In The New World
It’s Friday desk clearing time for this blogger. “Brooklyn, New York, home prices dropped 8.7 percent in the fourth quarter from a year earlier, the ninth straight decline, as unemployment and stricter lending standards sank property values. At 230 Ashland Place, a 30-story bank-owned condominium tower in Brooklyn’s Fort Greene neighborhood, the Corcoran Group has sold or received offers on 65 of 70 units it put on the market, said Frank Percesepe, senior regional VP in Brooklyn. Sales rose after asking prices fell to about $500 a square foot from the original $900, he said. ‘Condo prices I see coming down some more,’ he said.”
“A Virginia developer is moving ahead with a new townhouse community on an industrial swath of Baltimore’s Greektown neighborhood but scaling back more ambitious plans to build condos and apartments. To move forward, Kettler, a land and multifamily housing developer based in McLean, Va., needs city approval to modify the $200 million venture, which would have been one of the biggest residential developments in the city with more than 1,000 upscale condos, apartments and townhouses on 15 acres. Plans call for homes that are affordable for first-time buyers, possibly starting in the low- to mid-$200,000 range, said Luke Radlinski, director of land sales for Kettler.”
“‘We have the ability to get started on this block,’ said Charlie Kieler, a senior VP at Kettler.”
“The number of Peninsula-area properties facing foreclosure mushroomed from 86 in 2006 to 2,735 in 2009, according to RealtyTrac. Nearly a quarter of resale homes sold in December in Hampton Roads were distressed sales, bank-owned or short-sale listings. That’s the highest monthly percentage of distressed sales since the housing decline started. And there are more foreclosures on the way, with a wave of five-year adjustable-rate mortgages coming due, said Tom Sullivan, president of the Virginia Peninsula Association of Realtors.”
“At first, those seeking help were in trouble because of subprime loans. Now, the economy is taking center stage as the culprit, said uanne Gallagher, program director for Catholic Charities’ financial and housing counseling department. ‘We’re seeing people who are in very good loans and at their previous employment had no problem, but now hours have been cut back or they lost jobs,’ Gallagher said.”
“Edenmoor residents have dubbed the unique landmark the ‘Grand Canyon.’ Large crevasses have developed, some opening into cave-like pockets that drop more than 10 feet. And just like sites used by prehistoric man, drawings adorn the walls of the caves, except these were done by local teenagers.”
“The 800-acre development was originally to have included 2,000 homes. But the property has been sitting unfinished and mostly unused ever since three liens totaling $2.2 million were filed. Edenmoor residents Ernie Holmes and Wanda Rosa say their neighborhood is out of control. Rosa said she was caught off guard after closing on her house and learning she would be charged a yearly tax of $800 to pay for bonds on the property.”
“Rosa, who moved from Massachusetts a few years ago, said Edenmoor was supposed to be a cheaper place to live. ‘We had not been told about the $800 before we moved in,’ Rosa said. ‘We thought the taxes would be better here.’”
“Economist Hank Fishkind predicts 2010 will be ‘an ugly year for foreclosures’ in the Sarasota-Bradenton area and across Florida, putting further pressure on home prices, and that new housing starts will be ‘miserable.’ Some hard-hit areas of Florida may not be able to return to anything approaching normal activity anytime soon, he said. ‘There may be parts of Cape Coral and Lehigh Acres that won’t recover,’ Fishkind said. ‘It could be that 10 years from now, they are still having problems.’”
“‘In order to see a real recovery, we need to see that consumption, and to spur that we need employment,’ Fishkind said.”
“Orlando had more vacant houses, condos and apartments than any other major U.S. city during the third quarter, driving down rents and sparking landlord concessions just five years after finding an apartment was virtually impossible. ‘The reason why our vacancy rate is so high is because we had 400,000 units — and then just 350,000 a few years ago, when units started converting to condo,’ said Mark Smith, senior investment advisor at Smith Equities. ‘Now they’re going back on the market as rentals.’”
“Even taking into account Orlando’s foreclosed homes, empty condos and rental town homes, said Ed Malone, the Camden Trust’s regional vice president, it’s tough to believe Orlando has nation’s highest vacancy rate. ‘I still find it hard to believe that it’s worse than Vegas,’ he said.”
“David Crowe, the National Association of Home Builders’s chief economist, said he’s wasn’t optimistic for the Las Vegas housing market for 2010 because of a high number of foreclosures that continues to add to its inventory. He said Las Vegas doesn’t have enough demand to absorb the homes on the market through 2010 and most of 2011.”
“SalesTraq President Larry MurphyMurphy said that he’s concerned his foreclosure projection could be wrong, if people who can afford to pay their mortgages start walking away from their homes in larger numbers. Those who bought homes in the last two to five years have lost 50 percent on the value of their homes, and two of three Las Vegas residents owe more on their mortgages than their homes are worth, Murphy said.”
“Someone who bought a home for $300,000 has seen its valued drop to $150,000, and if prices appreciated at 5 percent a year, it would take 20 years to recoup that, he said. ‘Strategic defaults are a very real possibility,’ Murphy said. ‘People may lose hope and make a business decision and take a walk. Studies have shown this can go viral. If this were to happen, we could have a tsunami next year.’”
“Builders from around the country meeting in Las Vegas this week can expect to see the latest thing in home appliances, construction materials and homebuilding equipment. What they won’t see are the record crowds that the International Builders’ Show drew a few years ago. After peaking in 2006 with more than 105,000 in attendance, the big builders’ expo is expected to lure fewer than 60,000 visitors this year.”
“‘Yes, the numbers are down significantly,’ said Bob Morris, executive VP of the Home Builders Association of Greater Dallas.”
“‘Improvement will still be spotty – some local areas will see some new homes being built, others won’t,’ said James Gaines, an economist at the Real Estate Center at Texas A&M University. ‘Construction loans are still very difficult. I’m told some builders have trouble with construction loans even on new homes with strong contracts from buyers.’”
“Even though economists declared the recession over months ago, Oregonians had to take whatever work they could get in December. The construction industry that exploded during the real estate boom of 2004-2007 came crashing down. Contractors have shed 30,000 workers since the 2007 peak. Their payroll is now 11 percent below the 1999 levels.”
“Bart Eberwein, a VP at Hoffman Construction, said the prospects for new work are ‘very bleak through the end of 2012. … There’s no light at the end of the tunnel. None. Zero.’”
