Obama pushes new bank regulation

[Being]

Who controls your 401K and your 529?

[GGT]

It's what he's suggesting is the situation at hand.

My financial advisors are at Smith-Barney, under the umbrella of Morgan Stanley. They have a proprietary trading desk, but I make sure to keep my investments away from that branch.

It has occurred to me who might be the next Lehman or Merrill, or how we'd even know.

Again, what's your point Dread? Spit it out man. Who are your financial advisors and how do you know you can trust them?

I'm thinking you must know some Madoff clients or at least their secondary victims, since you live in Manhattan.

[Dreadnaught]

What is your point? I mean, how are you keeping your investments away from your proprietary trading desk? By definition your investments are kept away from your proprietary trading desk.

Your financial adviser doesn't talk to the traders.

[EyeKhan]

I have a fee only financial planner. He makes no commission on any of the trades or insurance products he arranges for me and his fee is based on a % of the total value of my portfolio. If I do well, he gets paid more. If I do poorly he takes a pay cut. No conflict of interest

[Lewkowski]

I have a fee only financial planner. He makes no commission on any of the trades or insurance products he arranges for me and his fee is based on a % of the total value of my portfolio. If I do well, he gets paid more. If I do poorly he takes a pay cut. No conflict of interest

So your adviser has a fixed downside to risky bets (0) but a theoretically infinite upside. Seems to me that encourages risky trading.

I doubt anything untoward is happening but personally as far as financial planning is concerned I'd want to have a flat fee planner (fixed dollars not percentage of portfolio) who doesn't get commission for getting me into certain products. However if your having your planner actively trade... well I doubt you'll find many charging that way.

Honestly unless your accounts are extremely complex just stick your money in no load super low cost funds from Vanguard or a similar company. Figure out what your percentage of equities and bonds your comfortable with and allocate accordingly. Re balance every year and you should be fine and you barely pay any form of fee for using your money.

[Dreadnaught]

I have a fee only financial planner. He makes no commission on any of the trades or insurance products he arranges for me and his fee is based on a % of the total value of my portfolio. If I do well, he gets paid more. If I do poorly he takes a pay cut. No conflict of interest

Indeed, that's pretty standard for companies like the one GGT uses.

[EyeKhan]

So your adviser has a fixed downside to risky bets (0) but a theoretically infinite upside. Seems to me that encourages risky trading.

I doubt anything untoward is happening but personally as far as financial planning is concerned I'd want to have a flat fee planner (fixed dollars not percentage of portfolio) who doesn't get commission for getting me into certain products. However if your having your planner actively trade... well I doubt you'll find many charging that way.

Honestly unless your accounts are extremely complex just stick your money in no load super low cost funds from Vanguard or a similar company. Figure out what your percentage of equities and bonds your comfortable with and allocate accordingly. Re balance every year and you should be fine and you barely pay any form of fee for using your money.

My finances ARE extremely complex and I got myself in some expensive trouble managing them myself a few years back. Note that if your planner's working on a fixed rate, he has no incentive to increase your portfolio or to fear losses. Excpet that you'll fire him of course. With a % basis the incentive is to work to increase it without too much risk of losing. The risk is set by me, anyway. Every trade is personally authorized, etc.

[LittleFuzzy]

Not when you compare it to what we have right now!

But it doesn't DO anything major to improve what we have right now. The only really major change it would enact is getting expanding coverage to those that don't presently have it, and that doesn't address the problems with the system, it just shifts those problems onto someone else.

[EyeKhan]

But it doesn't DO anything major to improve what we have right now. The only really major change it would enact is getting expanding coverage to those that don't presently have it, and that doesn't address the problems with the system, it just shifts those problems onto someone else.

It eliminates the Pre-Existing Condition limitation too. That's a big deal. Universal coverage means people don't have to stay in a job just for the health care, and there is no question that happens a lot. That alone might lead to people taking more entrapeneurial risk which could benefit the economy overall.

[LittleFuzzy]

Look, I'm all for eliminating the abuse of denying coverage *or at least making it harder to abuse* but that was far from a major problem with healthcare. It's just something that sticks in the craw.

And the idea that universal healthcare will encourage entrepreneurial risk is wild conjecture. One can just as easily argue that it will reduce employment and shrink the economy more, a bread and circuses line.

