BREAK ‘EM UP Reason #3: The U.S. Bankruptcy Code Was Changed to Favor Derivatives Over Loans

By Emily Eisenlohr | June 12, 2017

A law passed during the height of the bubble in 2005 altered the treatment of derivatives in the U.S. Bankruptcy Code to greatly favor derivatives counterparties over other creditors. The law’s title was, ironically, “The Bankruptcy Abuse Prevention and Consumer Act of 2005”. Bankruptcy law had been designed to rehabilitate debtors while protecting creditors. The…

BREAK ‘EM UP Reason #2: Dodd-Frank’s Resolution Authority is Too Little Too Late

By Emily Eisenlohr | June 12, 2017

After passing Dodd-Frank, Congressional leaders claimed both “no more bailouts” and that Dodd-Frank’s “resolution authority” was a primary tool in solving “too big to fail”. These two claims are polar opposites. The former states there will be no further government bailouts of big banks, and the latter involves strengthening the government’s ability to do just…

BREAK ‘EM UP Reason #1: Dodd-Frank Suffocates Both Commercial and Investment Banking

By Emily Eisenlohr | June 12, 2017

Congress may have removed Glass-Steagall barriers for all engaged in banking, but it sure didn’t create an even playing field. In fact, legislation in 1999 and 2008 suffocated two key financial sectors: investment banking and commercial banking. Comparing two giants from each sector — JPMorgan Chase and Goldman Sachs — shows how. Humans set the…

Are You a Bank Analyst or Do You Know One?

By Emily Eisenlohr | June 6, 2017

Are you a bank analyst, or do you know one? I have created a link, below, to a model I built in 2011 after the passage of Dodd-Frank. Based on regulatory filings of the banks on the Fed’s Top Fifty Bank Holding Companies list, mentioned from time to time in my blog posts. I was…

Dodd-Frank’s “Resolution Authority”: Not Too Little. Just Too Late.

By Emily Eisenlohr | September 22, 2016

TBTF bank CEOs were quick to support the Dodd-Frank “resolution authority”, stating that banks should be allowed to fail. This was a game. Dodd-Frank clarified and strengthened the ability of the government to bail out failing banks. When systemic banks fail, the whole system goes down, as we saw in 2008. If the intent is…

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