Posts tagged ‘geithner’

Top 10 Predictions for 2010

#10.  Federal Reserve Chairman Ben Bernanke decides pundits were wrong on the housing bubble, so he sets Fed Funds target rate at negative -3.0%. Small businesses start receiving loans.

#9.  As part of healthcare reform, Medicare is extended to teens for collagen lip augmentation.

#8.  Goldman Sachs, Morgan Stanley, and Citigroup form tri-merger to guarantee they are too big to fail. 

#7.  Tiger Woods poses in Playgirl to pay for pricey revised terms in his prenup. (see previous post)

#6.  Gold spikes to $3,000 per ounce as government subsidizes dental chains in “cash for crowns” gold melting campaign. Consumers get extra cash, but Jujube candy sales plummet. (see previous post)

#5.  Bernie Madoff escapes from prison. A cigarette Ponzi Scheme created by Madoff generates enough money to bribe guards.

#4.  Apple introduces iPot – a combination iPhone and toilet.

#3.  Kazakhstan pays Brazil, Russia, India and China a 5% GDP royalty to be added to the emerging B-R-I-C-K countries. A win-win for all parties, including spelling teachers around the world.

#2.  Timothy Geithner retires from Treasury after making millions for being cast as Eddie Haskell in new remake of Leave It to Beaver movie. (see previous post)

#1.  Oprah decides to halt her retirement plans. Instead, she signs me to a multi-million dollar deal to co-host a stock & gossip show with her.

HAPPY 2010!!

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper. 

DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds (including BKF) and AAPL, but did not have any direct positions in any stock mentioned in this article at time of publication (including GS, MS, C, and GLD). No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.

December 30, 2009 at 12:01 am Leave a comment

Government Looks to Strengthen Regulatory Web

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As the chart from the Financial Times shows (BELOW), our messy regulatory cobweb system needs to be straightened out, so it can efficiently function. Not only to encourage risk taking and capitalism, but to also deter and punish those that take advantage of the U.S. system and its citizens. The President and Treasury Secretary Timothy Geithner will address the inefficient, entangled set of regulatory issues surrounding the intertwined agencies in our financial regulatory system. With a mix of federal, regional, and state- driven oversight, the current structure leaves potential gaps for rule-breakers to slide through.

Source: The Financial Times

Source: The Financial Times

As the FT article explains (http://is.gd/13YuS),  a “council of regulators,” comprised of the agency heads, will be formed along with another consumer-related agency designed to protect areas such as home mortgages and credit cards. Will new unproductive layers be added to merely bog down risk-taking and innovation (i.e., Sarbanes-Oxley legislation), or will substantive reform occur, thereby allowing businesses to innovate and grow. The proof will be in the pudding when Geithner reveals the details of his plan.

What should regulatory reform include?

1)      Consolidation: You can call me crazy, but simply looking at the layers of agencies cries for consolidation. Do we really need six different sets of regulators overseeing the banks?

2)      Transparency/Capital Requirement Changes: When it comes to derivatives, heightened transparency and capital requirements feel like moves in the right direction. We have perfectly functioning options and futures markets that integrate margin and capital requirements for the various constituencies; I do not see why Credit Default Swaps should be any different. For more customized, exotic over-the-counter products, you could avoid much of the AIG debacle by increasing the capital requirements of the counterparties. I believe these aims without stifling innovation.

3)      FDIC of Mega-Institutions: FDIC insurance has succeeded in managing the failures of retail depository institutions, so I see no reason why the same model for mega financial institutions. Certainly, managing the collapse of a global money center bank would be more convoluted; however a system to handle an orderly failure would limit the fallout effect we experienced with the folding of Lehman and crumbling of Bear Stearns.

Although many lawmakers will hunt for a silver bullet, we all know that in this complex global economy a path for reform will involve more evolution rather than revolution. Most controversial will be the consumer protection agency, as details still remain sparse. In my a healthy regulatory system boils down to more simplified structures with tighter oversight, mixed in with proper incentives and harsher punishments for criminals. We’ll know soon enough whether the government can weave a solution tight enough to capture the Bernie Madoffs and Allen Stanfords of the world without sacrificing our position as the global financial capitol of the world.

June 18, 2009 at 5:30 am 1 comment


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