“You can almost hear the roar of the crowd at Target Field. Opening day at the new baseball stadium is set for April 12. But in the area surrounding the new ballpark, things are pretty quiet. Minneapolis-based Schafer Richardson previously developed three adjacent condo buildings in the area during the condo boom. The developer is still trying to sell the remaining units in the last building at 730 Fourth St. N. — which was completed in fall of 2007. David Frank, director of development with Schafer Richardson, said that the developer has sold 82 units, has rent-to-own deals for 12 others, and has 17 units still on the market.”
“Schafer Richardson has a proposal for 188 market-rate apartment units at a project called Third North. But so far, the developer has not secured financing and it’s unclear when the project would move forward. Maureen Michalski, a project manager with Schafer Richardson, said that they would like to start construction of Third North in the fall.”
“‘I think it’s a little too early to say how likely that is,’ Michalski said.”
“About 35 people attended a second public meeting to discuss the Westgate Land Use Plan Thursday night at the University of Illinois Extension office. At the end of the formal presentation, mixed use seemed to be the favorite scenario. Brad Key, who has owned a car stereo and supplies business, said he doesn’t want to see the area annexed into the city and he’s not in favor of any land-use scenario. ‘Danville is full of empty office buildings right now…,’ Key said.”
“Tough economic times call for thinking outside the box. And College of DuPage is ready to help people cope with the challenges of the most serious recession since the early 1980s. David Gay, director of the College of DuPage Small Business Development Center, spoke to the Naperville Area Homeowners Confederation at its monthly meeting.”
“One woman from Spring Hill spoke of gang-bangers living in Section 8 housing and ‘having to call the police constantly.’ Another, from the West Highlands, noted that an owner-occupied house there rented rooms to as many as eight people and she was often afraid to let her small children play outside. Still others noted that the some properties, including some brand-new ‘McMansions’ that didn’t sell in the down economy, were often in a state of extreme disrepair.”
“Roughly 100 buyers who have made down payments on units at downtown Denver’s new Spire condo tower are expected to close on those purchases in February. The Nichols Partnership Inc. of Denver, developer of the $175 million condo high-rise, is also in the process of renegotiating a $118 million construction loan for the project with the loan’s new owner.”
“‘There are a lot of things involved in our discussion with Starwood,’ said Spire developer Randy Nichols. ‘The main thing is we need to extend the loan. In the new world, it’s going to take longer to sell our units and operating costs [will be higher].’”
“For the newest marketing phase now under way, for more expensive units on floors 20-25, the developer is offering $40,000 to $80,000 off purchase price. Nichols discounts rumors that Starwood is pressuring him to convert Spire’s for-sale condos to for-rent apartments. ‘That’s not happening. … It doesn’t make sense,’ Nichols said.”
“Plans are moving forward to build 54 houses in March in the Sonora Wells housing community. Commissioner Greg Gustafson said he voted for the new design plans because of the concerns of residents who were living near empty lots and because the developer made the effort to talk to residents.”
“Sonora Wells residents Misti Fallis and her husband John were against D.R. Horton’s plans. The couple moved into the community in August 2006 expecting that the ‘homes throughout would look the same.’ ‘We felt that they were trying to save a buck and build some cheaper homes,’ she said.”
“Sonora Wells resident Adam Johnson supported D.R. Horton’s plan because it would mean construction on the empty lots near his home. ‘I don’t want to see empty lots for the next five years,’ he said. ‘There is graffiti, and they are unsightly. They are fenced off with construction gates with weeds growing, and I have to look at them every day.’”
“A proposal for a pedestrian-oriented town center in the Pacific Highlands Ranch community east of Carmel Valley has drawn fire from residents who say the plan has strayed from the original, voter-approved vision for the master-planned development. Pardee Homes, which owns most of the 27-acre site where the town center is planned, wants to build a mixed-use project including 294 residential units.”
“Dean Dubey, a Pacific Highlands Ranch resident and member of the planning board, appealed the Planning Commission’s approval of the project. Dubey said he and other residents bought their homes with the expectation that the town center would be built, and they are excited to see it happen. But he and others don’t believe the proposed plan matches the original vision for the town center.”
“‘They have lost really the main goal of making this a walkable village,’ said Dubey.”
“What remains of Valley Investments might not be worth even the $5 million that was estimated late last year, the receiver for the company told investors. After looking ‘with a hard, cold eye’ at the assets of Valley Investments, especially at some of the aging and decaying mobile homes in the parks it operated, attorney Kirk Rider said he is starting to question his original estimate. Valley Investments asked investors to invest $20,000 to $40,000 in low-income housing projects in Colorado, Idaho and Utah. Valley Investments collapsed last year. More than 400 investors lost about $31 million.”
“Rider said he is negotiating with the Lochmillers and family members to settle the receivership claims against their personal property, such as homes they own. He was unable to offer a date when he will be able to send out checks to investors, Rider told one investor during the call.’
“‘I just don’t have a timeline for you. I’m sorry,’ he said.”
“President Barack Obama’s proposal to regulate banks should include a requirement that CEO’s and their spouses forfeit their assets when companies fail, billionaire Warren Buffett said on Fox Business Network. ‘There ought to be a huge downside,’ said Buffett. ‘Make it so that the CEO of an institution that fails, or goes to the government and needs help, really gets destroyed himself financially.’”
“‘While the financial system is far stronger today than it was one year ago, it’s still operating under the same rules that led to its near collapse,’ Obama said at the White House today after meeting with former Federal Reserve Chairman Paul Volcker, who has been an advocate of taking such steps. ‘Never again will the American taxpayer be held hostage by a bank that is too big to fail.’”
“Buffett has repeatedly criticized bankers for failing to realize that housing prices could fall and said they exacerbated their mistakes by borrowing to increase the size of their failed bets.”
“‘I think you have to change the incentives,’ Buffett said on the cable news channel. ‘It’s nice to have carrots but you need sticks. The idea that some guy is worth $500 million and leaves and only has $50 million, that’s not much of a stick. There ought to be a huge downside.’”
“Economist Hank Fishkind predicts 2010 will be ‘an ugly year for foreclosures’ in the Sarasota-Bradenton area and across Florida, putting further pressure on home prices, and that new housing starts will be ‘miserable.’
How about:
“Sensible economists predict 2010 will be ‘a great year for buying foreclosures’ in the Sarasota-Bradenton area and across Florida, putting further pressure to make home prices affordable, and that new housing starts will be minimal, in proportion to demand.’
There, fixed
Fishkind said. ‘It could be that 10 years from now, they are still having problems.’”
