UIGEA regulations proposed

[NASHVEGAS]

Originally Posted by Mousey

Christian Science Monitor call for tougher online gambling laws.

from the March 25, 2008 edition
Don't fold on Internet gambling ban

A 2006 US law has cut Web-based betting. If anything, the law needs to be toughened.

Last year, the percentage of American college students who gamble online fell to 1.5 percent from 5.8 percent the year before. The reason? A 2006 federal law restricting Internet gambling. Now some in Congress who want to tax this type of addictive betting plan to roll back that progress.

Rep. Barney Frank (D) of Massachusetts is expected to hold congressional hearings next month to explore overturning the 2006 Unlawful Internet Gambling Enforcement Act and replace it with legalized online betting, which in turn could generate taxes and fees to the tune of billions of dollars. His bill to legalize online gambling has so far found more than 40 cosponsors.

Not included in the cost of this revenue stream, of course, would be the social price paid from ....

Mousey, I realize you are just the messenger with your post but I believe as I previously posted UIGEA will be put on the back burner which in its current state of legal disarray may be a good thing. That said I believe Mr.Frank will be very occupied in the months to come.

An recent article from US NEWS & WORLD REPORT
Uncle Sam Nears a Massive Banking, Housing BailoutMarch 14, 2008 02:04 PM ET | James Pethokoukis-Money Writer/Capital Commerce


Of course, the irony of today's Federal Reserve bailout of investment bank Bear Stearns is that the firm has a reputation as being among the most free-market loving on Wall Street—and that's saying something about a company located smack in the middle in America's financial capital. But just as there are no atheists in foxholes, there are no libertarians during financial crises, at least not if it's their dough at stake. And while there are plenty of economists out there who are advocating a hands-off approach to the credit crisis and housing implosion—echoing Andrew Mellon's infamous advocacy of "liquidate...liquidate...liquidate"—they will be disappointed. Uncle Sam will probably continue to intervene during this financial turmoil.

And not just the Fed. More and more, it looks as though Congress, followed by a reluctant White House, will move ever more boldly to stop the hemorrhaging in housing and unfreeze the credit markets. Richard Bove, banking analyst at Punk Ziegel, says in a note this morning that it's "more certain than ever" that there will be a housing bailout to stop the increasing rate of foreclosures and the continuing drop in home prices. And political analyst Alec Phillips of Goldman Sachs says that he sees "a high likelihood that some type of housing measure is enacted this year." Most of the legislative energy seems to be swirling around a plan put forward by Democratic Rep. Barney Frank. The plan, as outlined by Bove:
• FHA provides up to $300 billion in new guarantees to help refinance at-risk borrowers into viable mortgages.

• The terms of the first mortgage are set at a level that the borrower can afford.

• A second mortgage is put in place, which pays off on sale of the house and allows the government to recover the losses absorbed by creating the first mortgage at below market rates.

• The existing lender agrees to accept a reduced payment, which could be substantial since the new loan is based on the house's current appraised value.

• Gets the existing lender free of all obligations and exposure to the borrower.

• Refinance between 1 and 2 million homes.

• Provide funds to refurbish empty homes and put them back on the market.

Phillips thinks that while President Bush might prefer a more free-market approach, the White House is "not likely to come out strongly against the proposal initially. Given our expectation for Democratic gains in the upcoming election, such proposals are likely to become law by mid-2009 in the event that they fail to gain support this year. For this reason, Republicans may seek a compromise in 2008."

Indeed, President Bush has almost gone out of his way not to rule out a bailout. Nor did he do so in a speech to the Economic Club of New York this morning. And in an interview on CNBC today with Lawrence Kudlow, the president basically said that in extraordinary situations, extraordinary action is required.

Now, don't expect a financial miracle or a relaunch of the housing boom here. Instead, a bailout would give clarity to investors by shifting the price and foreclosure risk of the tumbling housing market to the government and taxpayers. Bove, who has been advocating a plan like Frank's, thinks passage would be great news for homeowners and the credit markets:

This program will work. It makes sense. It penalizes the bad lenders. It allows the householder to stay in the home and forces him/her to pay the government at the time of sale for its initial losses. It allows the holders of structured financial securities to be paid off and reestablishes the credibility of these securities. It cleans away the financial garbage that is now depressing the markets. It provides a solution to the empty housing dilemma. Plus, and this is important, it creates a format that can be used by the private sector to rid itself of the troubled loans without government getting involved. Big banks can do this without the government's aid. This idea is as brilliant as the Fed's securities swap idea. Clearly I am biased in reviewing this proposal because it is one that I have been advocating for months in almost the exact same format. If this gets through Congress the financial crisis is definitely over.

