Morning Report: Congressional Democrats take aim at the BB&T / Suntrust merger

Vital statistics:


Last Change
S&P futures 2714 -8
Eurostoxx index 360.39 2.36
Oil (WTI) 52.28 -0.41
10 year government bond yield 2.64%
30 year fixed rate mortgage 4.43%


Stocks are down this morning on overseas weakness. Bonds and MBS are up small.


There is a possibility we could see another government shutdown at the end of the week. Talks over the weekend concerning border security funding went nowhere. For the financial industry, it will make funding loans for government employees more difficult, but everything else should be transparent.


Consumer staples companies are raising prices as commodity prices, transportation and labor costs increase. “The good news is that competitors are raising [prices] in those categories as we speak,” Church & Dwight Chief Executive Matthew Farrell said on a conference call last week when the company reported higher quarterly sales and lower profits. The Fed has been anxious to create more inflation, and it looks like they have finally succeeded. Does this mean we are headed for a repeat of 1970s inflation? Probably not – at least not in the near future. But it does mean the Fed Funds futures might be a touch too sanguine about monetary policy in 2019.


Speaking of inflation, we will get the consumer price index and the producer price index this week, which should be the only market-moving data.


Maxine Waters thinks the STI / BBT merger requires “serious scrutiny” “This proposed merger between SunTrust and BB&T is a direct consequence of the deregulatory agenda that Trump and Congressional Republicans have advanced,” Waters said in a statement to American Banker. “The proposed merger raises many questions and deserves serious scrutiny from banking regulators, Congress and the public to determine its impact and whether it would create a public benefit for consumers.” IIRC, all the “deregulaton” did was raise the ceiling for stress tests to $250 billion in assets. And that was due to the fact that many small banks were spending a lot on compliance and risk management for a portfolio of traditional bank loans. While it is entirely possible that someone at East Podunk Savings and Loan may blow himself up selling protection on a basket of CDO squareds, it is highly unlikely as well. And imposing all sorts of regulatory burdens on these banks under the guise of tackling systemic risk was on the wrong side of the cost / benefit ledger.



26 Responses

  1. The analysis here is backwards. The press shouldn’t enjoy a professional exemption from campaign finance laws based on their adherence to some vague norms. Rather, the laws should be overturned as unconstitutional because when it comes to the First Amendment, there’s no special status for professional journalists vis-a-vis the rest of the citizenry.

    “Legal exemptions for news organizations often rest on explicit appeals to these norms. To escape the reach of the campaign-finance laws, a press entity has to be acting as a press entity, performing what the FEC has characterized as a “legitimate press function.” The Foreign Agents Registration Act (FARA), which requires reporting of political or public-relations work on behalf of foreign nationals, carves out protections only for press entities’ “bona fide” news coverage.

    It is unsettling to strong supporters of press freedom (and I consider myself one) to accept that, because of the absence of overriding constitutional immunities, a press entity can find itself a corporation like any other having to defend against campaign finance, extortion, FARA, or other charges. But AMI’s case shows that a media organization can assume too much.”


    • jnc:

      The analysis here is backwards.

      True, but inevitable, because most of the media actually thinks they do, or at least should, have special status vis-a-vis the regular citizenry.

      Liked by 1 person

    • Not exactly to the point of the First Amendment argument but bordering it –

      If I obtained material that could compromise you, by any means, and then threatened you with making it public unless you paid me, that would be extortion or blackmail, depending on definitions in penal statutes and granular facts.

      The First Amendment protection specific to the press certainly allows publication or refusal to publish compromising material, under most circumstances. Should it allow the press to offer to kill the story for compensation, assuming there is no other lawful bar to publication?

      That is my narrow concern. Obviously, there are other scenarios where I am certain that the right of the press is clear. For example, threatening to publish unless the subject tells his side of the story as well seems to me to be obviously protected.

      I am just thinking aloud and haven’t read any recent cases on point.


      • I’d argue that the threat is what makes it illegal and that applies equally to a member of the press threatening to publish something unless the target does something for them.

        Conversely, if I obtain something incriminating on a politician that they don’t want revealed (say a yearbook containing a blackface photo) and publish it on the internet without trying to extort anything from them, then the First Amendment should protect me just as much as it protects Bob Woodward.

        Reporters aren’t special.

        The article actually addresses the extortion that the press uses every day with sources:

        “In application, the question of whether a press organization is operating on accepted norms can become complicated. Bezos’s example of what no “real journalist” would do was right. But there is a variant that goes somewhat like this: I do not need to pursue this angle X on a story, which is peripheral to my main interest while embarrassing to you, if we can work together on Y, which I (our readers) really care about.

        This play is not uncommon among journalists, especially those within the appropriately hard-charging and vital community of investigative reporters. While there is still a threat implicit in this statement, it typically does not present a legal problem if it advances a clear journalistic purpose. Press organizations make deals for news. Not all are savory: Among the examples is, once again, the National Enquirer, which agreed not to run certain stories about Bill Cosby in return for an on-the- record interview with him. Nor does, or should, every instance of questionable or unethical conduct by journalists invite open season on the press and the threat of legal consequences.”


        • Definitely food for thought. Is it the threat, in general, or only the threat coupled with a demand for a cash payment or a demand to do something unlawful or dishonest that is to be found out of bounds? i understand your position on that, but I cannot think of why the simple threat coupled to a demand to do something lawful and honest would be criminalized. I do not think it is criminalized for me to do that to you.