“‘In order to see a real recovery, we need to see that consumption, and to spur that we need employment,’ Fishkind said.”
This Fishkill duded is really funny. He never saw any problems coming and when he did, they wouldn’t be a major. Now he is saying problems to come for 10 years.
I should be so lucky to have a job where you can be wrong 99.99% of the time and still get paid and quoted, as some sort of ‘expert’.
“I should be so lucky to have a job where you can be wrong 99.99% of the time and still get paid and quoted, as some sort of ‘expert’.”
Lol.
Being wrong 99.99% of the time is practically a requirement to be quoted as an “expert”. If your predictions came true 99.99% of the time, you’d be labeled “outspoken”, “controversial”, and a “gadfly”.
The truth will set you free Hank Fishkind!
Fishkill should team up with Snaith. You can’t make these things up.
I still say “Snaith” sounds like the name of a Harry Potter villain. Oslow Snaith, dark wizard, or something like that.
He said Las Vegas doesn’t have enough demand to absorb the homes on the market through 2010 and most of 2011.
Las Vegas isn’t the only market that has this problem. They all do. Demand was overshot by large margins.
And to top it off, we still have the same percentage of speculators in the market as during the height of the bubble.
Certainly “they all” is probably hyperbole. OTOH, with all the hidden inventory problems, I suspect that LV will STILL have an oversupply of housing in 2012.
Vegas is still an economic disaster zone. I’d be surprised if we see any recovery here before 2020. Oops, Lake Mead will be dry by then. I’ll be surprised if we have any recovery here EVER.
What about Phoenix etc.?
In an new Brooklyn condo “Sales rose after asking prices fell to about $500 a square foot from the original $900, he said.”
OK, that’s near me, so let’s think about it. It’s a decade from now, the kids are settled, and I want to downsize.
The $500 psf is still $400,000 for an 800-square-foot apartment. Not only that, but the City of New York taxes multi-family properties more heavily than 1-3 family properties, so the operating costs would be higher.
Now $400,000 is less than the $999,0000 a small rowhouse near identical to mind sold for recently. But as far as I’m concerned, that has to go way down. Take one-third off the price of each, and I might be interested someday.
I was in that area, near the Brooklyn Academy of music, last weekend. There was a brand new tower with two apartments with lights on. Do I hear $300 psf?
And do I hear big $ assessments on the shareholders, to pay for the common fees that some developer or investor stops paying?
And fear of co-ops going bankrupt for the same reason?
And regarding the $999,000 row house that sold near your recently…if that is the recorded sale price, you will notice is conveniently slightly under the amount that would be subject to the NY”mansion tax” on real estate transfers.
FB might have paid even more “under the table”…
There have been many sales of near identical houses at that price.
Yes, “mansion tax” is 1% of entire purchase price once the sale exceeds $1,000,000, so a transfer price of slightly under a million sometimes means side payments, (at least it did in the bubble years…)
Side payments?
You mean like, “I’ll sell you the house for $999K but you then have to buy my dog for $300K”?
Yes… with a nod and a wink - for “fixtures” or furnishings or something, so the official price for real estate transfer tax purposes is under the mansion tax limit. Buyer avoids mansion taxes, seller reports lower cap gains…
Also… doubt if side payments would be six digits, but if the sale price is reasonably close and buyer has some cash, is (or at least was) not uncommon.
You need to wait until all that is over.
I think one of the opportunties will be a large group of people buying a building together — they can pay less per unit and not have to worry about that very problem.
There are a number of groups of organized would-be homeowners who have banded together to buy and renovate existing apartment buildings to live in, or who have formed their own development companies to produce multi-family housing (condos or multiple freestanding houses) for themselves. It seems to be a growing trend. Google “cohousing” for more info. There is a cohousing group in Brooklyn (several families) that is looking to buy a multi-family building and may benefit from the downturn. (I believe their official name is “Brooklyn Cohousing”.) It is a concept that impresses me.
You are trying to be to analytical about all this.
Bernanke, with former friend Henry Paulson, Current tax-cheat and Wallstreet crook, Tim Geithner are going to fix all this for us.
The $500 you are looking at will be worth $50 over the next 10 years, so it would probably best to just go ahead and indebt yourself.
Although, Mr. Never-had-a-real-job president Obama is now trotting out Paul Volker as the leading spokesman for “fixing” the bankster/broker/for-our-own-book-that-you-can’t-see Wallsteet Ponzi finance scheme. Oh-babma may at least be intelligent enough to see his team of “specialists” has robbed us all for their benefit, and his rating in the polls is falling.
Perhaps the $500 may be worth $150? who knows, but it’s a sure thing our savings will be shrinking and governments will be trying to siphon off as much as they can.
And the best part is that salaries will not keep up with hyperinflation, so we’ll all be poor! Yeah!
Relative is in an adult trades class (HVAC); only 3 out of 12 are presently employed full time, rest are unemployed.
I’ve already told you stories from my 2005-2006 stint in the local community college’s construction trades program. I noticed that the place was quite busy during the summer and fall of 2005.
The classrooms really started having an echo back in the beginning of 2006. I finished my coursework in August 2006, and things still weren’t back to ‘05 levels.
That’s the untold story. Where are all the construction workers and direct feeder industry workers going to go? My guess is most are getting by with unemployment insurance and spotty contract work here and there for now. Longer term though they need to migrate to other trades/industries. Those other industries will cut once lucrative construction pay in half and hence we have a significant portion of what once where robust consumers no longer robustly consuming over the long term. Consider that scenario along with the Detroit workforce issues and handwriting is on the wall for a long cold freeze and a different US economy long term. Maybe it really is “different this time” when we compare this to past recessions?
Bad choice. Lot’s of A/C contractors are out of work. The one’s that are working are doing so because they have cut their expenses to the bone. Won’t be any easy jobs for a while, except to replace the stolen units that were sold for scrap from vacant houses and apartments.
To move forward, Kettler, a land and multifamily housing developer based in McLean, Va., needs city approval to modify the $200 million venture, which would have been one of the biggest residential developments in the city with more than 1,000 upscale condos, apartments and townhouses on 15 acres.
Aw, man. Is that where Kettler Capital’s Iceplex gets its name from? I play in the house league there. I was happier not knowing that.
He’s scaling back from 1000 condos in that accursed “mixed-use” configuration, down to 125 townhomes in the low $200’s. That’s the direction we should be seeing, depending on the ‘hood. Is the low $200’s a good price for that?
