Financial Reform Passes, Inspires Much Speculation

The big event of the day on Thursday was the passage of the Dodd-Frank bill ("The Wall Street Reform and Consumer Protection Act") in the U.S. Senate, to which President Obama will affix his signature before long.

July 16, 2010
By Dees Stribling, Contributing Editor

Courtesy Flickr Creative Commons user Violentz

The big event of the day on Thursday was the passage of the Dodd-Frank bill (“The Wall Street Reform and Consumer Protection Act”) in the U.S. Senate, to which President Obama will affix his signature before long. The main features of the bill are fairly well known — items such as the Consumer Financial Protection Bureau; new rules about derivatives and winding down non-banks; skin in the game for mortgage-backed securitization; oversight for rating agencies; and much more in its 2,300 or so pages. The devil has yet to emerge from all those details, however.

That doesn’t stop everyone and his uncle from having an opinion about the bill, mostly inspired by political considerations. The president said, “it will protect consumers and lay the foundation for a stronger and safer financial system,” while Sen. Richard Shelby (R.-Ala.) called it a “legislative monster.”

Still, for all its heft, the bill will not deal with Fannie Mae and Freddie Mac, two of the most troubled problem children of the financial meltdown. Congress, in its wisdom, has put off the painful task of reforming, abolishing or otherwise changing the GSEs for now.

JP Morgan Rakes It In

JP Morgan Chase posted a 2Q10 profit of $4.8 billion on Thursday, an increase of 77 percent from the same period last year. But the company did not achieve that number though increased revenues, which were down about 8 percent for the quarter to $25.6 billion.

The banking giant also set aside far less to cover bad loans during 2Q10 than it did in 2Q09: $3.36 billion, or 65 percent less. Still, JP Morgan Chase CEO Jamie Dimon said that the bank’s loan losses remain “at extremely high levels.”

During the question-and-answer period of Thursday’s conference call, Dimon also weighed in on the housing market: “We don’t know what’s going to happen to home prices,” he said. “And we don’t think anyone knows. We don’t think anyone actually knows what’s going to happen to home prices.”

Someone’s Buying in the Hamptons

In at least one small corner of the housing market, one driven by wealthy New Yorkers, it still seems like the mid-2000s. The average home price in the Hamptons and Shelter Island during the first six months of 2010 was $1.622 million, up 10 percent from $1.477 million during 1H09, according to a report by New York residential specialist the Corcoran Group.

The median price for homes in the popular resort towns was $935,000, up 34 percent from $700,000 a year ago. Moreover, there were 923 deals in the Hamptons in the first half of 2010, up 134 percent from 433 in the same period of last year, noted the report.

Wall Street had a wide ride on Thursday, mostly in negative territory, but almost ending up back at the starting gate. The Dow Jones Industrial Average lost 7.41 points, or 0.07 percent, while both the S&P 500 and the Nasdaq broke even.