Fed, FDIC, OCC Dodd-Frank Report: Merchant Bankers Beware

Last week there were some sketchy news articles on the multi-agency (Federal Reserve, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency) report required by the Dodd-Frank Act which highlighted possible financial risks, not covered in Dodd-Frank, which necessitate additional attention.

The Fed wants to limit merchant banking, which is where banks buy an equity position rather than lend money, and bank ownership control of  mining, warehousing, and shipping of commodities.  The OCC wants to limit Wall Street's investments in industrial metals, such as aluminum and copper.

All recommendations would require legislation and/or rules.

What was missing from the short news articles was a link to the actual Report which I am providing for your better understanding of what was proposed.

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Financial Weapons of War

While I do extensive daily financial and macro-economic research, occasionally I find something important which is  more than interesting. Tom C. W. Lin has written an important paper on the threats and uses of financial warfare in cyber space.  We can continue to software and access protect systems from hacks and intrusions as well as war game scenarios, but the means of attack will always be constantly evolving.

The recent attacks on the central bank of Bangladesh resulting in the loss of #101 million and similar attempts on other countries are not isolated incidences and such attempts are not just limited to criminals but include countries and organized terrorists/revolutionaries.

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Insurance Companies Profit from the High Cost of U.S. Healthcare

Why are healthcare costs so high in the United States compared to the rest of the modern, technological countries of the world?

The bottom line, historically and currently, is the health insurance companies in the United States are more profitable as healthcare costs increase.  While politicians have personal goals and motives, I find it inexcusable that any economist would consider the ACA market approach more politically preferable to a more cost efficient single payer system.   The public-private market-based approach of the ACA is an ethical minefield.

The fear that making the ACA a single payer system would invite political repeal of the ACA is nothing but an excuse for the failure to communicate, listen, and demonstrate political leadership over several Congressional elections.  The focus on one election cycle only is self-defeating to a government dedicated to the general welfare of its people.

Here are three Blogs which can give you information and views on healthcare in the United States:
True Cost of Healthcare, The Incidental Economist, and Healthcare Economist.



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Worst Misconduct Brokers Are Retail Brokers

In a recent study by the University of Chicago - Booth School of Business, the researchers found not only a pervasiveness of misconduct but developed a rating system to rank the worst misconduct brokers, who are all retail brokers (brokers who sell to the public as investment advisers).  The 30 worst are listed here.

While the U.S. Department of Labor has proposed a limited fiduciary rule, the financial services industry is is desperately trying to further limit the rule, kill the rule, or change it to continue the ability of salesmen to portray themselves as "advisors" implying fiduciary duty while providing "advice" which is conflict of interest based.

I have long maintained that fee only fiduciary advisors need to be regulated separately from the SEC and FINRA (I personally would prefer the Consumer Finance Protection Bureau regulate SEC and State licensed fee only investment advisors to separate them from the continual and purposely wolves in sheep's clothing of those who sell or act with conflicts of interest).

Even less appreciated is my belief that current educational requirements are totally inadequate and that no professional designation provides sufficient educational requirements.  Even the so-called Masters Programs in Financial Planning are merely CFP course material, which lack academic rigor, primarily designed to provide revenue to the universities which offer them.  I have indicated verbally and in letters that fee only fiduciary advisors should have a Masters in Finance.  It would have to be at least a two year program which covered macroeconomics, CFA material, CMT material, current research on investment allocation and portfolio construction, ethics and law, and retirement planning and distribution.  This does not make me professionally popular.

I intend to write more about Fiduciary Duty and the financial services industry's desire to continue some form of public deception (confusion), but I will want to create Goggle Doc containing the research. 

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