[agamemnus]

What is your point? I mean, how are you keeping your investments away from your proprietary trading desk? By definition your investments are kept away from your proprietary trading desk.

Your financial adviser doesn't talk to the traders.

It's not about that at all. Each bank pays insurance to the FDIC. The cost of that insurance is supposed to be based on the risk of default of the bank. The FDIC cannot measure that risk based on a combination of both the banks' investments and borrower loan default risk.*

In the case of a bank that only has lenders and borrowers, the bank's risk is that the borrowers default -- the bank must figure out what the best method of finding a borrower's credit worthiness is.

In the case of an investment bank, the FDIC is not able to determine the bank's portfolio's risk -- investment banks themselves try to figure that out daily and often get it wrong. You can't expect a government agency to do it.

Thus, the insurance price the banks are paying does not match the cost. So, in essence, the FDIC is subsidizing the banks' extra-risky investment behavior for those who do that proprietary trading.

Since the government, and the taxpayers/society, are basically paying for the FDIC's losses, that's a problem, I think...

*Edited just now for clarity.

[EyeKhan]

Look, I'm all for eliminating the abuse of denying coverage *or at least making it harder to abuse* but that was far from a major problem with healthcare. It's just something that sticks in the craw.

And the idea that universal healthcare will encourage entrepreneurial risk is wild conjecture. One can just as easily argue that it will reduce employment and shrink the economy more, a bread and circuses line.

Conjecture, perhaps. Not wild, however.

What are the problems with health care as it is today then? Here's a stab, in no particular order, add if you like:

#1. It's already too expensive and costs continue to rise too fast.

#2. A LOT of people don't have coverage.

#3. Widespread abuse including crappy coverage, hidden loop holes, benefit cut offs, pre-existing condition denials, and presumably many more.

The plans on the table, as far as I can tell, address #2 and #3. They claim to address #1 but I don't know how. There's been talk of controlling malpractice lawsuits so there won't be shotgun style CYA testing going on as much. I've heard talk of ending fee-for-service practices which give doctors conflict of interest. Single payer would have reduced the vast inefficency of having so many different insurance systems, but even the limited public option is dead now, I recall talk of allowing interstate competition between insurance providers, I heard there was going to be reduced medicare payments, but i'm not sure how effective that can be, I've heard they want to implement a best practices board to review rule of thumb stuff and make sure it makes sense, etc etc. I don't know how much of most of this stuff made it in either bill or what. But it seems to me that working on a solution, putting stuff in place, is better than doing nothing at all.

[agamemnus]

Conjecture, perhaps. Not wild, however.

What are the problems with health care as it is today then? Here's a stab, in no particular order, add if you like:

#1. It's already too expensive and costs continue to rise too fast.

#2. A LOT of people don't have coverage.

#3. Widespread abuse including crappy coverage, hidden loop holes, benefit cut offs, pre-existing condition denials, and presumably many more.

The plans on the table, as far as I can tell, address #2 and #3. They claim to address #1 but I don't know how.

STOP. Those are problems, not causes. Only liberal nutjobs address problems instead of causes.

[EyeKhan]

STOP. Those are problems, not causes. Only liberal nutjobs address problems instead of causes.

Yes, perhaps someone should start a 6-Sigma Black Belt project on the health care system. I'm sure nobody's bothered to do a root cause analysis, they're just jumping to conclusions and plan to fix things by trial and error. (roll eyes emoticon)

[agamemnus]

Well, yes.

[EyeKhan]

Well, yes.

Well, I hope not. I'm a jaded human being. I tend to take the negative over the positive most of the time. But what you're saying doesn't say much for America, because its not endemic to humanity. The rest of the developed world has done a nice job not creating a system that's totally fucked up like ours. If we can't, then its us, not human nature. I just hope your wrong. (thumbs down emoticon)

[agamemnus]

Rational analysis isn't endemic for humanity? Or what?

[EyeKhan]

Rational analysis isn't endemic for humanity? Or what?

Is that a joke?

[']['ear]

I think this regulation would be great for America. I think most people would be for it, and if Republican senators get in the way they will be the ones with the black eye on this one.