Baltimore is way outside my area of expertise, unfortunately. $200k seems reasonable to me based on my limited knowledge of the city though, depending on the neighborhood.
No it’s not reasonable.
Pre-bubble — i.e. not too long ago — brick row homes in decent working class neighborhoods could be had for $75K.
I’m sure salaries in B’morgue and the surrounding area have just rocketed up over the past 10 years to justify a more than 100% increase in housing prices. Oh, wait- they haven’t…. No Bubble here - move along!
Sonora Wells resident Adam Johnson supported D.R. Horton’s plan because it would mean construction on the empty lots near his home. ‘I don’t want to see empty lots for the next five years,’ he said. ‘There is graffiti, and they are unsightly. They are fenced off with construction gates with weeds growing, and I have to look at them every day.
I certainly agree with this guy, I wouldn’t want to live by empty lots for years!
“I certainly agree with this guy, I wouldn’t want to live by empty lots for years!”
I must be in the minority, then. I’d rather have empty land around me than people any day.
Wouldn’t want the graffiti, though. That means there are undesirables mulling about on that land.
Make it so that the CEO of an institution that fails, or goes to the government and needs help, really gets destroyed himself financially.
Yes!! You read it here first, but I’m delighted to see the MSM picking up this theme. You have to punish individuals, not corporations, if you want to see a change in behavior.
Taking this idea to its conclusion, other top execs, as well as, yes, shareholders, should be jointly and severally liable for the bank’s debts. The whole concept of corporate law– distorting normal risk calculations by limiting officer and shareholder responsibility for failure– is at fault and should be discarded.
I have a feeling that corporations would use any such law as an excuse for even more absurd compensation practices. Not that I think it has any chance of becoming a reality anyways.
That’s why we should also enact Barney Frank’s idea of requiring shareholder approval for executive comp decisions (yes, I agree with him on this and not much else!)
Or, again, abolish corp’s entirely and we wouldn’t have these problems.
Why limit this to corporate people?
If anyone fails, they should be financially destroyed. No more welfare. No public assistance of any kind. No more bankruptcy protection.
Fail and you are left with nothing.
It’s only fair.. can’t treat people differently. Equal protection under the law..
If anyone fails, they should be financially destroyed.
Yes!!!! But not everyone right?
The ones who get sick and uninsured yes but not the banks.
Cuz we need them, they told me…
Obama started his speach bashing the banks. The DOW was only down 38. When he finished it was down over 200. Barry, please let me know when you are going to go on another rant about bonus or compensation issues so that I can buy a bunch of in the money puts.
I’ll answer with this the obvious: because corporation CEO’s have no personal risk, whereas the average persona DOES!
geezuz these all these pro-capitalist old-man-potter posters get to be so tiresome. they love to spout the dog-eat-dog theory . .. until they become eaten.
then it’s always some lame azzed excuse.
like how the politicos urge the masses to take public transport, yet they themselves are too important for such things.
everyone from the dogcatcher to the mayor is just too dangummed important to not have a personal car.
hillaryarious
CEOs have no personal risk? What does that mean?
A CEO suffers the same risks as anyone else. They need car insurance.. health insurance.. homeowners etc. They can be sued..
It’s the “corporation” that has limited liability, not the people who work there.
Most importantly, the people who own the company (stock holders) have a liability that’s strictly limited to their “investment”… which is the real reason corporations have limited liability.
——-
See.. If stock holders were held personally liable for whatever the company did, you’d never buy a share of stock. Nor would I. Nobody would. If people never buy stock, the company couldn’t accumulate enough money to get off the ground.
Some things require lots of money.. like auto manufacture. Without investors buying into the company, nobody could build a car manufacturing facility.. it’s just too expensive.
———
So, no cars.. no electrical distribution.. No cell phones.. no computers.. no washing machines. No nothing unless it’s government funded, cause only govt has those big bucks.
Wanna live in a country where the govt pays for everything?
There’s still a few around.. go for it.
Not so fast… Corps typically indemnify the CEO and top executives against any and every contingency that could remotely be related to the business. It’s always written into their employment contracts.
VegasBob, if the owners of a corporation choose to offer something .. anything.. in their employment contracts, so what? The stockholders can do as they please. It’s their money. They can offer to cart the CEO around in a solid gold limo for all I care.
What’s that got to do with the common, generic CEO’s situation, as defined by corporate law?
Very well Joey. What say the gov strips CEO and wifey of everything except maybe $100K cash and the 401K. Surely our intrepid CEO is a good enough money manager to live on that with little trouble, and yet still satisfy your criteria for the welfare system.
Straw men are bad enough, but do you have to over exaggerate them into an all-or-nothing monster too?
Joey,
Just say, “the poor wealthy elite”.
Question for you. Why champion the wealthy elite when we all know you aren’t wealthy nor will you ever be?
Do you only allow yourself to champion that which you yourself are able to achieve, and feel the rest of us should act and think likewise?
Since you’ll never throw a pass in a Superbowl, I suppose you abhor the elitist spectacle.
All or nothing monster?
oxide, I don’t know where you come from, where your government master is allowed to “strip” people, but we in the United States have already PICKED, and we picked ALL.
We can earn, enjoy and keep ALL that we are able to accumulate within the limits of the law.
We can pass that wealth to our kids or, if one prefers as Buffett does, you might donate it to your favorite charity.
It’s “ours” to do with as we please. See?
The concept is certainly foreign to some but Americans actually have the right to own property! Amazing but true..
Read our Constitution for further insights into how this country works.. you’ll probably find it enlightening.
I think this should be applied to politicians and civil service bureaucrats. When a program they come up with goes over budget, their assets should be seized and their benefits terminated. When the results they claim for a given program do not materialize, their furniture should be carted out. This should promote honesty and caution, something that has greatly been lacking in politics since the beginning of time.
http://finance.yahoo.com/news/Bernanke-vote-shakier-as-more-rb-2776838566.html?x=0&sec=topStories&pos=main&asset=&ccode=
Bernanke second term suddenly in doubt
On Friday January 22, 2010, 4:48 pm
By Thomas Ferraro and Pedro da Costa
WASHINGTON (Reuters) - Ben Bernanke’s nomination for a second term as U.S. Federal Reserve chairman, once seen as a sure thing, appeared in jeopardy on Friday after two more Senate Democrats said they would vote against it.
“I believe there will be the votes to confirm him. But it’s going to be very close,” a senior Democratic leadership aide said.