And there are other ideas floating around as well. Nobel laureate and financier Myron Scholes wants the government to inject capital into the banking system by investing in debt and stock. International Monetary Fund official John Lipsky, a Wall Street veteran, also thinks the government may need to put taxpayer money directly into banks. And Vincent Reinhart, the Fed's former chief monetary economist, told Bloomberg that the Fed is inching closer to buying up those beaten-down mortgage-backed securities.

Are any of these suggestions likely to happen? Today's move by the Fed, using a little-used Depression-era provision of the Federal Reserve Act, makes previously unlikely actions seem far more possible.

[RobWin]

Well hell...color me pink I guess, but the more I read about Rep. Barney Frank, the more I'm starting to like him...

[RobWin]

Originally Posted by NASHVEGAS

And Vincent Reinhart, the Fed's former chief monetary economist, told Bloomberg that the Fed is inching closer to buying up those beaten-down mortgage-backed securities.

Are any of these suggestions likely to happen? Today's move by the Fed, using a little-used Depression-era provision of the Federal Reserve Act, makes previously unlikely actions seem far more possible.[/b]

Any idea when they are going to be making a decision on this one ??

[NASHVEGAS]

Originally Posted by RobWin

Any idea when they are going to be making a decision on this one ??

Your question opens a million other issues,lol......of course how we even got to this is beyond me but nevertheless that is another issue and in the past.....general consensus is without Fed intervention of buying this paper, a complete financial collapse is possible, I guess there is rational to Fed intervention in this situation and if artificial props (no opinion either way here) are a good thing then I hope The Fed does it in the next five minutes!!!

[RobWin]

Originally Posted by NASHVEGAS

Your question opens a million other issues,lol......of course how we even got to this is beyond me but nevertheless that is another issue and in the past.....general consensus is without Fed intervention of buying this paper, a complete financial collapse is possible, I guess there is rational to Fed intervention in this situation and if artificial props (no opinion either way here) are a good thing then I hope The Fed does it in the next five minutes!!!

Hell yea...you and me both !!!

[jetset]

UIGEA - A BURDEN WITHOUT BENEFIT

Competitive Enterprise Institute critical of attempt to use financial institutions to cripple online gambling

The Competitive Enterprise Institute in the United States has come out strongly against the use of financial institutions to cripple online gambling in the country following a study of the Unlawful Internet Gambling Enforcement Act. The act remains mired in a lack of clear regulations following widespread criticism of its impractcality.

Following a study of the implications of requiring the US financial industry to police unclear government enforcement policy on Internet gambling, the Institute claimed this week that the current laws have had damaging if unintended consequences far beyond their original target.

The report explains that the Unlawful Internet Gambling Enforcement Act (UIGEA), passed in October of 2006, has little to do with gambling itself, but is actually a wide-ranging regulatory mandate on banks, credit unions, credit card companies, wire transfer services, and even brokerages. The law forces financial institutions to cut off business with any entity that could possibly be engaged in online gambling transactions.

“The Act is unlikely to stop Internet gambling and could even threaten the stable, smooth operation of America’s banking system,” said Senior Fellow Eli Lehrer and author of the study Time to Fold the Unlawful Internet Gambling Enforcement Act .

“UIGEA and its currently proposed enabling regulations will undermine the financial privacy of all Americans and reduce the security of their bank accounts. In short, it makes almost no financial, social, or economic sense.”

Some members of Congress are at least aware of the problems with the gambling ban. On April 2nd, the House Committee on Financial Services is scheduled to hold a hearing titled “Proposed UIGEA Regulations: Burden without Benefit?” to detail what has gone wrong with its implementation and how to fix it. Ideally, however, they would go much further.

“Even before it considers proposals for the regulation of online gambling, Congress should consider an outright repeal of the Unlawful Internet Gambling Enforcement Act,” said Lehrer. “The law has very little to do with gambling and serves as a poorly thought-out banking regulation fraught with potentially perverse incentives. Quite simply, it is a bad law. Repealing it makes sense.”


MORE HEARINGS ON THE UIGEA NEXT WEEK

Internet gambling hearing set for Wednesday

Congressman Barney Frank, a Democrat from Massachusetts who chairs the influential House Financial Services Committee, wants to legalise online gambling in the U.S., effectively overturning the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) by introducing a regulatory and licensing regime under his Internet Gambling Regulation and Enforcement Act.

A further hearing on his proposal is scheduled for April 2 in Washington, and supporters are being urged to contact their political representatives expressing their support before the hearing.

[NASHVEGAS]

Originally Posted by RobWin

Any idea when they are going to be making a decision on this one ??

Rob, maybe reading in between the lines of this article may assist in addressing your concerns. Of course The FED and CONGRESS (Barney) might give the UIGEA issue priority.,not!!

