The Federal Financial Forum

From: Reuters

* Illinois has the largest pension liability

* Big pension liabilities reflect long-term underfunding

* Nebraska has smallest pension burden

WASHINGTON, June 27 (Reuters) – Ten U.S. states have public pension liabilities that are at least as big as their annual revenues, according to a Moody’s Investors Service report released on Thursday that found the Illinois pension bill was equal to 241 percent of its revenues.

The rating agency took a new approach to determining the health of public retirement systems by weighing each plan’s net pension liability – the difference between the projected benefit payments and the assets set aside to cover those payments – against state revenue.

From: The Foundry/Heritage Foundation

James Gattuso

Tomorrow, the House Finance Committee, chaired by Representative Jeb Hensarling (R–TX), is holding a hearing on one of the most damaging legacies of the 2008 financial crisis: the “too big to fail” doctrine.

Simply put, the doctrine holds that some firms are so essential to the functioning of the U.S. financial system—and their sudden failure so disruptive to the economy—that policymakers must keep them from failing, bailing them out if necessary.

From: Market Intelligence Center

By: Michael Fowlkes

A new study puts data behind the contention that high-frequency trading is bad for regular investors.

A new study conducted at the University of Michigan took a look at a type of high-frequency trading known as high-volume arbitrage activity. This is the practice of finding and trading on price differences between different exchanges.

Under Regulation NMS, prices across exchanges are supposed to be the same. To do this, a central system, the Security Information Processor, compiles information from the various exchanges and calculates the National Best Bid and Offer prices.

Editor’s Note:  The past is always a rebuke to the present.  –Robert Penn Warren

From: HuffPo

Susie J. Pak, Author, Gentlemen Bankers: The World of J.P. Morgan

As the regulations created by Dodd-Frank are chipped away, many are asking why the federal government is unable to enforce banking reforms even after the worst financial crisis since the Great Depression. One major factor is the revolving door of Wall Street lobbyists, lawyers, government regulators, and elected officials, which has created a shared culture and common world-view that undermines the drive for fundamental change. Economic and political actors are, after all, social beings and repeated interactions can create cohesion even among professed adversaries.

From: HuffPo

Shahien Nasiripour

WASHINGTON — The U.S. government on Monday preliminarily designated at least three financial companies as having the potential to pose a grave threat to the financial system, the first time regulators have used post-financial crisis authority to crack down on companies that have previously escaped federal attention.

AIG, the bailed-out insurance giant; Prudential Financial, the life insurer and asset manager; and GE Capital, the $530 billion lender responsible for a bulk of GE’s profit in recent years, all confirmed that the panel of regulators known as the Financial Stability Oversight Council has proposed to tag them as being so-called systemically important financial institutions, or SIFIs.