New financial reform bill targeted by corporate banking representatives

 

[caption id="attachment_11048" align="alignleft" width="300" caption="Chase Bank"][/caption]

Editor- A new financial reform bill passed the Senate that corporations are already beginning to attack through their consultants.

The reform bill was the Congressional response to deregulation that was found to have been part of the underlying cause for the collapse of financial markets at the time the recession began.

What an organization called Treasury Strategies believes is that the reform bill  "threatens to fundamentally change the economics of the commercial banking business and unravel a complex, interconnected system developed over 80 years since the Great Depression." 

Now what does this organization consider will happen and why.  Here is their explanation.

“A repeal of Regulation Q would allow for interest payments on business checking accounts. Now banks must re-evaluate their business models and pricing structures,” said Chrystal Pozin, a Principal with Treasury Strategies.There are many far-reaching measures in the bill, such as the repeal of Regulation Q, which have received little media attention despite their potential to radically alter commercial banking operations and relationships.

Commercial bank divisions must act now to address the threats and opportunities created by the bill’s far-reaching measures, which include this repeal and the extension of unlimited FDIC insurance.

“Meanwhile, corporations must re-evaluate their approaches to counter-party risk management and short-term investment policies,” added Pozin.

Given that commercial deposits could now earn interest, corporations must re-evaluate the value of investing in alternative instruments. With bank deposits already at an all-time high of $1.3 trillion, it’s likely that even more cash will be directed to banks, according to the continuing discussion set forth by this organization.  They are also concerned about what they consider will be an enormous and complicated regulatory  bureaucracy with more and more complicated rules.

“In a highly interconnected, global financial system, regulatory changes made in the U.S. cannot be considered in a vacuum,” said Anthony J. Carfang, Partner and Director of Treasury Strategies. “Provisions in this bill will directly interfere with the several trillion dollars of funds flowing through the global financial system each day.”

Carfang continued, “This regulatory upheaval comes at a time when the financial industry is already operating in a distressed economic environment. This bill only compounds the uncertainty created by the sovereign debt crisis, European bank stress tests and Basel capital requirements. The consequences – both intended and unintended – will take years to be fully understood.”

Treasury Strategies, Inc. refers to itself as "the leading Treasury consulting firm working with corporations and financial services providers," banks and corporations deregulated and now re-regulated following inquiry into causation of the original US financial meltdown.