Another Fed Official Supports Plan Forcing Banks To Spin Off Derivatives Units;

[laughingliberal]

Obama's Treasury STILL Opposed

The president of the Federal Reserve Bank of St. Louis supports a Senate plan that would force Wall Street megabanks to spin off their derivatives units and raise significantly more capital to cover their bets, becoming the third Fed official outside Washington and New York to support a hotly contested measure that's turning into a Wall Street versus Main Street issue.

James Bullard, the St. Louis Fed chief, joins Dallas Fed President Richard Fisher and Thomas Hoenig, who heads the Kansas City Fed, as the three Fed officials who publicly support the provision, authored by Senate Agriculture Committee Chairman Blanche Lincoln (D-Ark.), according to one of his spokesmen. The Obama administration and the Fed's Washington-based Board of Governors oppose the measure and are working to kill it.

Bullard's support is key to a measure vehemently opposed by Wall Street. The plan would force financial behemoths that run their swaps-dealing operations out of their banks to reorganize those desks into separately-capitalized affiliates, compelling them to collectively raise tens of billions of dollars in capital to back up potential losses.

More: http://www.huffingtonpost.com/2010/06/16/james-bullard-another-fed_n_614150.html


Any good reasons the administration would be opposing this? I'm open to hearing them.

[Skink]

1. When the fed makes money what happens to it.

Or is TARP outside the Fed?