http://dealbook.blogs.nytimes.com/2010/01/21/banks-derivatives-activity-falls-under-irs-scrutiny/
Federal authorities are scrutinizing certain financial derivatives that may enable Wall Street banks to avoid collecting billions of dollars in withholding taxes on stock dividends.
The instruments, known as equity swaps, mimic ordinary shares and give investors like hedge funds the benefits of stock ownership, including payments similar to dividends, without actually owning the shares. Big banks also benefit from the swaps because, under federal tax rules, the banks may avoid paying a 30 percent tax that is normally levied on stock trades, The New York Times’s Lynnley Browning writes.
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The president, for the first time, will throw his weight behind an approach long championed by Paul A. Volcker, former chairman of the Federal Reserve and an adviser to the Obama administration, Jackie Calmes and Louis Uchitelle write in The New York Times. The proposal will put limits on bank size and prohibit commercial banks from trading for their own accounts — known as proprietary trading.
"The heart of my argument,” Mr. Volcker said, “is who we are going to save and who we are not going to save. And I don’t want to save what is not at the heart of commercial banking.”
“Major institutions with a deposit facility should not be allowed to invest in subprime obligations under any conditions,” said Henry Kaufman, an economist and money manager, and one of a dozen prominent Wall Street figures who have told Mr. Volcker that they support his proposal, in principle if not in detail.
Others include William H. Donaldson, former chairman of the Securities and Exchange Commission; Roger C. Altman, chairman of Evercore and a Treasury official in the Clinton administration, and John S. Reed, a former chairman of Citigroup.
“When I was running Citi,” Mr. Reed said of his tenure in the 1980s and 1990s, “we simply did not trade for our own account.”
http://dealbook.blogs.nytimes.com/2010/01/21/obama-to-propose-limits-on-risks-taken-by-banks/
tough day for banks.....
The president, for the first time, will throw his weight behind an approach long championed by Paul A. Volcker, former chairman of the Federal Reserve and an adviser to the Obama administration, Jackie Calmes and Louis Uchitelle write in The New York Times. The proposal will put limits on bank size and prohibit commercial banks from trading for their own accounts — known as proprietary trading.
"The heart of my argument,” Mr. Volcker said, “is who we are going to save and who we are not going to save. And I don’t want to save what is not at the heart of commercial banking.”
“Major institutions with a deposit facility should not be allowed to invest in subprime obligations under any conditions,” said Henry Kaufman, an economist and money manager, and one of a dozen prominent Wall Street figures who have told Mr. Volcker that they support his proposal, in principle if not in detail.
Others include William H. Donaldson, former chairman of the Securities and Exchange Commission; Roger C. Altman, chairman of Evercore and a Treasury official in the Clinton administration, and John S. Reed, a former chairman of Citigroup.
“When I was running Citi,” Mr. Reed said of his tenure in the 1980s and 1990s, “we simply did not trade for our own account.”