This is proving to be an exciting summer in many regards, in the midst of new heat records in the Northeast. We are back in New York and have suffered along with the rest of New York City through an oppressive week of heat and humidity. When is that first fall NFL football game? The season will open on the evening of September 5th, with the defending Super Bowl Champion, the Baltimore Ravens playing the Denver Broncos. In spite of the heat and the building excitement for the new college and professional football season, this summer is proving to be exciting and, at certain points, complex as well.
First is the 21st Centry Glass-Steagall Act introduced by Senators Warren and McCain. “Senator Elizabeth Warren on Thursday introduced an aggressive piece of legislation that intends to take the financial industry back to an era when there was a strict divide between traditional banking and speculative activities.” (“Senators Introduce Bill to Separate Trading Activities From Big Banks,” New York Times: DealBook, July 11, 2013.) “The bill, which is also sponsored by Senator John McCain, Republican of Arizona, and two other senators, is named the 21st Century Glass-Steagall Act. Its intention is to create a modern version of the seminal Glass-Steagall legislation from the 1930s, which placed firm limits on what regulated banks could do. It was fully repealed in 1999, laying the groundwork for the mergers that created some of the biggest banks of today. If it passed, it could force many of those banks to let go of their trading operations.”
What seems to be lost on Senators Warren and McCain and their two other sponsors, Maria Cantwell, Democrat of Washington and Angus King, independent of Maine, is that banking is a global business and that their prescription for ending “too big to fail” will make the U.S. banking industry much less competitive in the global markets where they operate today.
“In recent weeks, the Treasury Department, senior regulators and members of Congress have stepped up efforts intended to make the largest banks safer.” (“Big Banks, Flooded in Profits, Fear Flurry of New Safeguards,” by Peter Eavis, New York Times, July 18, 2013.) “The banks have warned that more regulation could undermine their ability to compete and curtail the amount of money they have to lend, but the strong earnings that came out over the last week could undercut their argument. The most pressing concern for banks is a relatively tough new rule that regulators proposed last week that could force banks to build up more capital, the financial buffer they maintain to absorb losses. But the banks did not demonstrate any difficulty in meeting the proposed rules, and the banks now appear to have fewer allies in Washington than at any time since the financial crisis.”
It is disturbing that when our six largest banks – Bank of America, JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley and Wells Fargo – report their best earnings since 2008, our political leaders would choose this time to argue for more regulation. That is not to say that they were not culpable for the Great Crisis. However, in the midst of a very slow and uneven global recovery, we need strong global banks to partner with global businesses to drive growth and job creation. I, for one, applaud their record earnings and their return to health. They remain a major underpinning of the U.S. strength in global markets.
Another exciting development has been the resurgence of the British sportsman. I sense that this trend started with the London Summer Olympics of 2012. Great Britain and Northern Ireland won 29 gold medals, trailing only China with 38 gold medals and the United States with 46 gold medals. In total medal count, they placed fourth with 65 behind the U.S. with 104, China with 88, and Russia with 82. The days of Eddie “The Eagle” Edwards representing the U.K. in the 1988 Winter Olympics are ancient history.
In mid-June at the U.S. Open Golf Championship at Merion Golf Club in Ardmore, Pennsylvania, Justin Rose came from behind to beat Phil Mickelson on Sunday and become the first British golfer to win a major since Nick Faldo when he won at the Masters in 1996. Mickelson, who tied for second place, recorded his sixth 2nd place finish at the U.S. Open, without a win.
Then earlier this month, the Scot Andy Murray defeated Novak Djokovic at Wimbledon to become the first British male to win the title in 77 years. Murray previously won the gold medal at the 2012 London Olympics.
As I write this on Saturday afternoon after the third day of the British Open, the Englishman, Lee Westwood, whom many consider the best golfer to never win a major (Phil Mickelson had this weight on his shoulders prior to winning his first Masters’ title and now owns four major victories), has the lead by 2 strokes over Tiger Woods and Hunter Mahan. The leaderboard is very tight, with only 5 strokes separating number 10 on the leaderboard from Westwood. The final round, which will be broadcast starting at 6:00 a.m. on the East Coast, should be great theatre and championship golf at its best.