With the U.S. job market in disarray and voters angry at Wall Street, members of Congress facing mid-term elections in November have come down hard on the central bank and its leadership.
They say the Fed failed to prevent the worst financial crisis since the Great Depression, and combated the meltdown in a way that favored the financial sector at the expense of ordinary citizens.
Senators Barbara Boxer and Russ Feingold brought the total of known ‘no’ votes among the Democratic majority to four, while many others have said they were still on the fence.
“Our next Federal Reserve chairman must represent a clean break from the failed policies of the past,” Boxer said. “It is time for Main Street to have a champion at the Fed.”
================
Did Bernanke just deny recently that the housing bubble was cause by
the Fed ?
Fun to see “man of the year” gets kicked out ….
Ah, of course, that’s what’s wrong with the Fed: Ben Bernanke. The institution itself, you see, is perfectly fine. Sure, its mandates may be currency and employment stability, and the currency may be down 97% since the Fed’s inception while the heavily-massaged unemployment statistic reads 10%, but that’s mostly due to Bernanke, you see. It has nothing at all to do with the Fed’s institutional incentive to overissue fiat currency for short-term political purposes.
And my goodness, the bill to audit the Fed just might compromise its venerable “independence”, don’t you know. So the Man of the Year must be thrown under the bus to mollify the electorate, lest the balance sheets of this keystone of American prosperity be exposed to the light of day.
Just remember that, whatever stuffed shirt they find to replace Helicopter Ben, he gets at least 100 days of mad monetary expansion before you’re allowed to criticize him.
Boxer is just trying to save her own skin, with voters.
You’ll see a lot more fingers in the air…”which way is the wind (’s of change) blowing, and vote accordingly.
Same on health care issue. We’ll see how good party unity is now.
“Someone who bought a home for $300,000 has seen its valued drop to $150,000, and if prices appreciated at 5 percent a year, it would take 20 years to recoup that, he said.
Umm…no—- I’m not sure what Salestraq is, but should you have to understand compound interest to become it’s president?
Realtors really do have trouble with that pesky math thing huh?
For those keeping score at home, a $150,000 house that appreciates at 5% per year for 20 years ends up at $397,994.
“SalesTraq President Larry Murphy said that he’s concerned his foreclosure projection could be wrong.”
Projecting foreclosures without the benefit of algebra can be a tricky business.
Amazing! This math error has been posted all day and no one here is smart enough to realize it!
Five percent growth per year yields 2.653 times the original dollar amount after 20 years. So that $150K house would be valued at (drum roll please) $397,995
Oops, my bad. Or actually my bad eyeglasses. I thought the first amount said $297,994. Sorry.
Time for trifocals. Or maybe “reading glasses” intended for computer screen distances.
Good thing salaries will go up for everyone across the board at 5% a year for 20 years to keep that house “affordable!”
Right? Right? Nope!
‘We had not been told about the $800 before we moved in,’ Rosa said. ‘We thought the taxes would be better here.’”
Well, curse those people who were supposed to call Rosa up and tell her about the taxes in the place she bought her house. What a deriliction of duty on behalf of that person. Why, he/she has practically ruined Rosa! As if the homebuyer herself should be expected to research something as arcane as the local property tax regime.
The best part about 2008-present, for me, is the ruthlessly Darwinian effect on the overleveraged booboisie.
Furthermore, you’ve got to love someone who casually plonks down $300,000 or so on a crapshack, only to be reduced to penury by an $800 annual levy.
Booboisie ! Hehehe.
That development planned for 2,000 houses….and they are “asking what could be done for the more than 60 residents who feel stuck in the neighborhood”?
Presuming two person households, that’s only 30 houses actually build - out of 2,000 lots? The article was poorly written if that’s the case. The lede paragraph should have included the fact that after only building 30 houses on 2,000 lots the developer skedaddled.
“Tough economic times call for thinking outside the box. And College of DuPage is ready to help people cope with the challenges of the most serious recession since the early 1980s. David Gay, director of the College of DuPage Small Business Development Center, spoke to the Naperville Area Homeowners Confederation at its monthly meeting.”
These people need to order their special Fed-issued 3D bubble-view goggles, in order to get a better view of those otherwise invisible green shoots that are sprouting up all around them.
Yes, but unfortunately for them those green shoots are REIT shorts.
Or perhaps Bernanke suffers red/green color blindness? That would actually explain a lot…
“As if the homebuyer herself should be expected to research something as arcane as the local property tax regime.”
It still amazes me how many people retire and relocate without researching the cost-of-living difference first. There’s no excuse, really, since most of that information can be found online.
Oh, sorry, I meant that generally - didn’t relate to that woman Rosa in particular.
Heck if the retiree doesn’t have a pc, or even ever go online, ever- and I know some, then there are magazines up the wazoo and aarp that have periodicals with facts on where to live and the details of why..as in tax rates etc. So, no excuses. Agreed Molly.
“Even though economists declared the recession over months ago, Oregonians had to take whatever work they could get in December. The construction industry that exploded during the real estate boom of 2004-2007 came crashing down. Contractors have shed 30,000 workers since the 2007 peak. Their payroll is now 11 percent below the 1999 levels.”
They were way late on their recession call, and way early on their recovery call.
In fact, with a plummeting stock market and new evidence on home price declines, the evidence on the recovery seems very hard to spot at the moment
I’m glad we’re continuing to rent.
Butch Bucholz’s Tennis Tip # 5: Change strategies when losing.
UPDATE 1-Bank plan highlights Volcker’s new clout
Fri Jan 22, 2010 6:13pm EST
Related News
* Europe welcomes Obama bank plan, won’t imitate it
4:55pm EST
* Factbox: Obama proposes limits on banks’ size, investments
9:23am EST
* Scenarios: How bank reforms could affect banks
9:23am EST
* Geithner aired concern on bank limits: sources
Thu, Jan 21 2010
* Obama threatens fight with banks on new risk rules
Thu, Jan 21 2010
* Geithner, Summers seen still wielding huge influence
* Volcker had been outspoken on “too big to fail” concern
* Ex-Fed chief consulting about bank plan with lawmakers (Adds Summers quote, paragraph 24)
By Caren Bohan
WASHINGTON, Jan 22 (Reuters) - When U.S. President Barack Obama launched a fight with Wall Street by announcing a new plan to limit banks’ size, the man standing at his side was former Federal Reserve Chairman Paul Volcker.