Bush Seeks Financial Regulation Overhaul
SOURCE:AP via AOL.COM NEWS
Posted: 2008-03-29 03:29:36
WASHINGTON (AP) - The Bush administration is proposing a sweeping overhaul of the way the government regulates the nation's financial services industry from banks and securities firms to mortgage brokers and insurance companies.

The plan would give major new powers to the Federal Reserve, according to a 22-page executive summary obtained by The Associated Press.

The Fed would be given broad authority to oversee financial market stability. That would include new powers to examine the books of any institution deemed to represent a potential threat to the proper functioning of the overall financial system.

The proposal, which will be outlined Monday in a speech by Treasury Secretary Henry Paulson, is certain to set off heated debates within different sectors of the financial services industry and in Congress, where some Democrats are likely to complain that the proposal does not go far enough to crack down on abuses.
The administration divided its recommendations into short-term goals that could be adopted quickly, intermediate recommendations and an "optimal" regulatory framework, which contains a radical restructuring of how the government supervises banks and other financial institutions.

The recommendations are the product of a yearlong review that was begun in an effort to modernize the government's regulatory structure so that the country's financial services industries could better compete in a fast-changing global economy.

The plan also seeks to address problems that have been brought to light in recent months since a severe credit crisis began roiling financial markets last August.

That crisis has already claimed as its biggest victim Bear Stearns, the nation's fifth-largest investment bank, which came to the brink of collapse before a government-arranged purchase by JP Morgan Chase & Co.

"I am not suggesting that more regulation is the answer, or even that more effective regulation can prevent the periods of financial market stress that seem to occur every five to 10 years," Paulson will say in the remarks he will deliver on Monday.

But the plan does seek to address problems highlighted by the current crisis in which the Fed in an unprecedented move has begun making direct loans to securities firms in an effort to shore up a system badly shaken by billions of dollars of losses stemming from sour mortgage loans.

The proposal would allow the Fed, in its new role as "market stability regulator," to dispatch examiners to check the books not just of commercial banks but of all segments of the financial services industry.

The administration proposal would also consolidate the current scheme of bank regulation by shutting down the Office of Thrift Supervision and transferring its functions to the Office of the Comptroller of the Currency, which regulates nationally chartered banks.

The plan recommends that the Securities and Exchange Commission, which regulates stock trading, be merged with the Commodity Futures Trading Commission, which regulates futures trades for oil, grains and various other commodities.

The plan would create a national regulator for the insurance industry, which is now largely governed by the states, and would create a Mortgage Origination Commission to try to address the abuses exposed in the current tidal wave of mortgage defaults.
The role Federal Reserve Chairman Ben Bernanke and his colleagues have been playing to shore up the financial system would be formalized in the administration plan by giving Fed officials greater power to detect where threats might be lurking in the system.

The proposal is certain to generate intense scrutiny in Congress and within the financial services industry, where past efforts to change how regulation is handled have met with fierce resistance.

Many Democrats in Congress are already pushing tougher proposals that would impose much stricter regulation in an effort to crack down on abuses exposed by the current credit crisis.

Sen. Charles Schumer, D-N.Y., said he believed Paulson's plan offered some valid suggestions.

"In broad outlines, we agree with large parts of Secretary Paulson's plan," Schumer, chairman of the Joint Economic Committee, said in a statement. "He is on the money when he calls for a more unified regulatory structure, although we would prefer a single regulator to the three he proposes."

Under Paulson's approach, the long-term goal would be to designate the Fed as market stability regulator and to have a financial regulator who would focus on financial institutions that operate with government guarantees such as providing deposit insurance.

The administration plan, which was first reported by The New York Times on its Web site Friday night, also proposes a business conduct regulator who would be in charge of overseeing consumer protection issues.

The initial reaction from the securities industry was also positive.

"Treasury has delivered a thoughtful and sweeping plan which should provoke intense discussion, debate and potential legislative changes," said Tim Ryan, president of the Securities Industry and Financial Markets Association.

"Our present regulatory framework was born of Depression-era events and is not well suited for today's environment where billions of dollars race across the globe with the click of a mouse," Ryan said in a statement

[jetset]

UIGEA HEARINGS (Update)

Congressman Gutierrez will chair April 2 review

April 2nd's Congressional hearing on the practical implementation of the Unlawful Internet Gambling Act (UIGEA) will be conducted by the Subcommittee on Domestic and International Monetary Policy, Trade, and Technology under the chairmanship of Democrat Congressman Luis Gutierrez.

The hearing, titled "Proposed UIGEA Regulations: Burden Without Benefit?" will be held in the Rayburn House Office Building in Washington DC commencing at 10 am.

The hearing is regarded as being of critical importance by many industry observers, because it facilitates a thorough debate on a highly controversial piece of legislation that was pushed through Congress in late 2006 under questionable circumstances. This denied many of the voting politicians at the time the opportunity to read and understand its full implications, particularly for the financial institutes required to enforce the provisions against online gambling transactions.