Dreadnaught/Ziggy: basically that's saying that banks won't be able to work as investment banks and as savings&lending banks at the same time. An investment bank gives a profit or loss to their shareholders, while a purely savings/lending bank gives a profit or loss to their savers.

This regulation would completely decouple the two types of risk that banks have now: the loan faults of their customers and investment risk. I think it makes perfect sense.

Yes, it always did, didn't it? Too bad it was repealed in the first place. Typical Clinton--try to please everybody.

But... the Democrats' health reform was bad. But, it is arguably true that the Republicans didn't put a whole lot of thought into whether it was bad or not. On the other other hand, the Republicans were not really allowed into crafting the current health reform bill..

I disagree. The Dems went to great lengths to make concessions for moderate Republicans (or the few that remain). But the far right center of gravity of the GOP is opposed to ALL health care reform.

[agamemnus]

Is that a joke?

I don't know what you're talking about, that's all.

[EyeKhan]

I don't know what you're talking about, that's all.

Rational analysis is only possible by humans after a great deal of training. And even then they back-slide. Training with pain works.

[agamemnus]

Rational analysis is only possible by humans after a great deal of training. And even then they back-slide. Training with pain works.

So you're saying you want a horrible health care bill to teach Americans a lesson for voting in politicians who initiate poorly thought through liberal agendas?

I disagree. The Dems went to great lengths to make concessions for moderate Republicans (or the few that remain). But the far right center of gravity of the GOP is opposed to ALL health care reform.

I don't think that they did... They added little things that they needed to get moderate Democrats' votes, otherwise it wouldn't have passed the Senate. They still kept the bureaucratic morass brunt of it alive. The problem is that the left-wing Democrats want far too much bureaucracy. Republicans want a simple bill without all these government handouts, taxes, and new bureaucracies, but then many far-left Democrats would be against it because it doesn't go far enough...

[EyeKhan]

So you're saying you want a horrible health care bill to teach Americans a lesson for voting in politicians who initiate poorly thought through liberal agendas?

No. I want one or the other of the current health care bills because they are a lot better than the status quo.

[']['ear]

I think this regulation would be great for America. I think most people would be for it, and if Republican senators get in the way they will be the ones with the black eye on this one.

Dreadnaught/Ziggy: basically that's saying that banks won't be able to work as investment banks and as savings&lending banks at the same time. An investment bank gives a profit or loss to their shareholders, while a purely savings/lending bank gives a profit or loss to their savers.

This regulation would completely decouple the two types of risk that banks have now: the loan faults of their customers and investment risk. I think it makes perfect sense.

But... the Democrats' health reform was bad. But, it is arguably true that the Republicans didn't put a whole lot of thought into whether it was bad or not. On the other other hand, the Republicans were not really allowed into crafting the current health reform bill..

I guess we'll see what happens?

Look, I'm all for eliminating the abuse of denying coverage *or at least making it harder to abuse* but that was far from a major problem with healthcare. It's just something that sticks in the craw.

And the idea that universal healthcare will encourage entrepreneurial risk is wild conjecture. One can just as easily argue that it will reduce employment and shrink the economy more, a bread and circuses line.

So you're saying you want a horrible health care bill to teach Americans a lesson for voting in politicians who initiate poorly thought through liberal agendas?


I don't think that they did... They added little things that they needed to get moderate Democrats' votes, otherwise it wouldn't have passed the Senate. They still kept the bureaucratic morass brunt of it alive. The problem is that the left-wing Democrats want far too much bureaucracy. Republicans want a simple bill without all these government handouts, taxes, and new bureaucracies, but then many far-left Democrats would be against it because it doesn't go far enough...

Then why were they courting Olympia Snowe?

I do wonder with what the GOP threatened her. Typically she would have voted for this. Any time something splits along strictly party lines, you know arms were twisted. That's because Republicans in hard blue states are more liberal than Democrats in hard red states. So you know there was arm-twisting happening here.

[EyeKhan]

Then why were they courting Olympia Snowe?

I do wonder with what the GOP threatened her. Typically she would have voted for this. Any time something splits along strictly party lines, you know arms were twisted. That's because Republicans in hard blue states are more liberal than Democrats in hard red states. So you know there was arm-twisting happening here.

Ya think?

[']['ear]

Why yes. Yes I do.

Your point?

[EyeKhan]

Why yes. Yes I do.

Your point?