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Tag Archive: Dodd–Frank Wall Street Reform and Consumer Protection Act


First time I heard about paraprosdokians, I liked them. Paraprosdokians are figures of speech in which the latter part of a sentence or phrase is surprising or unexpected and is frequently humorous. (Winston Churchill loved them).

  1. Where there’s a will, I want to be in it
  2. The last thing I want to do is hurt you … but it’s still on my list.

  3. Since light travels faster than sound, some people appear bright until you hear them speak.

  4. If I agreed with you, we’d both be wrong.

  5. We never really grow up — we only learn how to act in public.

  6. War does not determine who is right, only who is left.

  7. Knowledge is knowing a tomato is a fruit. Wisdom is not putting it in a fruit salad.

  8. To steal ideas from one person is plagiarism. To steal from many is research. Continue reading

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Its been while not posted about the regulatory stuff as in the past I’ve frequently expressed concern that the legacy of Dodd-Frank will be to Googlepromote artificial consolidation of the banking industry by driving small banks out of business and making large banks even more “Too Big to Fail.” This is for two reasons.

The first reason would be if Dodd-Frank perpetuates the so-called TBTF subsidy. This is the idea that being designated too big to fail creates an implicit government guarantee for creditors that permits large banks to access capital markets more cheaply than non-TBTF banks. Whether there is a continued subsidy, and if so, how large, seems to be still somewhat undetermined at this point. Continue reading

I did this post last year but the essence is clearly visible now so posting it again under new rules and regulations. images

Deja vu all over again, the over-reliance on ‘shaky’ collateral and concentration of risk is building once more – this time in the $648 trillion derivatives market. New Clearing House rules (a la Dodd-Frank) mean derivatives counterparties are required to pledge high quality collateral with the clearing houses (or exchanges) in a more formalized manner to cover potential losses.   Continue reading

I did this post last year but the essence is clearly visible now so posting it again under new rules and regulations :-images

Deja vu all over again, the over-reliance on ‘shaky’ collateral and concentration of risk is building once more – this time in the $648 trillion derivatives market. New Clearing House rules (a la Dodd-Frank) mean derivatives counterparties are required to pledge high quality collateral with the clearing houses (or exchanges) in a more formalized manner to cover potential losses.

However, the safety bid combined with Central Banks monetization of every sovereign risk asset onto their balance sheet has reduced the amount of quality collateral available; this scarcity of quality collateral creates liquidity problems. Continue reading

Some bankers sing this morning instead of ‘Purple Rain, Purple Rain’ – “Margin call, Margin call!”images

Last week’s biggest news is not the Nonfarm Payrolls, or the European Central Bank or even Portugal’s government falling. No – the big deal is the openness with which the Federal Reserve is preparing a major margin call on the too-big-to-fail banks in the US.

This has been a long time coming since the introduction of the Dodd-Frank law back in 2010 but it is a game changer. Remember all macro paradigm shifts come from policy impulses, often mistakes.

Fed approves step one in a three-step plan:   Continue reading

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