Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.

Mike Konczal, after noting that U.S. officials are trying to weaken European proposals for tougher capital requirements, explains how Susan Collins’ Senate amendment to tighten up capital requirements would work:

No more capital loopholes! No more playing BS games where a firm creates a trust and does financial engineering alchemy to pretend that debt is equity. Serious, quality capital is required for our largest and most systemically risky banks.

This is probably the real fight. When it comes to increasing capital under the Dodd Bill you can practically hear the banks say: “Yes we’ll hold more capital as long as massive amount of risky debt turned into ‘safe’ equity through the shenanigans of our financial engineers can count as that capital.” Do we need to do that all over again?

Enough people think these points are implied in Section II of the bill, but the ability to have discretion on this point is something the regulators are fighting tooth and nail over. And here’s something fascinating: for all the talk about how Basel III and “international agreements” will fix our bank capital problems, the US is fighting this over there too. Check out the bold above; having serious quality capital for our banks is a major disagreement between the US and the Europeans, with the US wanting weaker requirements, and if their hands are tied here then they’ll be tied over there where they could possibly win this.

There’s no way to get around the fact that regulators need a fair amount of discretion no matter what kind of rules you set up. That’s just the nature of a highly complex, fast moving area like high finance. But we can set reasonable floors, and when both Treasury and the banks are fighting those floors tooth and nail it doesn’t bode well for how seriously they take this stuff.

The CFPA is great. Resolution authority is great. Clearing derivatives trades is great. But if we pass financial reform without addressing financial system leverage in any kind of serious way, we’ve wasted our time. Keeping Collins’ amendment intact ought to be a key goal for the progressive community — or, for that matter, for any community that cares about creating a sane banking system. Read Mike’s post for more.

GREAT JOURNALISM, SLOW FUNDRAISING

Our team has been on fire lately—publishing sweeping, one-of-a-kind investigations, ambitious, groundbreaking projects, and even releasing “the holy shit documentary of the year.” And that’s on top of protecting free and fair elections and standing up to bullies and BS when others in the media don’t.

Yet, we just came up pretty short on our first big fundraising campaign since Mother Jones and the Center for Investigative Reporting joined forces.

So, two things:

1) If you value the journalism we do but haven’t pitched in over the last few months, please consider doing so now—we urgently need a lot of help to make up for lost ground.

2) If you’re not ready to donate but you’re interested enough in our work to be reading this, please consider signing up for our free Mother Jones Daily newsletter to get to know us and our reporting better. Maybe once you do, you’ll see it’s something worth supporting.

payment methods

GREAT JOURNALISM, SLOW FUNDRAISING

Our team has been on fire lately—publishing sweeping, one-of-a-kind investigations, ambitious, groundbreaking projects, and even releasing “the holy shit documentary of the year.” And that’s on top of protecting free and fair elections and standing up to bullies and BS when others in the media don’t.

Yet, we just came up pretty short on our first big fundraising campaign since Mother Jones and the Center for Investigative Reporting joined forces.

So, two things:

1) If you value the journalism we do but haven’t pitched in over the last few months, please consider doing so now—we urgently need a lot of help to make up for lost ground.

2) If you’re not ready to donate but you’re interested enough in our work to be reading this, please consider signing up for our free Mother Jones Daily newsletter to get to know us and our reporting better. Maybe once you do, you’ll see it’s something worth supporting.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate