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Japan says U.S. reforms could force its banks out of Wall Street

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I wonder if those same Japanese banks were part of "trading by banks in financial instruments on their own account, deals which are widely held to have contributed to the global financial crisis." or did they not participate ???

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deals which are widely held to have contributed to the global financial crisis.

The global financial crisis was caused by central banks flooding their respective countries with money, and keeping interest rates artificially low, creating a huge bubble.

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gaijinfo: The global financial crisis was caused by central banks flooding their respective countries with money, and keeping interest rates artificially low, creating a huge bubble.

and all banks were innocently sucked in short time profits and greed...

3 ( +4 / -1 )

I'm a Japanese who has been living in New York and working at a Japanese bank for over 10 years. It would be tragic if regulations intended in part to punish people on Wall Street end up punishing thousands of innocent, working class people even more. If the Japanese banks end up leaving NYC, their employees will take with them millions of dollars that are spent every year in New York, much of it in the New York "Japanese" economy. How many Japanese business (restaurants, beauty salons, etc.) will be put out of business? And how many Japanese employees of those businesses will lose their ability to stay in New York? Many of these people are pursuing dance or music or education, and enrich both New York's and Japan's (when they return) cultural life. People need to understand that there are always side effects of new laws and regulations. Somebody wins and somebody loses. In the rush to "do something" about the banks and the few people in them who are rich, I hope we're not harming even more innocent and working class people.

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gaijininfo. So all those exotic funds and CDFs were innocent in the problem as well? Certainly the climate of profiteering in lending and realestate were also completely devoid of bank driven greed.

Regulation is the only way to assure that greed is managed.

-2 ( +3 / -5 )

@MackUtsunomiya,

If you work at a bank (no matter WHAT its nationality is) you're not an "innocent working-class" person. Your wages stem from your bank's ability to get AS MUCH from their customers as they can without getting prosecuted. What the Bank of Japan (with the "wink, wink, nudge, nudge" of Japan's Financial Regulator) basically stated in this letter is that the fleecing of their customers would be unacceptably curtailed if the new law applied to their... er..., "operations" in the United States.

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Fadamor. "....you're not an "innocent working-class" person." If we apply your logic, then who is an innocent worker? Every corporation, most institutions are self serving and profit driven. With this definition, no working person in a capitalist environment is innocent.

An IT or Reception person at a bank has no more power over that institution than they do over the moon. A clerk at Walmart has the same problem.

You should not be blaming working people. Everyone needs to work, feed and care for the family. Failing to do so means death or dependence upon the state. So what other choices do working people in capitalist systems have but to work for companies who are part of the problem?

If you want to blame someone, blame the people who are in power. The beneficiaries of greed and those who make the decisions that cause harm.

I am sure if we look at your world, the bank you support with your deposits, the government you pay taxes to, we could implicate you with dirty hands too. But that would be wrong. The problem is the system and it's benefactors.

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I love capitalism. Sure beats communism.

7 ( +5 / -1 )

Does anybody listen to a weeping & moaning banker? Nope.

3 ( +3 / -0 )

Mobo. Is your world really so black and white that the only two options you can weigh are unbridled capitalism and communism? There are many other alternative solutions that work to allow people to excel and yet are socially responsible. Do broaden your horizons.

-2 ( +3 / -5 )

So Japanese government is worried they will not be able to sell their bonds anymore? Well, maybe it is about time they did something with that debt.

Also I am a bit confused about this line in the article.

...and could lead to the exit from Tokyo of Japanese subsidiaries of U.S. banks...

So the risk Japan is worried about is Japanese subsidiaries of foreign banks leaving Tokyo - not the other way around as the title implies?

There is another sentence which also says

Some of the Japanese banks might be forced to cease or dramatically reduce their U.S. operations.

But I am not sure if they are too worried about that.

3 ( +3 / -0 )

Fadamor:

I appreciate your response, but you may have misunderstood my comment.

1) The "innocent, working class people" I was referring to work at restaurants, are receptionists at hair salons, operate cash registers at Japanese grocery stores, etc. My concern is that these people could be hurt by the new regulations and laws, a possibility that many people (including perhaps yourself) don't fully appreciate. I'm not necessarily making an argument against these laws/regulations, but people who support them should understand all of the ramifications. I am simply hoping that anger against those whose greed has harmed the global economy doesn't and a psychological need to for revenge doesn't lead to legal/regulatory changes that end up doing more harm than good.

2) I made no generalizations regarding nationality, ethnicity and gender in any way. They played no role in my comment except to the extent that the whole topic involved Japanese banks and Japanese people in New York.

3) The majority (probably vast majority of people) who work at banks are not rich and not greedy. They are average people trying to make a living. Every day a janitor comes and empties my trash can, and someone in the cafeteria cooks and serves my food, etc., etc. These people are hardly rich, have absolutely zero power, and will probably be fired if the Japanese banks pack up and leave. These are the negative ramifications that I am talking about. If this pain is worth it, then the regulations/laws should be enacted. But if they aren't worth it, a waiver should be given.

