Tags: Pelosi | Dems | Warren | banks

Pelosi: Congressional Dems Don't Agree With Warren on Bank Crackdown

By    |   Thursday, 02 July 2015 06:00 AM

Sen. Elizabeth Warren, D-Mass., has drawn applause from some on the far left — and some on the far right too — in her quest to tighten regulation of financial service firms.

But that doesn't mean the rest of Congress' Democrats support her. "There may have been a couple of people who say that, but that is not the consensus in our party," House Minority Leader Nancy Pelosi told CNBC.

For those who say President Obama has been "too soft" on Wall Street, "the financial industry doesn't agree with that," she said.

Wall Street played a major role in financing President Obama's 2008 presidential campaign. But bankers have shied away from supporting Democrats in the wake of the 2010 Dodd-Frank financial reform bill and other efforts to crack the regulatory whip since then.

Chief CNBC Washington correspondent John Harwood notes that Pelosi is a highly successful fundraiser who needs some support from Wall Street to regain a Democratic majority in the House. To be sure, that's highly unlikely to happen anytime soon regardless of what Wall Street does.

Meanwhile, the government's strict regulations have banks seeking acquisitions of less than $1 billion for companies in the advisory business (wealth management, for example), payment processing/treasury services and the financial technology business, analysts say.

"If you think about banks today, their balance sheets have been nationalized," Dick Bove of Rafferty Capital Markets, dean of the country's bank analysts, told TheStreet.com. "The government tells banks how big they can be and the structure of their assets and liabilities."

Regulators have forced banks to boost the amount of low-yielding cash and Treasurys on their balance sheets. But at the same time, they have to issue high-yielding preferred stock to meet increased capital requirements.

"Banks need to get far away from their balance sheets to reach lightly regulated businesses," Bove says. Thus their interest in the sectors cited above. But this isn't going to be a day at the beach for the banks. "The problem is everyone wants the same thing at the same time," Bove says. And that, of course, will push acquisition prices higher for the banks.

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Sen. Elizabeth Warren has drawn applause from some on the far left -- and some on the far right too -- in her quest to tighten regulation of financial service firms. But that doesn't mean the rest of Congress' Democrats support her.
Pelosi, Dems, Warren, banks
354
2015-00-02
Thursday, 02 July 2015 06:00 AM
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