Relief on Wall Street, as Reform Takes Shape

As Reform Takes Shape, Some Relief on Wall St.

By ERIC DASH and NELSON D. SCHWARTZ

The financial reform legislation making its way through Congress has Wall Street executives privately relieved that the bill does not do more to fundamentally change how the industry does business.
Despite the outcry from lobbyists and warnings from conservative Republicans that the legislation will choke economic growth, bankers and many analysts think that the bill approved by the Senate last week will reduce Wall Street’s profits but leave its size and power largely intact. Industry officials are also hopeful that several of the most punitive provisions can be softened before it is signed into law.
Though there is anger in some quarters, other financial executives seem resigned to the changes, acknowledging that after the industry’s excesses set the stage for the deepest recession since the 1930s, there were bound to be major reforms.

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But Wall Street’s initial verdict seems to be that it could have been much more draconian.
“If you talk to anyone privately, there’s a sigh of relief,” said one veteran investment banker who insisted on anonymity because of the delicacy of the issue. “It’ll crimp the profit pool initially by 15 or 20 percent and increase oversight and compliance costs, but there’s no breakup of any institution or onerous new taxes.”
The reaction of the market to the legislation echoed that view. Stocks of financial institutions performed well on Friday, with shares of JPMorgan Chase and Morgan Stanley each up 5 percent.

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“The health care bill is going to transform the structure of health care exponentially more than this legislation on financial regulation is going to change Wall Street,” said Roger C. Altman, the chairman of Evercore Partners and deputy Treasury secretary in the Clinton administration. “It’s not even close.”

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A Senate proposal calls for Wall Street firms to wall off their derivatives businesses and place them in subsidiaries requiring substantially more capital. That would be a major blow — but this provision faces opposition from the both the financial industry and federal banking regulators, and is likely to be shelved or watered down before final passage.


http://www.nytimes.com/2010/05/24/business/24reform.html?ref=todayspaper&pagewanted=all

Same as it ever was.

:shrug:

big bag of BS to placate the progressive netroots.

Yep, pretty much another dog and pony show to keep the people distracted while corporate governance of this country continues apace.