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@Mack, do you really worry about those people or you worry about yourself, that will have to pack up and return to Japan to the overworking hours and all the nonessential things that come with the package of working in japan as a Japanese salarymen?

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So then, the US Gov is basically telling everyone to do business their way or else? Yes, that's basically it. Other nations' sovereignty is not held in any esteem, is it? Are the leaders of banks(regardless of nationality ) greedy? SURE! Why else would they be in banking? The problem in US, and subsequently the world, is that the bankers(esp. Federal Reserve) own the politicians. That's NOT capitalism, but CRONY-capitalism. End The FED! JFK was taking steps to do so when he was ... dealt with politically. All the conspiracy theories looked to the wrong agencies to blame. Look no further than the controllers of the FED. The Japanese banks need to do what's best for JAPAN.

-2 ( +0 / -2 )

The Obama administration war on prosperity is heatin up.

-1 ( +3 / -4 )

The "innocent, working class people" I was referring to work at restaurants, are receptionists at hair salons, operate cash registers at Japanese grocery stores, etc. My concern is that these people could be hurt by the new regulations and laws, a possibility that many people (including perhaps yourself) don't fully appreciate.

Your concern for the shop workers in Japan is duly noted, but the plain truth is that laws passed regarding banking activities in the United States had little to no impact on a ramen shop worker in Shibuya, Japan. Please illuminate me on how restricting banks in the U.S. from "trading in financial instruments on their own account" is going to hurt the cashier at your local デパート. The U.S. can't pass laws that are binding in other countries. Some people here apparently haven't learned that.

I would hope the Bank of Japan isn't going to go bankrupt if they have to change their practices at their American branches, or even shut their American branches. I would think they would continue as usual once they found another country to do these risky transactions in. These transactions were identified as one of the reasons the global economy hit this rough spot. That the Bank of Japan is screaming so loudly about this new restriction speaks volumes as to who one of the major contributors to the crisis was.

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Japan needs to update its banking systems. Period.

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The global financial crisis was caused by central banks flooding their respective countries with money, and keeping interest rates artificially low, creating a huge bubble.

Sure but that was exacerbated by private financial institutions investing in risky leveraged assets --such a subprime mortgages. The low rates facilitated that, sure, but the institutions also created very risky instruments.

0 ( +0 / -0 )

Mack, how do you sleep at night? Don't you worry about the customers in Japan who get nickeled and dimed by your bank for everything? Who get no almost no interest on their cash they have in your bank? Do you worry about the shops and stores in Japan that suffer due to bad banking practices in Japan?

-2 ( +1 / -3 )

Stop the protectionism and allow foreign banks fully in the Japanese market before asking Washington to think about the issues of Japanese banks.

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Kronos, I agree - the article describes Japanese banks' unhappiness with the new regulations but not the regulations themselves.

The bread and butter of such banks has traditionally been managing their customers' accounts for a fee. Such customers are varied in nature and as such will not instantaneously stampede in the same direction upon any given event.

Since the '80s, though, banks have begun investing using their own money to speculate. Aside from possible (and, in many cases, proven) conflicts of interest against their clients, bankers are more knowledgeable of how the system works and how to exploit it; they tend to trade more frequently and in larger amounts; and they DO tend to move at once in the same direction. The amount of such capital movements challenges even the Fed's ability to counteract. Hence, the new regulations, which will have no effect on traditional banking business.

Banks which want to continue trading aggressively on their own accounts are welcome to do so - just not from the United States.

0 ( +0 / -0 )

Yet, on the same thought,Japanese banks are by far better than banks like Bank of America (BOA). BOA would not care if you were laid off or homeless they woukd still ttry to cheat their customers with hefty fees.

-4 ( +0 / -4 )

To The_True:

It's unfortunate that you chose to attack my motives rather than to address my arguments, which would have been more contructive and less personal, but the short answer is: Of course I'm concerned about myself. But I'm also concerned about the broader impact on people and was using this forum to make a political-sociologic argument, not to make selfish complaints about my own situation.

Fadamor: Please re-read my two previous posts. I never referred to anybody or anything inside of Japan. All of my comments related to specifically to New York, and New York only. I am making a relative narrow point about how there are always unintended consequences related to laws and regulations. I'm not defending all of the every bank's practices.

1 ( +1 / -0 )

I say go ahead with the reforms despite Japan's protest.

-1 ( +1 / -2 )

To tmarie:

Are you angry at me personally for some reason? It seems that you feel that I'm guilty by association, whether or not I have control over any of the issues that bother you, and that this triggers some kind of animosity inside of you. It might be more constructive if you didn't change the subject and focused on what I actually said.

Also, please note that I never defended the banks for anything. All I am doing is trying to get people to think about the unintended consequences of rules and regulations, especially when they are rules and regulations driven in part by a sense of revenge and with limited if any understanding of the extremely complex issues involved.

