Some funny things are going on in the banking world these days.
1) For nearly a year, regulatory bodies and the Fed have been complaining about banks making too many leveraged loans (loans made to companies with higher levels of debt than regulators deem proper or at interest rates higher than some benchmark).
http://dealbook.nytimes.com/2014/11/04/a-recent-surge-of-leveraged-loans-rattles-regulators/?_r=0
Ironically, this exploratory piece in the NYT states it best: "In raising money for Mr. Shannon, Wall Street would appear to be doing its job of matching companies that need capital with investors who can provide it."
Of course, not long ago, everyone was complaining about banks failing to lend. Then, banks actually make loans and people complain about banks making the loans they supposedly weren't making enough of.
2) The Fed finalized a rule Dodd-Frank was trying to figure out for some time. Banks are prohibited from acquiring more than 10% of the liabilities in the banking system via a merger/acquisition with/of another bank.
http://www.federalreserve.gov/newsevents/press/bcreg/20141105a.htm
There are exceptions of course. The first is acquiring failing banks (similar to what JP Morgan, Bank of America, Wells Fargo and others did during the financial crisis), but Bloomberg's Matt Levine explains, "though ask Jamie Dimon and he'll tell you that that hardly seems worth it either". The second is the ability to acquire securitization pools (wait, weren't these some of the assets that contributed to the failings of Lehman and Bear?).
Levine comments, "There is also an exception for the acquisition of securitization vehicles, basically because a securitization looks, legally, like a financial company, but is really just a portfolio of loans or bonds or whatever. So legally you'd analyze it as buying a company, which would seem forbidden, but really it's just buying some loans and financing those loans with the securitization. And the intent seems not to be to prevent banks from growing their balance sheets by buying and financing loans, but just to prevent them from growing their balance sheets by doing mergers. Why that would be a useful distinction seems a little unclear to me."
In sum, it has been over five years and we have gotten seemingly nowhere. The incompetent national oversight never ceases to amaze.
1) For nearly a year, regulatory bodies and the Fed have been complaining about banks making too many leveraged loans (loans made to companies with higher levels of debt than regulators deem proper or at interest rates higher than some benchmark).
http://dealbook.nytimes.com/2014/11/04/a-recent-surge-of-leveraged-loans-rattles-regulators/?_r=0
Ironically, this exploratory piece in the NYT states it best: "In raising money for Mr. Shannon, Wall Street would appear to be doing its job of matching companies that need capital with investors who can provide it."
Of course, not long ago, everyone was complaining about banks failing to lend. Then, banks actually make loans and people complain about banks making the loans they supposedly weren't making enough of.
2) The Fed finalized a rule Dodd-Frank was trying to figure out for some time. Banks are prohibited from acquiring more than 10% of the liabilities in the banking system via a merger/acquisition with/of another bank.
http://www.federalreserve.gov/newsevents/press/bcreg/20141105a.htm
There are exceptions of course. The first is acquiring failing banks (similar to what JP Morgan, Bank of America, Wells Fargo and others did during the financial crisis), but Bloomberg's Matt Levine explains, "though ask Jamie Dimon and he'll tell you that that hardly seems worth it either". The second is the ability to acquire securitization pools (wait, weren't these some of the assets that contributed to the failings of Lehman and Bear?).
Levine comments, "There is also an exception for the acquisition of securitization vehicles, basically because a securitization looks, legally, like a financial company, but is really just a portfolio of loans or bonds or whatever. So legally you'd analyze it as buying a company, which would seem forbidden, but really it's just buying some loans and financing those loans with the securitization. And the intent seems not to be to prevent banks from growing their balance sheets by buying and financing loans, but just to prevent them from growing their balance sheets by doing mergers. Why that would be a useful distinction seems a little unclear to me."
In sum, it has been over five years and we have gotten seemingly nowhere. The incompetent national oversight never ceases to amaze.
