Why Dodd-Frank Needs To Be Fixed

16 Mar 2018

This is an in depth article explaining the enormous monstrosity that is Dodd-Frank. Initial compliance costs runs in the hundreds of thousands of dollars ($400M – $600M for Chase). Smaller banks could not keep up with those costs.

Another issue is that much of Dodd-Frank still has a bunch of regulations that need to be determined. It was estimated to be 12-18 months to complete everything. It probably hasn’t been done. But what that does is this… because there is a bunch of legislation that is yet to be determined – it enriches the politicians. Why? Banks will spend money lobbying politicians as the various undetermined rules are determined. That’s in the article below as well.

Too big not to fail – The Economist, 2012/02/18

Over-regulated America – The Economist, 2012/02/18


Toy Icon Toys’R Us Is Wrapping It Up

16 Mar 2018

Toys “R” Us shutting U.S. stores, liquidating inventory – CBS, 2018/03/15

Toys “R” Us is going out of business in the U.S. The iconic chain announced early Thursday that it’s seeking bankruptcy court approval to start closing its 735 U.S. stores and liquidating their inventory.

Some 33,000 employees will lose their jobs as a result.

Toys “R” Us, which declared bankruptcy in September, was unable to convince creditors to refinance its more than $5 billion in debt, a crushing load that experts say hampered its ability to adapt to the growth in online shopping, among other consumer trends.

The chain was hobbled by debt stemming from the 2005 leveraged buyout by KKR, Bain Capital and Vornado Realty Trust (VNO). That deal placed it at disadvantage against larger rivals such as Amazon (AMZN), Walmart (WMT) and Target (TGT), which have made inroads in the toy market in recent years.

Toys “R” Us closing leaves workers, customers hanging – CBS, 2018/03/15

The company’s current leadership only compounded its mistakes by failing to act quickly and decisively. One example: When Toys “R” Us first declared bankruptcy in September, CEO Dave Brandon vowed not to close any stores, blithely remarking that “today marks the dawn of a new era at Toys “R” Us.” He was wrong.

The bankruptcy filing doesn’t cover Toys “R” Us’ international business, but it’s struggling, too. The company’s U.K. business on Wednesday announced that it is closing its doors after failing to find a buyer — about 3,000 people will lose their jobs. Toys “R” Us is considering combining as many as 200 of its top-performing U.S. stores with its Canadian operations, but Selbst said that would be complicated, expressing doubt it will fly.

Senate Approves Dodd-Frank Roll Back

16 Mar 2018

Despite the title of the article, it was a bi-partisan effort to roll back certain measures of the Obama era legislation. 17 Senate Dems approved the roll back. It goes to the House next.

Republicans Took A Hatchet To Obama’s Banking Regulations – Daily Caller, 2018/03/06

Dodd-Frank was originally intended to increase transparency by implementing a consistent set of regulations aimed at closing loopholes and making firms accountable for their own mistakes. The bill attempted to shift the burden of major financial mistakes from taxpayers to market participants, ensuring those who partake in risky investment practices would bear the financial burden of their mistakes. Dodd-Frank promised to “end too big to fail” and “promote financial stability.”

Large banking institutions have grown dramatically since the passage of Dodd-Frank despite the act’s intentions, and small community banks have incurred serious losses as they try to keep up. Crippling regulations saddled smaller banks, forcing American consumers to market with fewer investment vehicles and greater costs.

Trump’s administration applauded the Senate’s move Wednesday, championing it as a win for small and community banks subjected to burdensome regulations for nearly a decade.

“The bill provides much-needed relief from the Dodd-Frank Act for thousands of community banks and credit unions and will spur lending and economic growth without creating risks to the financial system. By tailoring regulation, the bill seeks to prevent excessive regulation from undermining the viability of local and regional banks and their ability to serve their communities,” White House press secretary Sarah Sanders said in a statement.


Excessive regulation is the enemy here.  This is not a total repeal, but a removal of parts of the legislation.


Steel, Tariffs, Trade War – Beyond Trump #2

7 Mar 2018

This is good info, before we started penalizing Chinese steel in 2016, on how these unfair trade practices persists. There is much more at the link.

Surging Steel Imports Put Up To Half a Million U.S. Jobs at Risk – Economic Policy Institute, 2014/05/13

The U.S. steel industry is facing its worst import crisis in more than a decade. In the aftermath of the Great Recession, steelmakers in other countries, backed by aggressive government support, continued to add production capacity as demand stagnated. The open and large U.S. market became the prime target for the massive excess supply stemming from this excess capacity, and, since 2011, U.S. steel imports have surged and import unit values have plummeted.

Surging imports of unfairly traded steel are threatening U.S. steel production, which supports more than a half million U.S. jobs across every state of the nation. The import surge has depressed domestic steel production and revenues, leading to sharp declines in net income in the U.S. steel industry over the past two years (2012–2013), layoffs for thousands of workers, and reduced wages for many more.