Volcker’s clout on the White House economic team was on full display as the 6-foot-7-inch longtime adviser took the choice spot next to Obama, who named his proposal to restrict bank trading activities “the Volcker Rule.”
The 6-foot-1 Obama referred to Volcker as “this tall guy behind me.”
U.S. Treasury Secretary Timothy Geithner and senior economic adviser Lawrence Summers — who attended the announcement but at a greater distance from the president — still wield a tremendous amount of power.
Volcker, who commands respect on Wall Street and among both Democrats and Republicans, is seeing a resurgence of his influence after venting frustrations to friends that he had been left out in the cold when it came to economic decision-making at the White House.
The 82-year-old Volcker was one of Obama’s most influential advisers during his 2008 presidential campaign and now chairs a panel of outside economic advisers to the White House.
…
This Trust Bustin’ idea I have occasionally suggested on the HBB seems to be gathering a bit of a following.
Comments to the above article:
UPDATE 1-Bank plan highlights Volcker’s new clout
Jan 23, 2010
Ironically, the banks took the TARP money, and used it to buy other banks, thereby increasing their size, and increasing the chances of them being designated “Too big to fail.” In fact, the larger the TARP loan to a bank, the more likely that bank is already viewed as “Too big to fail.” It is simply unbelievable that the federal government allowed these banks to use taxpayer money to further consolidate an industry that almost brought on the second great depression, in part, because the sector is structured in a way that would cause a cascading effect on the entire world economy, if certain players were allowed to become insolvent. In short, the federal government exacerbated an already ungovernable problem, instead of meeting it head on. We are in greater danger than ever, from the “domino effect,” and the problem isn’t limited to the banking sector by any means. Fannie Mae, and Freddie Mack must be broken apart, and members of congress must refrain from meddling with their loan criterion. High risk loans, issued by Freddie Mack, and Fannie Mae were encouraged, and at times forced upon them by members of congress. This is outrageous, and inappropriate. It is no wonder the federal government was quick to cover their losses, realizing that the government was the actual cause of the debacle. Lastly, the insurance sector, with its behemoth, AIG must be broken into pieces that do not pose a systemic threat to the economy, if one becomes insolvent. We’ve got a lot of work to do, to mitigate the risks exposed by this sub prime debacle, and the government is screwing around with insurance mandates that are probably less popular than prohibition was, rather than formulating a balanced system of trade, including rules governing any platforms, and players that are integral to this system, so that we can move on with our lives, and learn to both live within our means, and not take irresponsible risks, to satisfy a growing, and unchecked greed.
davideconnolly Report As Abusive
Jan 23, 2010
I was unaware that we were facing imminent double-digit inflation (I still hear rumblings of Japan-style deflation).
Back in the Pres. Carter 80’s, didn’t P. Volcker’s changes in policy contribute to the significant recession the U.S. economy experienced which included (at that time) the highest unemployment levels since the Great Depression? Did not Volcker’s Fed also call forth widespread protests due to the effects of the high interest rates on the construction and farming sectors?
I don’t claim to understand economists, but it seems we already have ample recession and high employment.
“Those who cannot learn from history are doomed to repeat it.” [George Santayana]
DeeEwe38 Report As Abusive
Jan 23, 2010
EXACTLY RIGHT, david.
Too Big to Fail = To Big to Exist
The banking industry has consolidated using our taxpayer money and our credit.
The only solution is to break these banks, and insurers, into pieces.
We have anti-trust laws, and it is high time that we used them.
EQClovis Report As Abusive
Stepn, it’s late, but some of the stuff in the past few days reminded me of something else you should read up on: genetic drift
You are actually a force in genetic drift.
What will happen when the tax credit is removed? I gotta think they have sucked in all the buyers. But last year was hard watching. That tax credit really made a momentary turnaround. For a while there everything was being bought quick in my area. Now, it all seems to have stopped. But for some odd reason the new listings are all inflating asking price. I’m thinking they expect spring buyers to come in and buy at these prices.
In my mind you gotta have jobs to create new home buying. I think this thing will take years to play out. There will be a wave of expectation. Then prices will drop lower and a new wave of expectation wil replace the old one. And so on and so on. Until one day there is the bottom and no one talks real estate anymore.
There will be up moments like this last year.
When you think about it…owning a house is really a lot like renting. You still make payment on an inflated price. Your payment goes to who….the bank. The bank is the wealthy. Same with rent. It usually goes to a corporation. The corp. is the wealthy.
I would like to build my own house a little at a time and own it outright and not have to pay the bank a dime.
What makes you think that, unlike other REIC-lobbyist-driven housing subsidies, the tax credit will ever be removed?
Don’t you see the behind the efforts to hand America’s wealth over to Megabank, Inc and force Main Street to pay ridiculous prices for the privilege of buying a home, or even renting one? I certainly do see it. That’s one among many reasons why Megabank, Inc needs to be busted up to smithereens and their Washington, DC protectors gotta go.
“…behind the scenes efforts…”
Anger is the father of poor editing.
He’s come a long way from someone who could not see the housing bubble to someone who understands what caused it and what did not.
Bernanke’s Shaky Branch in Housing Argument
1/13/2010
Fed Chairman Ben Bernanke has insisted that low interest rates in recent years have had nothing to do with the housing bubble. WSJ’s David Wessel looks at the problems with his argument.
Of course not! And high prices had nothing to do with the high prices. And making risky loans had nothing to do with bank failures! All is well! All is well - green shoots for all!
Was out driving around tonight with a favorite son in the back seat. He explained how you can beat your grade school friends in a game of Heads or Tails:
“When you toss the coin, tell them that it is ‘heads I win, tails you lose.’ They usually don’t notice what you said; if the coin lands heads, you say, ‘I win,’ and if the coin lands tails, say, ‘You lose.’”
I told him he would have a promising future ahead of him if he became a banker.
Real Time Economics
Economic insight and analysis from The Wall Street Journal.
* Joblessness Across the U.S.: December Unemployment Rates by State
* Does Bernanke Delay Affect Next Week’s Fed Meeting?
* January 22, 2010, 1:55 PM ET
Tally of Senate Vote Count on Bernanke Confirmation
Last Updated: Jan. 22 at 5:40 pm
Federal Reserve Chairman Ben Bernanke’s confirmation has become less clear in recent days as more Democratic senators have come out in opposition to his reappointment.
The Wall Street Journal and Dow Jones have compiled a tally of senators who have declared their intentions for the confirmation vote based on interviews with the senators or their offices. Amid the threat of a filibuster, Bernanke needs the support of 60 senators for his nomination to succeed.
