Banking Law

Crain's Business New York sponsored a business breakfast this morning and invited Charles Schumer to speak. We assume that Crain's must be in cahoots with the makers of Pepto-Bismol, because "breakfast" and "Chuck Schumer" go together like "breakfast" and "the smell of rancid Yak fat." I'm not certain how the diners in the audience kept down the bagels and lox, but reporter Aaron Elstein apparently didn't "Up-Chuck" until after he managed to write a story for Crain's online web site in which he stated the inconvenient truth that when it comes to the regulation of Wall Street banks, Chuckles has done a 180 degree turn.

Sen. Charles Schumer said Monday that more aggressive regulation is needed in order to ensure New York maintains its standing as the world?s capital of finance.

That view contrasts starkly with his opinion of just two years ago, when he issued a report warning that the U.S. regulatory environment was a ?competitive disadvantage? driving banking business to London and other overseas markets.

One massive economic crisis later, Mr. Schumer said that a strong financial-services regulator is needed to help rebuild confidence in U.S. markets, because jittery investors around the world are looking for places where they can trust that tough regulators will protect their interests. To that end, he called for the most dramatic overhaul of the U.S. financial regulatory system since 1933 and urged the new regulators be granted the power to ?get in ahead? of problems before they explode.

?We need a smarter regulator, a tougher regulator,? he said, adding that he would like to see the Securities and Exchange Commission move its headquarters to New York from Washington so it can be closer to the banks and brokerage houses it is charged with overseeing. He added that federal regulation of financial services should be overhauled to become more global in scope and that supervisors should be watching for ?systemic risk? so that problems at places like American International Group do not infect the entire system.

What we need are smarter senators, more honest senators. Instead, we get senators who, when the going gets tough, wilt like hot house flowers exposed to the noonday sun, who pirouette like prima ballerinas, facing first stage left, then stage right, whatever it takes to keep on dancing.

Chaz did note that while New York City might be chock full of toxic mortgage waste, London looks Hiroshima at 8:15 am on August 6, 1945.

...Mr. Schumer observed that markets and economic conditions are even worse in London and other leading financial centers than they are in New York.

The British government, which not long ago was praised by many on Wall Street for its lighter, ?principles-based? approach to regulation, has had to shovel over much more assistance to rescue some of its ailing banks than the U.S. British taxpayers now control a 95% stake in the Royal Bank of Scotland, for example, while the U.S. possesses a 36% stake in Citigroup. Mr. Schumer also observed that the derivatives business that triggered the collapse of AIG was based in London, not New York.

That's right Chuck. If you'd gotten your way and the pathetically weak regulation of the SEC had been as completely nonexistent as you desired two years ago, your beloved New "Yawk" City could be even worse than the wasteland it is today. By all means, though, continue your turnaround on "smarter, tougher" regulation. We'll be giving you all the attention that you deserve.

Two years ago, the US needed to loosen regulation for New York City to remain the world's financial center. Today, the US needs to tighten financial regulation for New York City to remain the world's leading financial center.

Senator, no one notices that you're naked. No, really, no one notices a thing. By all means, keep dancing.