Today’s post reacts to the news that the Financial Stability Oversight Council (FSOC) has removed AIG’s designation as a ‘Systemically Important Financial Institution’ (SIFI), which has the effect of lessening the regulation of the massive insurer that was at the heart of the Financial Crisis. In this post, the focus will be on that decision and how it plays into a growing deregulatory movement which is gaining strength all the time although, as we shall see, this ‘amnesia’ that is taking hold is based upon particularly short-sighted and overly-politicised ‘point-scoring’ which puts the very fragile financial system in great peril. It was announced on Friday that, technically, the giant insurer American International Group, more commonly known as AIG, is no longer ‘too big to fail’. The insurer, who at the height of the crisis was afforded an $85 billion bailout , was on Friday taken off the ‘systemically important financial institution’ list which conveys a number of increased ...

Earlier this year here in Financial Regulation Matters , we took a look at the confirmation of Steven Mnuchin as Treasury Secretary in the U.S. from within the concept of ‘Government Sachs’, which is a phrase that has been adopted to describe the continuous presence of former and prospective Goldman Sachs employees within the top offices of the United States political framework. The previous post focused on Mnuchin as he ascended to one of the most crucial jobs within the American political framework, but in this post the progression of Gary Cohn, who sits as the Director of the National Economic Council (NEC), will be the focus. Whilst the existence of ‘Government Sachs’ will not be questioned because, quite frankly, it cannot be questioned, assessing the effect that Cohn is having is an important endeavour because, as is generally accepted, these are currently quite extraordinary times. We saw in the last post on ‘Government Sachs’ that Goldman’s stranglehold on these socie...

Today’s post reacts to the news that US President, Donald Trump, has yesterday hinted at establishing a ‘Glass-Steagall’-type piece of banking legislation. The ‘Glass-Steagall’ Act, more formally known as four specific components of the U.S. Banking Act of 1933 , was established to separate the commercial and investment arms of US banks as part of the ‘ New Deal ’ era that defined President Franklin D. Roosevelt’s first term in office. For this post, the focus will be on the actualities of President Trump’s intimation, based against the backdrop of his other actions, and then ultimately the focus will be upon the larger implications of choosing to follow this pathway, and indeed the implications of doing the opposite. Speaking to Bloomberg news, Trump declared on Monday that, with regards to reintroducing a Glass-Steagall-type Act, he was ‘ looking at that right now’ and that ‘there’s some people that want to go back to the old system, right? So we’re going to look at that’ . Be...

During the last few days, leading members of the largest American bank, JPMorgan Chase, have been making a number of statements that hint towards a change in regulatory sentiment being very close indeed. Although President Trump’s attempting axing of a number of elements of the Dodd-Frank Act has already been discussed in Financial Regulation Matters , the largely ineffective executive order, which admittedly just called for review, is merely an indicator for a sea-change in sentiment. That change can be predicted by reading the words, and moreover the confidence of business elites, and in today’s short post the focus will be JPMorgan Chase. What we will see is that the levels of confidence being displayed, namely that the bank members themselves feel comfortable in lobbying for deregulation rather than paying lobbyists to do it for them, is an incredible and potentially positive development, for one counterintuitive reason. The two biggest indicators of JPMorgan Chase’s height...

It was reported this week that on Thursday, in a speech before the Economic Club of New York, 91-year old former Chairman of the Federal Reserve (hereafter the ‘Fed’) Alan Greenspan stated that the Dodd-Frank Act 2010 was the ‘worst legislation since Nixon’s wage and price controls of the 1960s’, and that we ‘ could do away with all financial regulation – almost all of it – if we did one thing, and that is raise the capital requirements of banks ’. The debates about the merits of such a statement will only be touched upon in this post because, as with everything of this nature, the analysis could stretch to volumes. So, for this post, the focus will be on the effect of Greenspan over the years and, more importantly given the current climate, the effect that Economists can have in shaping the direction of society. Alan Greenspan’s thinking about financial regulation is simple, as demonstrated by the contents of the speech. In it he discussed how raising the capital requirements ...