Even more exciting up-and-coming financial regulation: Big banks now required to produce emergency plans
posted at 4:41 pm on August 10, 2012 by Erika Johnsen
Blergh. It appears that federal regulators have recently required that the five largest American banks — Bank of America, Goldman Sachs, Citigroup, Morgan Stanley, and JPMorgan Chase — need to come up with “recovery plans” in the event of fiscal calamity, and the plans should be careful not to rely on public-sector help. …Gee, ya’ think? Riddle me this, dear regulators: How did we get in this “too big to fail” situation in which banks might reasonably expect federal assistance in the first place? It couldn’t have been because of — oh, I don’t know — too much government interference in the private sector, could it?
The two-year-old program, which has been largely secret until now, is in addition to the “living wills” the banks crafted to help regulators dismantle them if they actually do fail. It shows how hard regulators are working to ensure that banks have plans for worst-case scenarios and can act rationally in times of distress.
Officials like Lehman Brothers former Chief Executive Dick Fuld have been criticized for having been too hesitant to take bold steps to solve their banks’ problems during the financial crisis.
According to documents obtained by Reuters, the Federal Reserve and the U.S. Office of the Comptroller of the Currency first directed five banks… to come up with these “recovery plans” in May 2010.
They told banks to consider drastic efforts to prevent failure in times of distress, including selling off businesses, finding other funding sources if regular borrowing markets shut them out, and reducing risk. The plans must be feasible to execute within three to six months, and banks were to “make no assumption of extraordinary support from the public sector,” according to the documents. …
Recovery plans differ from living wills, also known as “resolution plans,” which are required under the 2010 Dodd-Frank financial reform law. Living wills aim to end bailouts of too-big-to-fail banks by showing how they would liquidate themselves without imperiling the financial system.
Yes, because we should never expect private, profit-seeking ventures to act rationally, should we? It’s completely the government’s fault if they’ve altered banks’ preferred course from agile and responsive profit-seeking to clunky and entrenched rent-seeking. But hey, I guess we should give the feds a break — even if they have no possible way of foreseeing the long-term effects of their incredibly dumb and growth-hindering regulations, they at least have the best of intentions, right? They’re from the government, and they’re here to help! The White House couldn’t possibly be capable of corruption, cronyism, playing politics, or doing whatever they darn well please, the costs be damned. They’re just looking out for us is all.
…Just kidding, but isn’t it pretty to think so?
The Justice Department said Thursday it won’t prosecute Wall Street firm Goldman Sachs or its employees in a financial fraud probe.
In a written statement, the department said it conducted an exhaustive investigation of allegations brought to light by a Senate panel investigating the 2008-2009 financial crisis.
“The department and investigative agencies ultimately concluded that the burden of proof to bring a criminal case could not be met based on the law and facts as they exist at this time,” the department said. …
The Justice Department’s decision capped a good day for Goldman as the Securities and Exchange Commission decided not to file charges against the firm over a $1.3 billion subprime mortgage portfolio. At the same time, the Justice Department’s decision ensured that the Obama administration will continue to feel political heat, particularly from the liberal wing of the president’s own party, for not having brought more prosecutions in the financial crisis.
Wait a moment… somebody remind me why banks like Goldman thought it would be a good idea to get into the business of making subprime loans again?
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Uncle Sugar will figure out a way to Fast-n-FallingOver the situation to blame America and tax the hellouttait anyway.
Limerick on May 12, 2013 at 6:35 PM
Even a blind pig…
Cleombrotus on May 12, 2013 at 6:37 PM
“I like girls who drink beer.” – Toby Keith
myiq2xu on May 12, 2013 at 6:37 PM
This is what senators are worried about — the excise tax on beer?
Liam on May 12, 2013 at 6:42 PM
These bills have been around for a few years, but the problem is that the explosive growth of this industry will make lessening the tax — at least in Congress’s books — more expensive.
Finding a pay for that both sides can agree on will be difficult.
bomble on May 12, 2013 at 6:46 PM
Its a good move since the blossoming up of home-brew has been great for this nation, but my understanding of the issue is that many big brewers own smaller craft brews, so they will qualify as well. Of course its all good if you think about it.
rob verdi on May 12, 2013 at 6:47 PM
This is great news!
Those White house beer summits will be cheaper…
Electrongod on May 12, 2013 at 6:50 PM
Bi-partisan? BS.