2 ( +2 / -0 )

To CVHuan:

This comment is not intended to be confrontational. I'm just trying to understand people's thought process, please don't feel you need to get defensive. Given that you are in favor of the reforms, I'm wondering if you: 1) reject my argument that many average people will be hurt by the reforms, or 2) believe that the benefits outweigh the negative impacts.

1 ( +1 / -0 )

Starring Tim Geithner as "The Volcker": Some bankers just want to see the world burn.

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The Volcker Rule as it now stands is a prime example of throwing the baby out with the bathwater.

Through the Volcker Rule, US legislators aim prohibit bank trading in all financial instruments because some forms of financial instruments exacerbated the financial crisis. They are painting all financial instruments with the same brush and grossly overreaching with this policy.

I agree that it is a good idea to remove banks from trading in credit default swaps and other such high risk and highly speculative instruments. But, (in line with what @MackUtsunomiya has written) inflicting harm on the international sovereign bond trade will be detrimental to people at all levels of society worldwide.

With the looming EU/worldwide sovereign debt crisis, this is the worst possible moment for the US to impose this sort of ban. I hope US legislators take some time to put some meaningful thought into this.

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Mack, how do you sleep at night? Don't you worry about the customers in Japan who get nickeled and dimed by your bank for everything? Who get no almost no interest on their cash they have in your bank? Do you worry about the shops and stores in Japan that suffer due to bad banking practices in Japan?

Do you worry about potential entrepreneurs whom want to start a small business but need a loan from even a small bank? Or how about the fact that no one anywhere is getting interest on their cash because of the inflation tax? Worrying about some small Japanese bank yet not worrying about central banking?

The solution to it all is Capitalism. There can never be a truly free market so long as their is central banking, centrally planning interest rates for all. Only the consumer can decide which banks should be allowed to operate via voting with his/her cash. It is the beauty of the free market in action. As Mack eloquently pointed out, there are side effects to every regulation. With every regulation there will ALWAYS be unintended consequences http://www.youtube.com/watch?v=Ij4H9M55c64 . If these reforms take place, and hopefully they do not then they will certainly kills Japanese jobs and even Japanese tourism. It always prevents foreigners from Investing within the U.S market.

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Don't think so, Piltdown - seems like a rare example of compromise between the two parties. Not perfect, sure, but something which disappoints both sides but leaves neither crying is probably a good thing. This article explains a lot;

http://www.nytimes.com/2011/10/14/business/new-dodd-frank-rules-muddled-by-congress-that-wants-it-both-ways.html?_r=2&src=recg

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BOA would not care if you were laid off or homeless they woukd still ttry to cheat their customers with hefty fees.

How are Japanese banks any different?

Mack, just wondering how you can defend Japanese banks when they are guilty of the same things American banks are.

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PiltdownMan has made the most logical and correct statement. He's no Neanderthal!

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To MackUtsunomiya: i didn't attack your motives or you personally, is just that i have been in japan for too long, and have never come across a Japanese person who care about anyone who is not japanese that face those kind of situations. another thing is that most of the people working in those japanese restaurant and shops are japanese, not New Yorkers, i live in new york for almost 20 years before coming to japan and even there most Asian immigrant play they racial card, i mean go to Flushing and there you have the Koreans with all the shops having they sign in Korean like they are in Korea, that is the USA for god sake!, the same in Manhattan with the Japanese Restaurants and shops around town, i mean i dont see the European immigrant doing that. i think is valid for me to wonder.

RealJapan said in his post "Stop the protectionism and allow foreign banks fully in the Japanese market before asking Washington to think about the issues of Japanese banks."

-1 ( +0 / -1 )

meh companies shouldn't have money, people should have money.

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@ The_Face

those kind of situations. another thing is that most of the people working in those japanese restaurant and shops are japanese, not New Yorkers, i live in new york for almost 20 years before coming to japan and even there most Asian immigrant play they racial card, i mean go to Flushing and there you have the

Heh, I used to pass by Flushing many times. There are many Chinese and Korean shops around there that will attempt to over charge you on your purchasing item on the basis that your ot an Ethnic Korean not Chinese lol.

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But the Bank of Japan and the government’s financial regulator wrote to authorities in Washington urging them not to apply the rules to non-U.S. firms, and calling for trading in Japanese government bonds (JGBs) to be exempt.Japan

has the highest debt burden of any advanced economy at around 200% of gross domestic product.

The document warned that the regulations threatened the LIQUIDTY & PRICING of Japanese and other non-U.S. government bonds at a crucial time for global debt markets

Once Japanese banks are out of the Wall Street, then some serious investorsthe will continue following the JGBs. No problem. The debt burden of Japan may face up to a trouble finding enough buyers to keep Japan floating though..That is very serious.

Do not worry about Japanese resaurant, sushi bars and other Japanese businesses in New York. Americans love Japanese food, so they will be doing okay.

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