Do Not Allow Taxpayers to Remain Hostages of Big Banking

Do Not Allow Taxpayers to Remain Hostages of Big Banking
China Times editorial (Taipei, Taiwan, ROC)
A Translation
January 29, 2010

Unemployment in the US has reached 15 million since the financial tsunami, or nearly 10%. The Obama administration has provided hundreds of billions in government relief for major banks. The banking industry meanwhile, has been doling out huge dividends with complete impunity. The result has been intense public antipathy. Yesterday Barack Obama announced the largest scale financial reform bill since the 1930s. The bill will impose limits on the size of big banks and on their range of services. Obama vowed that he would no longer allow taxpayers to remain hostages to Big Banking. His proposal sent shockwaves through the financial sector and sent financial stocks tumbling on Wall Street for several days in a row.
This is the third time in one week that Obama has targeted Wall Street's big banks. First, on the 14th of this month, he announced the imposition of a "Financial Crisis Responsibility Fee" on the nation's 50 biggest banks. He plans to levy a tax of 90 billion USD on them over the next decade. He intends to get back every dime the taxpayers lost. Next, he ordered the establishment of an independent consumer finance protection agency, responsible for the protection of consumers of financial services. On the 21st of this month he introduced the "Volcker Rule." This financial reform was proposed by former Federal Reserve Chairman Paul Volcker. It will prohibit commercial banks from engaging in dealer transactions. They will not be allowed to own or invest in hedge funds or private equity funds. In addition, any single bank's deposit insurance may not exceed 10% of the US total. This rule will apply to non-insurance deposits as well. These reforms will have a major impact on mergers and acquisitions within the financial sector.

In 1929 the US stock market crashed, sending the economy into the Great Depression. At the time the securities industry was regarded as the culprit. In 1933 the US Congress passed the Glass-Steagall Act, imposing severe restrictions on commercial banks and investment banking sub-sector operations. The bill was not repealed until 1999. Obama has now introduced the "Volcker Rule." It is considered a new version of the Glass-Steagall Act, one that will lead to massive changes in the financial industry's business model. It is widely believed that tanking public support, coupled with the Democratic Party's election defeat in Massachusetts, forced Obama to reposition himself relative to the fat cats on Wall Street, in order to salvage his tarnished image.

The announcement of the "Volcker Rule" was greeted with widespread international approval. The President of the Bank of England, the President of the Swiss National Bank, and the French Finance Minister have all expressed their support. Mario Draghi, Chairman of the International Financial Stability Committee (FSB), said Obama's financial reform will help promote international financial reform. This week the World Economic Forum (WEF) will convene in Switzerland. Early next month the G7 finance ministers will meet. In May the Group20 will meet. All of them will focus on strengthening financial supervision.

But Wall Street firms strongly object to Obama's financial reform bills. Many bankers who deliberately stayed away from the World Economic Forum last year have decided to become personally involved. They intend to use the forum to make their wishes known to national policy-makers and the media.

Wall Street analysts are skeptical. They doubt that Obama's financial reforms will prevent future financial crises, or change the "too big to fail" status of big banks. Suppose a large financial group sells private equity funds and hedge funds. In the event of a financial crisis, will the government really do nothing? Analysts expressed doubts. The root cause of the financial tsunami was toxic securities invented by Wall Street and sold to investors. The process lacked clear supervision. The Volcker Rule does not touch upon this thorny issue. But not all financial industry leaders are opposed to Obama's proposals. For example, former Citigroup chairman John Reed has expressed his support.

Obama's financial reforms face two major challenges. First, the bill must be passed by Congress. The Democratic Party lost a crucial battle in Massachusetts. Its support in the Senate remains in doubt. Secondly, in an era of globalization, Obama's financial reforms need support from other governments. Will the international financial supervisors meeting at the World Economic Forum really reach a consensus? It is difficult to be optimistic.

From an international perspective, unemployment is rising, governments are spending vast sums on relief for Big Banking. Meanwhile these big banks remain utterly indifferent to public perceptions. They continue to hand out huge bonuses, provoking taxpayer wrath. Obama is taking advantage of this sentiment to aggressively promote financial reform. He is clearly speaking to the taxpayer. He has declared his commitment to reform. He hopes to win the hearts of the public. The financial tsunami has not impacted the financial sector on Taiwan as badly. But no matter which party comes to power they firmly support the interests of the big banks and financial groups. They have never been willing to allow banks to fall. Taxpayers have always been held hostage by the big banks. This phenomenon must be reversed. Otherwise bad money will drive out good, becoming the biggest obstacle to progress in the financial sector.