          We certainly agree that the decision simply to publish or not is protected.


        • “to a demand to do something lawful and honest would be criminalized.”

          I suspect the majority of these involve revealing evidence of infidelity, which strikes me as classic extortion/blackmail material.

          But I don’t believe there’s an expectation of privacy that can be enforced vis-a-vis revealing an affair in and of itself.


  2. IIRC, all the “deregulaton”[sic] did was raise the ceiling for stress tests to $250 billion in assets.

    That is how I remember it too, but you were my mentor in the first instance. We could be equally incorrect!

    Does the FTC have any say in bank mergers? And what is your take on this one?

    I have a prejudice or bias against them separate from my belief in breaking up trusts and monopolies. When the national banks started swallowing big locals in TX in the 80s it created a credit crunch for small biz, all by itself. Suddenly the “loan committees” were in North Carolina.


    • The Hart Scott review for bank mergers is generally a wave-through. The ceiling for deposit market share is 10%, which keeps the industry relatively unconcentrated, certainly well below the threshold which antitrust regulators would consider concentrated. The US has the least concentrated banking system in the world, which is a legacy of the Depression-era banking regulations which prohibited interstate banking. Most other countries have 3 or 4 banks which dominate everything.

      The tough part of the review is the relevant banking regulator – either the Fed, FDIC or OCC, as well as the state banking regulators. Here the issue will be risk and compliance, which is always a tough test. That said, increased compliance costs as a result of Dodd-Frank should have encouraged more merger activity, but the Obama admin was very much against them.

      I suspect the credit crunch of the 80s in TX was due more to the drop in oil prices triggering distress in the overall economy. A lot of banks had non-performing loans to energy companies that went bankrupt. I don’t think mergers have restricted credit availability – the credit cycle is driven by the business cycle.

      Liked by 1 person

  3. NoVA, Aletheia wasn’t an outlier. Apparently the new trend on the left is to argue that people were better off with a subsistence existence rather than concede that capitalism had any role in reducing global poverty.


    • “it’s not clear that going from a pre-monetary society to a monetary society — even if that monetary society is cutting monetary poverty at a rapid rate — represents an improvement in living standards, especially when that transition happened in large part due to violence and coercion by Western powers.”

      hey, we had to walk 10 hours for a bucket of clean water, but it was ours, dammit


      • There has never been a coherent theory of history – although Guns, Germs, and Steel is much more fun than The Communist Manifesto. And standard reactionary theories expressing that there was a golden past that was preferable to the present are usually steeped in either nostalgia or personal grievance, or both.

        But who of these people has any personal experience or even knows anyone who has experience with a “pre-monetary” society? Is this some sort of 60s hippie think? Shut up and pass the LSD?

        Liked by 1 person

        • Well, without antibiotics I’d be dead. And probably most of us would be dead by this point. So, I dunno, I prefer the post-monetary society.

          Eh, it’s all failing to see the forest for the trees. “Money” is ultimately a bill of tender. It’s an exchange medium to allow those without goods they wish to mutually exchange to still barter for what they need. For there to be no money, there would have to be no bartering. There could be no storing of goods you didn’t immediately use, in order to prevent any immoral bartering from taking place. Every day would be a fresh hunt-and-gather.

          That being said, the logic is bewildering. How can it possible be said that we haven’t have an improvement in living standards? And how would the mechanism for achievement of any kind of living standards have any bearing on the quality of those living standards–even if violence and coercion were involved. Say, you take over a country, make them start using paper money, and fifty years later everybody has access to more healthcare and cleaner water than previously. Their living standards have improved, no matter how it happened.


        • Yes – it is hippiethink.


    • it just goes to show that a generation of students have been indoctrinated in marxism than educated.


  4. Should any guy here need an excuse for forgetting to buy flowers for Valentine’s Day, go with saving the world from environmental catastrophe.


    • There is no reference to the current political climate in the film or the ad. Still, the filmmakers’ candor about their reasons for making the movie, combined with an ad on a conservative cable show, could be read in some quarters as comparing Trump supporters to those at the arena that night.

      ya think?


    • Well, it’s definitely not going to help make their point. Nazi comparisons and analogies long ago reached the point of “semantic satiation” with the public at large, and it’s simply not meaningful or communicative to evoke Nazis in any way to make your point. It doesn’t work. Nobody says, “Hmm, you know, this person comparing x to Nazis or me to Nazis has a good point.”

      Whatever they are trying to convey, there’s a more direct and potentially more effective way to do it. Whatever that way is, it doesn’t reference Nazis.

      Also worth mentioning that the Nazis were still very popular with progressives in America at the time, and the populism on display was a largely progressive one.

      Which is another problem with using Nazis for the structure of the argument: they are ultimately criticizing demagoguery in the name of nationalism and cultural supremacism–not demagoguery itself, though that’s what they claim, as demagoguery is also used in the service of globalism and environmentalism and expansion of the welfare state. And frankly, the Nazi’s were all for big government, nationalization of businesses, worship of the state, the perfecting of humanity through state intervention, etc.


  5. This should be amusing:

    “McConnell says Senate will vote on ‘Green New Deal’ as he seeks to portray Democrats as radical”


    • So the Democrats are going to pull the bill in order to prevent the Republicans maliciously voting on their legislation–or putting Democrats in the position of voting against it–instead of just letting them use it as a campaign ad?


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