The current tally:
Voting “Yes”: 26 (18 Democrats, 8 Republicans)
Voting “No”: 15 (4 Democrats, 10 Republicans, 1 Independent)
Officially Undecided: 21 (13 Democrats, 7 Republicans, 1 Independent)
The remainder of the senators haven’t officially commented.
The Senate Banking Committee voted 16-7 last month to move the Bernanke confirmation to the full Senate.
…
Real Time Economics
Economic insight and analysis from The Wall Street Journal.
* Secondary Sources: Deficit Reduction and Taxes, Jobs, Geithner
* Tally of Senate Vote Count on Bernanke Confirmation
* January 22, 2010, 11:09 AM ET
Joblessness Across the U.S.: December Unemployment Rates by State
By Phil Izzo
The Nation’s Unemployed
Follow the change in unemployment from the beginning of the current recession. Below, the state-by-state unemployment rate from the Bureau of Labor Statistics, seasonally adjusted. Updated: 1/22/2010
…
Real Time Economics
Economic insight and analysis from The Wall Street Journal.
* Tally of Senate Vote Count on Bernanke Confirmation
* Greenspan Backs Bernanke
* January 22, 2010, 4:06 PM ET
Does Bernanke Delay Affect Next Week’s Fed Meeting?
By Phil Izzo
Federal Reserve Chairman Ben Bernanke’s reappointment has gotten more cloudy in recent days, as more Democratic senators have come out in opposition. But monetary policy and the structure of the rate-setting Federal Open Market Committee aren’t likely to be affected by the delay — as long as it remains a delay for scheduling reasons, and not due to diminishing support.
The FOMC begins a two-day meeting on Tuesday, and it’s likely that Bernanke won’t be confirmed by then. But the committee will look the same as it would had the Senate voted “yes.”
The chairman and vice chairman of the FOMC are chosen separately from the main Board of Governors. At the first meeting of the year, the committee members vote for the two positions. The chairman of the Board is usually named chairman of the committee and the president of the New York Fed is traditionally the vice chairman. At next week’s meeting, the FOMC is expected to vote for Bernanke and William Dudley of the New York Fed to take those positions for 2010. Though Bernanke’s term as chairman of the Fed’s Board is up on Jan. 31, he retains his position as Fed governor and remains on the FOMC. As long as he stays on the Board of Governors, he can lead the rate-setting committee.
But things won’t be as stable at the Board of Governors. When Bernanke’s term expires on Jan. 31, Vice Chairman Donald Kohn is set to become acting chairman. Kohn remains in that position until Bernanke or another nominee is confirmed. If for some reason, Kohn were to leave the Fed before the Senate approved the president’s nominee, the Board of Governors would elect a chairman from its ranks. If such a situation occurred, Bernanke as a governor would be eligible to be acting chairman.
…
What does “central bank independence” really mean? Certainly, by all appearances, it does not mean independence of Wall Street.
Bernanke under pressure
By Tom Braithwaite in Washington and Patrick Jenkins in London
Published: January 22 2010 19:27 | Last updated: January 23 2010 01:30
Ben Bernanke’s prospects for a second term as Federal Reserve chairman were thrown into doubt on Friday as the Obama administration scrambled to shore up faltering support among Democrats in the Senate.
Congressional critics of Mr Bernanke, some fearful for their own re-election prospects and others critical of the Fed’s management of the financial crisis, moved against him, adding to a list of proclaimed no votes.
Democratic senators Barbara Boxer from California and Russ Feingold from Wisconsin, said that they would oppose Mr Bernanke in a vote that has been promised before the end of his term on January 31.
Mr Bernanke needs 60 votes to secure confirmation as a result of procedural blocking tactics.
Donald Kohn, the Fed vice-chairman, would serve as interim head of the bank if Mr Bernanke’s confirmation were rejected or delayed.
Other names circulated as possible permanent alternatives have included Mr Kohn, Lawrence Summers, the president’s adviser, and Alan Blinder, the Princeton University economist.
White House and Treasury aides said that President Barack Obama and Tim Geithner, Treasury secretary, were confident that Mr Bernanke would be confirmed by the Senate five months after the president announced his renomination.
Earlier, the vote of Harry Reid, Democratic leader in the Senate, had appeared to be in doubt, but he issued a statement that said: “While I will vote for his confirmation, my support is not unconditional.”
Economists warned that a rejection of Mr Bernanke could be seen as a threat to the central bank’s independence. US Treasury yields were little changed but stocks fell more than 2 per cent.
…
I sure hope I am feeling sufficiently radiant to take a shine to the gentler gender by the time I reach age 82…
Man in the News: Paul Volcker
By Krishna Guha and Gillian Tett
Published: January 22 2010 21:12 | Last updated: January 22 2010 21:12
By common consent, Paul Volcker is never happier than when he is casting for trout in a river or lake, far from the chaos of New York and Washington.
Then, the former chairman of the Federal Reserve will happily wait long hours before landing a catch, and afterwards share in the bonhomie of his fellow fishermen. “When he is away fishing he is a delight,” says Jim Wolfensohn, the former World Bank chief who hired Mr Volcker to join his investment firm on leaving the Fed. “He lets his guard down and nobody is interested in his views on interest rates.”
That quiet patience is now serving Mr Volcker well. Almost exactly a year ago, Mr Volcker presented a report calling for restrictions on banks engaging in risky activities such as proprietary trading while continuing to enjoy taxpayer support for insured deposits.
It was ignored. Though Mr Volcker played an important role in the Obama election campaign, validating the inexperienced candidate, during the past year he appeared to be cast into the outer political wilderness, a lonely advocate of radical structural reforms – almost a figure of fun.
The former Fed chief was given an advisory committee to chair. But actual policy was made by Treasury Secretary Tim Geithner, National Economic Council chief Larry Summers and White House budget director Peter Orszag.
However, this week the towering former Fed chief stood by Barack Obama’s side as the president embraced what he dubbed the “Volcker rule” banning proprietary trading – over the reservations of some of his most senior economic advisers.
It was his second recent triumph: three months ago he proposed to his longtime, ultra-loyal – and equally patient – secretary Anke Dening. “It’s a real fairy story – who would have thought it at the age of 82,” says Tim Collins, a Wall Street financier who attended their engagement party and reports that both were suitably radiant.
…
The world seems newer by the moment. Volcker worked at the Fed when the concept of “central bank independence” really meant what it said.