Craft beer appeals to blue-staters and the “smart growth” crowd which is why you see a guy like Schumer, who normally can’t find a tax he doesn’t like, suddenly so hot to reduce taxes on “craft beer”.
A lot of these small breweries, like the ones in my Upstate NY town already receive a ton of tax incentives and property tax breaks to locate in downtown areas. Guess who pays for that? The property taxpayers like me, who pay the full tax on my own property.
Don’t worry, old Chuckie, I’m sure, is quick working on a way to make up for the lost revenue, particularly in NY State where everything that moves is already taxed. And I’m sure I’ll get screwed over, like always.
Dreadnought on May 12, 2013 at 6:50 PM
Sounds like a good time for HA to supplement its offerings by starting up its own trademark HA micro-brew.
WhatSlushfund on May 12, 2013 at 6:51 PM
Oh no. Those we want to tax the living crud out of.
Limerick on May 12, 2013 at 6:52 PM
Bayam should be along any minute to defend Big Beer like Budweiser, while denigrating craft beer.
tom daschle concerned on May 12, 2013 at 6:53 PM
That is absolutely brilliant!
Right now the beer market is almost a full blown duopoly, where Anheuser-Busch InBev and Miller-Coors own 90%+ of the market.
It is only possibly through the states and federal government’s regulation of alcohol distribution. Breweries are almost wholly banned from selling directly to taverns/bars and grocery stores, because the government requires them to sell through a middle-mad (distributor).
AB InBev and Miller-Coors went after the distributors by either buying them out or contracting them, forcing all of the small breweries fight over whatever distribution is left for them. Any change to the three-tiered distribution system is decried and virtually shut down by their lobbyists.
Anyhow, the slashing of the excise tax would be an absolute boon to the small business craft brewers.
ZachV on May 12, 2013 at 6:54 PM
Red Stripe is some horrid beer, but they had some great commercials.
HOORAY BEER!
Steve Eggleston on May 12, 2013 at 6:58 PM
Glad to see an HA conservative finally agree that these perpetual tax cuts for the so called small businesses/ job creators are truly paid for by the working American..
HotAirLib on May 12, 2013 at 6:59 PM
Bread, beer, and circuses.
MelonCollie on May 12, 2013 at 7:04 PM
Rule of thumb: If Schumer is for it, I’m sure to get screwed.
And yes Mr. (or Ms.) Lib. You and I do agree on targeted tax breaks. Crony capitalism at its finest, which every conservative
should be against, whether it involves beer or not.
Dreadnought on May 12, 2013 at 7:07 PM
There was a nice article recently saying that American craft beers were even making headway in Germany. They noted that many of the German brands taste similar due to 500 year old German beer purity laws that force standardized ingredients and brewing processes.
BohicaTwentyTwo on May 12, 2013 at 7:09 PM
Wow. We agree again. Wall Street/I am for everything BIbi is for Schumer is far from any politician I like.
HotAirLib on May 12, 2013 at 7:18 PM
You think so? I’ve always really liked Red Stripe. But, then again, I have plebian beer tastes. My usual go-to is Bud Light.
My theory is that Red Stripe was brewed to work together nicely with ganja.
WhatSlushfund on May 12, 2013 at 7:23 PM
If only this could make up for all of Sen. Collins’ wrongdoings this year. Unfortunately, I can’t afford the volume of Shipyard Summer Ale that it’d require to make me forgive and forget her RINO stance on nearly every important issue recently, of which none are more important than her embrace of the Manchin/Toomey bill. It’s time for her to come home and get a real job. Baxter IPA for ftw!
Birchbark on May 12, 2013 at 7:49 PM
Hate to pop your stereotype, Erika, but craft brewers don’t use the term.
AshleyTKing on May 12, 2013 at 7:50 PM
I’m OK with anything that makes Stone Brewery and Heavy Seas cheaper and easier to get hold of.
Sgt Steve on May 12, 2013 at 7:55 PM
…they want to keep us drunk!
KOOLAID2 on May 12, 2013 at 7:55 PM
This might be the first worthwhile thing Washington has done in…….. ever? Or at least since 1976 with the last beer tax cut. It’s such a good idea that even Schumer can figure it out!
alchemist19 on May 12, 2013 at 8:03 PM
It’s not one’s fault but yours that you don’t like beer that actually tastes good. :-)
alchemist19 on May 12, 2013 at 8:04 PM
Complaints about local property tax incentives, as above, aside, I am glad that any aspect of the Federal beast recognizes that lowering taxes is a logical move for stimulating growth.
