What We Read Today 09 April 2014

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary “reading list” which will include very brief summaries of why each item has gotten our attention. Suggestions from readers for “reading list” items are gratefully reviewed, although sometimes space limits the number included.

• Tax Preparers Targeting Poor With High Fees (Campbell Robertson, The New York Times) A vast majority of tax preparers are ethical and serving clients well. But there are some who charge fees like a top corporate lawyer to prepare and file a return requiring 30-60 minutes of work. There are a range of problems in the tax prep field, ranging from incompetence to outright fraud.

• Biggest US banks forced to hold $68bn in extra capital (Gina Chon and Tom Braithwaite, Financial Times) Can we make it unprofitable to be TBTF? The equity requirement is 67% higher than the 3% requirement in Europe.

US regulators have held out the prospect of more draconian measures after ratcheting up capital requirements for the biggest US banks – from JPMorgan Chase to Goldman Sachs – forcing them to hold at least $68bn in additional capital.

A new “leverage ratio” will force the eight largest US banks to hold a minimum of 5 per cent equity to total assets to absorb losses in a crisis and proposes adopting a more stringent way of calculating the rule.

The leverage ratio is supposed to be a backstop to other capital rules that are “risk-weighted”. It does not allow banks to use their own models, which some critics have warned allows institutions to game the system.

• Seeds being sown for the next GFC (John Addis, The Canberra Times) As long as TBTF banks remain too big to fail the next crisis is just down the road.

• High-Frequency Din Rises as Trading Inquiries Evoke Market’s Past Scandals (Sam Mamudi and Gerrit De Vynck, Bloomberg) Hat tip to John O’Donnell. Authors claim scandals for stock markets are nothing new. See also Shah Gilani’s latest at GEI Investing.

• ACA can be repealed even with enrollment, Ryan says (Derek Wallbank, Bloomberg, Employee Benefit News)

“I don’t think it can last,” Ryan said of the law in an interview recently with Bloomberg Television.

Ryan this week unveiled a budget plan that seeks to repeal the 2010 law known as Obamacare and would scale back the U.S. safety net in an effort to eliminate the deficit in 10 years. The House will vote on the proposal next week. House Democrats will release their alternative as soon as Monday, April 7.

The Republican budget proposal will serve as a contrast with Democrats’ fiscal priorities before the U.S. midterm election on Nov. 4. Senate Democratic leaders have said they plan to tie House members vying for Senate seats in Colorado, Montana and Louisiana to Ryan’s proposal.

“This is the fourth year we’ve passed a budget like this, fourth year we’ve said here’s how we plan on balancing the budget and paying off the debt,” Ryan said in advance of next week’s vote. Though it’s expected to be close, party leaders in the House say they’ve secured sufficient support to pass the measure, probably with only Republican votes.

Ryan and Senate Budget Committee Chairman Patty Murray agreed in December on a two-year deal that sets top-line discretionary spending at $1.014 trillion for the 2015 fiscal year that starts Oct. 1. Ryan’s budget total, including mandatory spending on entitlement programs, including Medicare and Social Security, is $3.7 trillion.

• After A Lioness Killed A Baboon, This Baby Was Left All Alone. What Happened Next Is Unbelievable. (ViralNova) Somethings just can’t be real, or can they?

Today there are 13 more articles discussed ‘behind the wall’, including a “mini-article” discussion about ‘Flat Tax‘ and ‘Fair Tax‘ proposals.

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