Obama bank plan shifts power from Geithner
Proposed checks on financial firms show rival Volcker’s growing influence
By David Cho and Binyamin Appelbaum
updated 3:02 a.m. PT, Fri., Jan. 22, 2010
WASHINGTON - For much of last year, Paul Volcker wandered the country arguing for tougher restraints on big banks while the Obama administration pursued a more moderate regulatory agenda driven by Treasury Secretary Timothy F. Geithner.
Thursday morning at the White House, it seemed as if the two men had swapped places. A beaming Volcker stood at Obama’s right as the president endorsed his proposal and branded it the “Volcker Rule.” Geithner stood farther away, compelled to accommodate a stance he once considered less effective than his own.
The moment was the product of Volcker’s persistence and a desire by the White House to impose sharper checks on the financial industry than Geithner had been advocating, according to some government sources and political analysts. It was Obama’s most visible break yet from the reform philosophy that Geithner and his allies had been promoting earlier.
…
Obama plans fail to forge EU consensus
By FT reporters
Published: January 22 2010 09:28 | Last updated: January 22 2010 19:36
Barack Obama’s plans for a far-reaching overhaul of Wall Street failed to forge an immediate political consensus in Europe, as bankers at groups such as Barclays, Royal Bank of Scotland and Deutsche Bank scrambled to gauge their exposure.
The US president’s announcement of a crackdown on banks’ riskier activities, including speculative “proprietary” trading and investing in private equity and hedge funds, drew some words of support but no commitment to follow suit from Britain, France or Germany
Christine Lagarde, French finance minister, called Mr Obama’s proposals “a very, very good step forward”.
“I’m delighted to see that the president of the United States has fallen into line . . . and [acknowledged] that regulation is crucial to control and limit excess in the banking sector.”
Worried investors sent European bank shares tumbling on Friday as concern mounted about the impact of the increasingly hostile climate as governments around the world seek to curb perceived bank excess.
While analysts were divided on which foreign banks would suffer the most if the proposals were adopted, many warned the flurry of reform was destabilising the entire sector.
“New regulations are being proposed thick and fast and the industry faces major uncertainty from these,” wrote Nomura’s Raul Sinha in a note. “The latest proposals are only a week after the announcement of the tax on wholesale liabilities. What’s next?”
…
White House nightmare persists
By Edward Luce
Published: January 22 2010 19:21 | Last updated: January 22 2010 19:21
Barack Obama at the White House
Tough going: Barack Obama at the White House. Speculation is rife about his Treasury secretary
At the end of Barack Obama’s worst week since taking power a year ago, the US president’s fortunes look set only to deteriorate over the coming days. Following the shock defeat of the Democratic candidate in Massachusetts on Tuesday, a move that deprived the president of his 60-seat super-majority in the Senate and left his legislative agenda in tatters, Mr Obama has just four days to reboot the system.
The US president had originally delayed next week’s State of the Union address to Congress in the hope he would get his signature healthcare reform bill enacted in time. That prospect, already waning, was killed dead by the voters in Massachusetts. A growing number of Democrats believe the nine-month effort could collapse altogether.
…
Worse, most people do not think Mr Obama can even command unity within his own administration on the Wall Street proposals amid growing speculation about whether Tim Geithner, the Treasury secretary, can survive in his job. Mr Geithner was conspicuously sidelined during Thursday’s announcement by the presence of Paul Volcker, the former Federal Reserve chairman, who lent his name to the push to rein in Wall Street banks.
The speculation about Mr Geithner is only likely to grow. “The Obama proposals were clearly politically motivated and came from the White House not the Treasury,” says a Democratic adviser to the administration, who withheld his name.
Finally, there is increasingly open Democratic disaffection about the way Mr Obama is managing relations with Capitol Hill. Many believe that Rahm Emanuel, Mr Obama’s aggressive chief of staff, served Mr Obama badly by persuading the president that his election was a transformational moment in US politics that gave him the opportunity to push through long-cherished Democratic goals, such as healthcare reform.
In fact, exit polls from Mr Obama’s election showed that almost two-thirds of the voters cited the economy as their chief concern, with fewer than one in 10 mentioning healthcare. Mr Emanuel is also perceived to have mishandled the day-to-day logistics of getting healthcare through Congress.
…
Do any Lilliputians reading here have suggestions about how to tie down Gulliver Sachs so it cannot ‘with one bound be free’?
Could Goldman Sachs with one bound be free?
January 22, 2010 3:03am
I write in my news column for the FT on Friday about the “Volcker rule” - Barack Obama’s attempt to repeat some kind of Glass-Steagall structural reform - that Goldman Sachs would almost certainly be caught by it, along with commercial banks.
But I had second thoughts after listening to CNBC interview with Barney Frank, chairman of the House of Representatives Financial Services Committee, and reading what my colleagues Krishna Guha and Paul Murphy had to say.
In my column, I say:
The “Volcker rule” that would not only limit proprietary trading at deposit-taking institutions but stop them from “owning, investing or sponsoring” hedge funds and private equity funds has some ambiguities.
On the face of it, it might allow holding companies such as Goldman and Morgan Stanley to evade the restrictions by shedding their relatively small deposit-taking activities.
Yet so great is the unpopularity of Goldman and Wall Street that it seems inconceivable that Congress will allow them to escape, while deposit-taking “Main Street” banks such as JPMorgan Chase and Bank of America are caught by the rule.
Mr Frank, however, was much less clear. He suggested that Goldman could escape by giving up its New York state bank charter, through which it raises retail deposits:
“With regard to Goldman, they will probably sell their bank charter and that’s an artificiality anyway. Give it up, I don’t mean sell it.”
I agree that, if Goldman has a choice between giving up its bank charter and divesting its private equity and hedge fund operations, there will be no contest. But it strikes me as extremely strange, not to say wrong in principle, that it could shrug off the rule so simply.
Goldman would, after all, remain a financial holding company, regulated by the Federal Reserve and with access to the Fed discount window in emergencies. It would also stay a systemically important financial institution (aka too big to fail), like large commercial banks.
Mr Volcker appears to be most worried about not permitting deposit-taking institutions to own “casino” operations - proprietary trading desks, hedge funds and private equity funds.
…
send them a Thank You card. Let them know how important they are to you and that it doesn’t have to be a holiday to get a card from you. In the act of writing Thank You cards, you are deflecting the negative out of your thoughts and filling mind with the positive. And most importantly, you are taking action