And Anheiser and Miller products blow.
M240H on May 12, 2013 at 8:10 PM
Maybe I’m missing something, but why exactly is there an excise tax on beer? Does anyone know the rationale, other than “the government wants more money”?
NorthernCross on May 12, 2013 at 8:19 PM
Why don’t the lawmakers end the 3-tier distribution system instead? That is the real culprit that prevents smaller breweries from getting their beer out there. I live in the midwest and I can’t get Russian River, Dogfish head, and other popular craft breweries because the big distributors don’t want the competition.
Erika, I am disappointed you didn’t focus on the distribution racket and instead this obscure tax cut.
nazo311 on May 12, 2013 at 8:42 PM
States vary a lot too.
AshleyTKing on May 12, 2013 at 8:57 PM
Oh good, my son is brewing beer.
Cindy Munford on May 12, 2013 at 9:02 PM
I think it’s a holdover from the prohibition-era Volstead Act.
gryphon202 on May 12, 2013 at 9:47 PM
Love the photo – Three Floyds is one of the best breweries in the country and their Rye Da Tiger and Alpha Klaus are awesome beers.
bound4er on May 12, 2013 at 10:17 PM
+1
AshleyTKing on May 12, 2013 at 10:21 PM
I have no problem with rolling back Prohibition-era laws against home-brewing and small-scale brewing like Alabama recently did. Nor do I mind streamlining the bureaucracy for small brewers (where I am, all breweries are classified as “light industrial” and thus have a hard time getting decent zoning space outside of office parks). Even giving special tax treatment to start-ups sounds fine to me, which seems to be what this bill is about.
On the other hand, some places have tried to get too involved. One city out here decided to buy a restaurant space in its downtown, purchase a ton of brewery equipment, and then hand it all over to some random brothers who didn’t know what they were doing. Not surprisingly, that brewery attempt spectacularly failed and the city was left on the very large financial hook. It’s strange that they thought they needed to do that since all around them breweries are popping up left and right, but hey, some politician got to trumpet that they “helped small business in the downtown” (for a bit).
Streamline the regulations, especially for the little guys, and let the free market do its wonderful (and delicious in this case) work.
HayekFriendlyCon on May 12, 2013 at 11:15 PM
Hillary’s going to need a keg or two before what is brewing with Benghazi comes to a head.
profitsbeard on May 12, 2013 at 11:31 PM
As my moniker attests, I’ve been brewing at home for some time. Inexpensive and better than 90% of the biers I can buy. Plus…no tax to the Feds!
BierManVA on May 13, 2013 at 6:10 AM
i don’t know of any bipartisan senators.
sesquipedalian on May 13, 2013 at 6:24 AM
…and I live a stone’s throw from the brewery. Happy times! Perfect picture.
tdarrington on May 13, 2013 at 7:09 AM
This is a great step, but what we truly need to see our craft beer market “really” flourish is for the government to get out of the distribution mandating business. The government’s forced distribution (3-tier system) plan enables companies like (the owners of) Miller, Busch, Coors, Bud, etc… to have a stranglehold on the competition. It’s government forced monopoly.
The system was established to help the little guy but actually has done the opposite over the last 10-20 years… and while beer drinking in America has never been better… it could actually be better! Just get the government out.
therambler on May 13, 2013 at 7:48 AM
Hmmmm. Is it time to follow the senator’s investments?
Don L on May 13, 2013 at 8:00 AM
“Yeah, what’s wrong with the beer we got?!”
-Alvin Holmes, Alabama State Representative
Nick_Angel on May 13, 2013 at 9:58 AM
I would love to see a streamlined process for lowering all of myriad of tax laws into something coherant and understandable. If this act is including all breweres regardless of size then it isn’t crony capitalism per se – but I would like to see a real effort to study the tax code – see how much streamlining would really cost – look to cut spending along with it,utilize some real non-static costing and come up with something that helps more than just brewers.
Zomcon JEM on May 13, 2013 at 10:42 AM
While I am for the lowering and elimination of many taxes, don’t we have bigger issues to deal with than this?
Klem Kadiddlehopper on May 13, 2013 at 11:11 AM