On the first anniversary of his administration, Barack Obama's prestige has taken a beating. But he has demonstrated a resolve to promote a new wave of financial reforms, and a determination to turn the tide. As he approaches the second anniversary of his administration, President Ma's prestige has also taken a beating. Does he have the resolve to protect the interests of taxpayers and promote a new wave of reform?

中時電子報 新聞
中國時報 　2010.01.29
別再讓納稅人淪為銀行人質
本報訊

金融海嘯以來，美國失業人口高達一千五百多萬，失業率逾十％，歐巴馬政府砸下數千億元資金紓困大銀行，業者卻肆無忌憚發放高額紅利，讓民怨沸騰到了極點。歐巴馬日前宣布了一項一九三○年代以來最大規模的金融改革法案，將限制大銀行經營規模與業務範疇，誓言不再讓納稅人淪為大銀行的人質。這項改革為金融業投下了震撼彈，也使得華爾街金融股連日大跌。

這是歐巴馬在短短一周內第三次對華爾街的大銀行開刀，他首先在十四日宣布對全美前五十大銀行開徵「金融危機責任費」，計畫在未來十年內徵收九百億美元，把納稅人紓困的每一毛錢要回來；其次，指示成立一個獨立的消費者金融保護局，專責保護金融消費者。廿一日則祭出「伏爾克法則」，這項由前聯準會主席伏爾克所主導的金融改革，將限制吸收存款的商業銀行進行自營商交易，也不得擁有或投資對沖基金、私募基金。此外，擬將單一銀行保險存款占全美比例不得超過十％的規定，擴大到非保險存款，此舉將對金融業的併購活動造成衝擊。

美國在一九二九年股市大崩盤，經濟陷入大蕭條，當時銀行兼營證券業務被視為禍首，國會在一九三三年通過葛拉斯｜史帝格法案，嚴格限制商業銀行與投資銀行分業經營，這項法案直到一九九九年才廢止。這次歐巴馬推出「伏爾克法則」，被認為是新版的葛拉斯｜史帝格法案，將使金融業的經營模式產生極大變化。一般認為，歐巴馬由於民意支持度跌落谷底，再加上民主黨在麻州選舉失利，迫使他對華爾街肥貓祭出鐵腕，以挽救低迷的聲望。

「伏爾克法則」宣布後，普遍獲得國際間的肯定，英格蘭銀行總裁、瑞士央行總裁、法國財長都表示支持。國際金融穩定委員會（ＦＳＢ）主席德拉吉表示，歐巴馬的金融改革，增強國際間推動金改的動力。本周將在瑞士舉行的世界經濟論壇（ＷＥＦ）、下月初七大工業國財長會議、五月的二十國集團會議，都將以加強金融監理為重點。

不過，對於歐巴馬的金改法案，華爾街業者非常不以為然。去年刻意避開世界經濟論壇的銀行家們，許多人今年決定親自出馬並將利用這個論壇對各國決策官員與媒體們提出他們的訴求。

華爾街分析師質疑，歐巴馬的金改無助於防範新的金融危機，也無法改變銀行「大到不能倒」的現況，假設某大型金融集團出售旗下私募基金與對沖基金，將來若發生金融危機，政府真的見死不救？分析師質疑，金融海嘯的根源是華爾街發明了一系列有毒證券，然後銷售給投資人，這個過程缺乏明確的監理，而伏爾克法則完全未觸及這個棘手問題。不過，並非所有金融業者都反對這項方案，例如，前花旗集團董事長瑞德（John Reed）就表示支持。

歐巴馬的金融改革，未來必須面臨兩大挑戰，首先，法案必須獲得國會通過，民主黨輸掉麻州關鍵性一役，未來能否在參議院取得支持，仍是一大問號。其次，在全球化時代，歐巴馬的金改要達到效果，必須取得各國政府的支持。各界對於這次參與世界經濟論壇的領袖們是否能就國際金融監理，達成一致的共識，也不敢太樂觀。

從國際趨勢來看，在失業率高漲之際，各國政府花大錢紓困大銀行而這些大銀行不顧社會觀感大發紅利的做法，已令納稅人怒不可遏。雄心勃勃的歐巴馬則趁勢推動金改，明確向納稅人喊話，宣示改革決心，希望挽回民心。反觀台灣，金融海嘯雖未直接對金融業造成太大的衝擊，不過，無論哪一黨執政，均堅定擁護大銀行與財團的利益，也從來不敢讓銀行倒，納稅人一直是銀行永遠的人質，這個現象如果無法扭轉，金融市場劣幣逐良幣惡性循環，成為台灣金融業進步的最大阻力。

執政滿周年的歐巴馬在聲望下挫之際，有魄力推動新一波金融改革，以力挽狂瀾；執政即將滿二周年的馬總統，民意也跌落谷底，是否也有魄力從保障納稅人權益的立場出發，推動新一波金改？