of executives employed by TARP would be capped in a standardized manner, regardless of what type of aid they received under the program. It would also make the pay limit provision retroactive to existing program participants.

"If they don't like it, they can give the money back," Frank said, referring to the retroactive limits on pay, Reuters reported Friday.

• The U.S. Treasury would have to dedicate at least $40 billion to reduce home foreclosures, with a plan developed by March 15.

Continue reading Barney Frank proposes TARP overhaul, including executive pay cap

Barney Frank proposes TARP overhaul, including executive pay cap originally appeared on BloggingStocks on Sat, 10 Jan 2009 10:10:00 EST. Please see our terms for use of feeds.

This post was written by anonymous Minyanville contributor Minyan Peter.

Representative Barney Frank is reported to be recommending that $50 billion of TARP money be used to "alter" loans.

While the route may be circuitous and positioned as great for Joe Q. Public, I think it is important to recognize that the ultimate beneficiary is the banks.

Like the rumored tax carry-back benefit rumored on Monday, Representative Frank's proposal represents yet another potentially "non-dilutive" injection of additional government capital into the banks.

Given the United States' position as the global "capitalist" nation - and its symbolic importance in attracting global "entrepreneurial" capital, I expect that Congress will go through enormous (albeit often convoluted) steps to avoid the overt nationalization of the banking system that we are seeing in Germany and the UK.

This doesn't mean we won't see more marienette shows like yesterday's press conference with Citigroup, Inc. (NYSE: C) and the Senate, but given the public outrage to the government's overt bailout of the banks, going forward (if at all possible) I expect the means used will be far less obvious to the taxpayer.

Banks benefit from TARP originally appeared on BloggingStocks on Fri, 09 Jan 2009 17:45:00 EST. Please see our terms for use of feeds.

Today Congressman Barney Frank (D-MA) will grill the SEC on why it missed the $50 billion Madoff Securities Ponzi scheme. After all, over the last 16 years, the SEC investigated Madoff eight times and each of those times, it failed to discover the scam. This -- and so much more -- means it's time for a change in the way Washington regulates Wall Street.

And Frank is sure to use today's stage to talk. Last Monday, I appeared on a TV program in Boston "with" Frank. I put "with" in quotes because when Frank arrived at the TV studio, he made sure that me and any other guests who were to appear got thrown out of the green room so he could have it to himself. And while I was on the set with Frank -- I was scheduled to go on the show right after him -- he never even looked at me -- by contrast, every other person I have appeared with was happy to introduce themselves.

Frank likes to talk -- he used 25 of the 30 minutes (he was supposed to take up about 15 minutes). (And in the four minutes Frank left me, I gave out a few Bernie awards for the worst financial foibles of 2008.) So when he chairs hearings today, Frank will no doubt do quite a bit of talking. And he'll probably ask why the SEC officials failed to discover the Madoff scandal after receiving emails from a New York hedge fund that described his business practices as "highly unusual." As I posted, I think Frank should focus on the village that enabled Madoff.

Let's hope things get better this year.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing.

SEC is 0-8 on Madoff probes originally appeared on BloggingStocks on Mon, 05 Jan 2009 08:30:00 EST. Please see our terms for use of feeds.

Continue reading Treasury says TARP is working, banks obligated to lend; so why aren't they?

Treasury says TARP is working, banks obligated to lend; so why aren't they? originally appeared on BloggingStocks on Fri, 05 Dec 2008 12:46:00 EST. Please see our terms for use of feeds.

Continue reading U.S. House leadership's new task: Find 13 more votes ...

U.S. House leadership's new task: Find 13 more votes ... originally appeared on BloggingStocks on Tue, 30 Sep 2008 08:59:00 EST. Please see our terms for use of feeds.

Continue reading Should Congress fund a homeowners' refinance program after the bailout?

Should Congress fund a homeowners' refinance program after the bailout? originally appeared on BloggingStocks on Wed, 24 Sep 2008 18:30:00 EST. Please see our terms for use of feeds.

With the above as a backdrop, BloggingStocks Wednesday asked three economists, David H. Wang, Richard Felson, and Peter Dawson, for their policy recommendation.

Continue reading Economists: Pass bailout bill with an equity stake for U.S. taxpayers

Economists: Pass bailout bill with an equity stake for U.S. taxpayers originally appeared on BloggingStocks on Wed, 24 Sep 2008 14:15:00 EST. Please see our terms for use of feeds.