How dodd-frank rollback bill could come back to haunt us dealbook briefing – the new york times gas oil ratio for weed eater


Less stressful tests. The Dodd-Frank Act of 2010, which did much to overhaul the United States financial system, required that banks undergo regular tests to assess whether they have the strength to weather large losses. Banks have complained that the stress tests were burdensome. But the tests raised awareness about the risks lurking on the banks’ balance sheets – and forced regulators and banks to try and quantify potential losses. Under the new legislation, banks with under $100 billion in assets would no longer be subject to the tests. For banks with between $100 billion and $250 billion in assets, the bill allows regulators to stop testing every year, and instead, do so “on a periodic basis.”

This change provides a big opening to officials at the Fed who are eager to deregulate. They could decide to perform the tests, say, every two years, or allow for an even longer break. During the untested period, the banks could grow complacent about risks. Crucially, the stress tests also help determine a bank’s level of capital, its main defense against losses. As a result, banks with $100 billion to $250 billion in assets could let their capital levels decline during the untested period, leaving them less protected against losses. With more than $2 trillion in combined assets, the banks could report large losses in a future crisis.

The nation’s largest banks, those with more than $250 billion in assets, also get a stress test concession under the new legislation. Dodd-Frank required these banks (and others) to apply their own stress tests to their balance sheets at least once a year, but the new law allows the Fed to demand these tests “periodically.” These bank-run tests have allowed regulators to assess the quality of the largest banks’ risk management. If the Fed requires these company tests less frequently, regulators may end up with less insight into how the most systemically important banks are preparing for shocks.

Killing off living wills. The bill frees many banks from another common sense measure that Dodd-Frank introduced. Larger banks were required under Dodd-Frank to draw up and regularly update a detailed plan for how they would be wound down. The aim of these “living wills” was to make it easier for regulators to seize a failing bank without disrupting the wider financial system. The fear of chaotic disruption was in part behind the government’s decision 10 years ago to bail out the banks or force them to be acquired by larger institutions. But the bill effectively allows banks with under $250 billion in assets to stop drawing up living wills. “This is one of our biggest concerns,” said Gregg Gelzinis of the Center for American Progress, which opposes much of the new bill, “In the crisis, regulators resorted to merging banks because there was no tool to wind them down.” Under the new banking law, the Fed can decide to force banks with over $100 billion to comply with “enhanced supervision” requirements, which include the living will. But, again, whether the Fed does so now depends on who’s in charge at the regulator, not the law.

Risky real estate. The new bill also allows banks to lower their defenses against losses on loans to developers building offices and other types of commercial buildings. The post-crisis overhaul demanded that banks hold higher capital against certain types of these loans, in part because they produced crippling losses for banks big and small after the financial crisis. The new bill would allow banks to reclassify many of these loans in such a way that they avoid the higher capital requirement. This move comes after a surge in commercial real estate lending. Banks in the United States currently have $2.12 trillion of commercial real estate loans on their books, an increase of $680 billion, or nearly 50 percent, from $1.44 trillion five years ago. “The commercial real estate market is overheated,” said Marcus Stanley, policy director of Americans for Financial Reform, which opposes much of the new bill, “We are coming in at the top of the economic cycle and we are trying to juice this even more.”

Wired reports that security researchers from Microsoft and Google have discovered a new bug, related to Meltdown and Spectre, that puts chips made by Intel, AMD and Arm at risk of being hacked. If exploited, the flaw could allow hackers to gain access to private user data inside the chips.

Intel says that it has not seen the flaw being exploited yet, and that it has already written software patches that should protect users from attack. They will be rolled out by computer makers in the coming weeks. But a big problem with Meltdown and Spectre was that they were fundamental flaws in the chips, and software fixes to solve the issues slowed devices down.

But we’ve been here before. And while the media reaction to the problem in January was huge, the impact on chip-makers was minimal. First-quarter earnings appeared to be unaffected by the security scare: Revenue rose about 40 percent at AMD and 9 percent at Intel, compared to the previous year.

Today, there’s no sign that either company is hurting all that much. AMD’s stock has barely wobbled. And Intel’s appears to have been buoyed by news that it will jointly manufacture new kinds of memory with the semiconductor maker Micron Technology.

AMD has enjoyed recent success from some of its chips being used to mine cryptocurrency, but more specialized processors from other manufacturers are becoming popular in the Bitcoin community. And Intel still needs to ensure that it cements itself as a major player in A.I. chips, which is becoming harder as companies like Tesla, Apple, Google and Facebook design their own.

President Trump walked back a threat to put tariffs on Chinese goods, and his administration has reportedly agreed on the outlines of a deal to save the Chinese telecom company ZTE. To critics, it looks like China has bested a divided White House.