Nevertheless, the act had immediate and serious consequences for many online gambling and processing companies which felt compelled to exit the well established and connected American market, resulting in serious financial losses and less choice for the US player.

Since then, the much-delayed regulations drafted to support the act have also run into trouble, with a slew of critical submissions to the drafting authorities underlining the practical difficulties of implementation, the burden on an already stretched banking industry and the lack of detail in the enforcement proposals.

[jetset]

FRANK LAUNCHES NEW ATTACK ON ANTI-ONLINE GAMBLING REGS

New bill seeks to stop implementation of unworkable UIGEA regs in its tracks

Following the recent Congressional hearings in Washington on the Unlawful Internet Gambling Enforcement Act, few can doubt that government agencies and the financial services industry required to police it have a monumental task in thinking up practical ways to implement a flawed law passed by Congress in 2006.

This week that task may have been made tougher by new legislation - H.R.5767 - introduced by influential Financial Services Committee chairman Barney Frank and presidential aspirant Ron Paul.

According to a statement from Frank and Paul, HR 5767 introduced this week seeks to prohibit the Federal Reserve Board of Governors and the Treasury secretary from "proposing, prescribing, or implementing any regulation that requires the financial services industry to identify and block Internet gambling transactions."

If approved, the Bill will effectively curtail the further operation of the UIGEA.

It comes after intense criticism of proposed regulations drafted by government agencies to give teeth to the Unlawful Internet Gambling Enforcement Act, which was designed to disrupt financial transactions with online gambling companies but places the burden of enforcement on the U.S. financial services industry.

Both Congressmen claim the UIGEA unduly infringes upon personal freedoms. "The ban on Internet gambling infringes upon two freedoms that are important to many Americans: the ability to do with their money as they see fit, and the freedom from government interference with the Internet," Representative Paul said.

Critics protest that the UIGEA is impossible to implement due to ambiguities in its language and a serious lack of definition, together with the impracticality of tasking an already stretched financial services industry with its complicated enforcement across a variety of financial and in many cases international instruments.

Congressman Frank has highlighted these flaws, saying: "I believe that even those who agree with it ought to be concerned about the regulations' impact," and pointing out that the recent Congressional hearing had showed that "the regulations are unworkable for the financial services industry."

Federal government executive Louise L. Roseman to an extent confirmed that, warning that banks had expressed uncertainty about implementing the law at the hearing on April 2 (see previous InfoPowa report) and commenting on the difficulty in drafting effective supporting regulations.

"The payment system, frankly, isn't well designed to be able to identify this activity," Roseman said.

Congressman Frank has another card ready to play in his fight against the UIGEA. His HR 2046 Internet Gambling Regulation and Enforcement Act currently has 48 co-sponsors and seeks to regulate and licence online gambling in the United States, raising tax revenues at the same time as controlling the popular pastime of Internet gambling.

If eventually passed, this bill could effectively overturn the UIGEA, although it is still in need of more political support.

A spokesman for the anti-UIGEA pressure group Safe and Secure Internet Gambling Initiative, Jeffrey Sandman applauded the new bill, saying: "The Frank-Paul bill would stop the U.S. government from taking any further steps on regulations that would require all of the country's financial institutions to block Internet Gambling payments."

"It's a bold move, but a necessary one, in light of the warnings from the Treasury and Federal Reserve that they did not know how to write regulations to solve the problems created by UIGEA.

"Further, witnesses representing a broad spectrum of the financial services community unanimously stated that the current ban on Internet gambling is dangerous to the payments system and ineffective in stopping people from using the Internet to play poker, make bets on horses, or engage in other types of wagering."

[Stanford]

Originally Posted by jetset

FRANK LAUNCHES NEW ATTACK ON ANTI-ONLINE GAMBLING REGS

New bill seeks to stop implementation of unworkable UIGEA regs in its tracks

Following the recent Congressional hearings in Washington on the Unlawful Internet Gambling Enforcement Act, few can doubt that government agencies and the financial services industry required to police it have a monumental task in thinking up practical ways to implement a flawed law passed by Congress in 2006.

This week that task may have been made tougher by new legislation - H.R.5767 - introduced by influential Financial Services Committee chairman Barney Frank and presidential aspirant Ron Paul.

That is certainly good news.

But even if the proposed Regs survive, does this pretty well mean that routes to play can be opened. I could see a foreign bank and then a Neteller type account through the foreign bank. All transactions to the US would be bank to bank. All transactions to the Web Wallet would be via the foreign bank account. Under the proposed Regs, I don't see a problem with that arrangement. The only problem I see is we need a replacement for Neteller like we had a replacement for Paypal.

Will it be time to come back soon? Any thoughts from anyone?

Stanford.