This appears to be Loophole Monday, with quarterbacks over the weekend forecasting the give-backs�that will allow banks to escape the worst in the financial reform legislation making its way to Congressional reconciliation.
Despite some reports that banks are quaking in their boots, others have found significant ways in which banks get off easy:
The Wall Street Journal’s editors, railing against the unelected regulators who will now have more power, concludes that the largest banks will come out okay, as “Big Finance will more than hold its own with Big Government, as it always does.”
Meantime, The New York Time’s Eric Dash and Nelson Schwartz quote various observers saying the bill will be far less of an earthquake than originally thought. As former Deputy Treasury Secretary Roger Altman tells the authors, the bill is far less significant than was the Health Care Form legislation for that industry.
And over at the Financial Time’s op-ed section, former U.S. Labor Secretary Robert Reich laments that Senator Blanche Lincoln’s measure to force derivatives trading into a separate entity is “on life support.” After all, writes Reich, why should big banks get federally funded deposit insurance as capital to fund their derivatives trades, even if it means they’ll be less likely to fail that way?
Still, the Journal’s�Mark�Gongloff writes this morning that banks face some substantial�risk of credit downgrade by Moody’s,�et�al. if the final�bill ends up making clear that their government safety net�is going away, removing a big support for solvency.
The banks are having a pretty solid morning, with Goldman Sachs (GS) up $1.77, or 1.3%, at $142.39; JP Morgan Chase (JPM) up 5 cents, at $40.10; Bank of America (BAC) up one penny at $16; Citigroup (C) up 7 cents at $3.82; and Morgan Stanley (MS) up 9 cents, at $27.20.
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