So what I am understanding is that the Chinese (primarily, and probably a couple of other countries) is trying to undercut the market, wipe out international competition, and increase their world market share. They are flooding the steel market with excess supply which lowers prices. Many of these Chinese steel producers are owned or controlled by the government, and received government subsidies. So they have they money of the entire national at their disposal to flood the market.

So what I am seeing with these tariffs are protection and support for the steel producers in the country.  While at the same time, there will be some pain for those on the back end, who purchase the steel to make their products.  Hopefully the pain will be for the short term.


U.S. Steel follows tariff promise with plans to restart Illinois furnace – Pittsbugh Post Gazette, 2018/03/07

U.S. Steel announced Wednesday that it will restart one of two blast furnaces and the steelmaking facilities at its Granite City Works in Illinois, recalling about 500 employees.

The mill restart comes on the heels of President Donald J. Trump’s announcement that he would seeking tariffs of 25 percent on imported steel and 10 percent on aluminum. Getting the mill running again could take up to four months, the company said.


Steel, Tariffs, Trade War – Beyond Trump

7 Mar 2018

If you are interested in the issue, beyond using it as leverage to bash Trump, here is more info…

The Problem With U.S. Tariffs On Steel And Aluminum That No One Is Talking About – Forbes, 2018/03/05

Critics of the U.S. action have enumerated a number of reasons for concern, including the possibility of tit-for-tat retaliation from impacted trade partners, a further weakening of the WTO, domestic economic distortions in the U.S. as a narrow industry is protected at the expense of downstream producers, and ultimately, higher prices for consumers.

Most of these points have at least some validity, and some are entirely valid. All should be carefully weighed.

But at the same time there is another side to this coin which doesn’t receive as much attention. The simple fact of the matter is that a number of countries are undeniably engaging in unfair and even predatory trade practices in the steel and aluminum sectors which are damaging to their trade partners.

To put the magnitude of the overcapacity issue in perspective: experts maintain that the world needs about 400 million tons of excess steel capacity. Today, we have roughly 730 million tons. About half of that is in China, which has grown to be the world’s largest steel producer.

So Trump may be fighting a larger issue that goes beyond the simple relationship with other countries and the immediate impact that this would have on jobs.

Back in 2016, we put a bunch of duties and levies on Chinese steel because of their strategy to create an advantage for themselves by overproducing and lowering prices. The EU did the same thing last year.

China produces half of the world’s steel, and we now have an oversupply that’s almost double. If no action is taken, then they could likely increase their share of the world’s steel market and wipe out much of the international competition. Because of the levies and duties, we only import around 2% of our steel from China. However, they still import steel to all of the other countries and that has an effect on the global market.

There is going to be pain one way or another. Jobs would be impacted if the Chinese corner the overwhelming majority of the steel market. Jobs will be impacted if we rock the boat with these tariffs. It seems like the tariffs takes the short term pain now approach, instead of the long term pain of the Chinese cornering the market and forcing international steel producers out of business.

I am not an expert on this… I am just researching to understand the issue.


Trump Economic Adviser To Leave Trump Administration

7 Mar 2018

Trump’s top economic adviser, Gary Cohn, is leaving the White House – Business Insider, 2018/03/06

Gary Cohn, the director of the National Economic Council and President Donald Trump’s top economic adviser, is leaving his post at the White House.

The move comes after an up-and-down year in the administration that included public spats with the president and a large legislative success in the form of a tax-code overhaul.

Recently, Cohn was unable to persuade the president to forgo tariffs on steel and aluminum. Cohn attempted to convince Trump that such tariffs would be damaging to the US economy, but Trump went ahead with the new trade barriers over the objections.

Cohn’s relationship with Trump hit a rough patch when it was reported that he had been dismayed at the president’s response to the violence in Charlottesville, Virginia, in August. He criticized the president’s statements about the violence in an interview with the Financial Times.


Explaining the State and Local Tax Changes in the New Tax Bill

2 Jan 2018

This blog explains the importance of the State and Local Tax (SALT) changes that go into effect with the new tax bill. This statement seems to be a key.

The bottom line is that high-tax states no longer will be able to jack up taxes, using federal deductibility to spread some of the burden to low-tax states.

And this from an LA Times exerpt quoted in the blog…

There’s no credible justification for the federal government subsidizing California’s highest-in-the-nation state income tax — or, for that matter, any local levy like the property tax. Why should federal tax money from people in other states be spent on partially rebating Californians for their state and local tax payments? Some of those states don’t even have their own income tax, including Nevada and Washington. Neither do Texas and Florida. …federal subsidies just encourage the high-tax states to rake in more money and spend it.

In other words, some people in high tax states would tolerate high state taxes because it was all being deducted from their federal taxes… but not anymore. Only the first $10,000 of state taxes paid will be deductible. Now these states will need to face their high tax rates, or possibly see a mass migration to lower tax states. Read the blog for further info.

Restricting the Deduction for State and Local Taxes Is a Big [Expletive Deleted] Deal – International Liberty, 2018/01/02