New York, New York (TheStreet) -- Bill Ackman is lukewarm about the government's efforts at financial reform, maybe because he thinks President Obama's biggest challenge right now isn't sorting out the banks, but rather how to handle the deficit.
|Pershing Square's Bill Ackman is happy that FinReg finally made it through Congress.|
"The best thing about the bill is that it has been passed," said the CEO and founder of hedge fund Peshing Square Capital during a MBA Corps-sponsored panel discussion in New York on Wednesday night.
Also appearing on the panel, which addressed the outlook for the banking industry post-FinReg, were David Askin, co-founder of Bloomberg's Evaluated Pricing Business; Ed Grebeck, the CEO of Tempus Advisors; and Christine Richard, a Bloomberg reporter and author of The Confidence Game.
While some of the panelists such as Grebeck felt the government's role under the bill could pose systemic risk, Ackman said he thought the bill was a positive move and that the government's main problem at the moment was its roughly $1 trillion in debt.Ackman chose to focus on what the legislation had addressed; rather than what it didn't, steering the conversation away from such lingering issues as what to do with Fannie Mae (FNM) and Freddie Mac (FRE). "I think there are some significant things in this bill such as the resolution requirement, disclosure and the Volcker rule," he said. "I've never felt good about banks raising money with deposit guarantees. That kind of capital should not be used to trade proprietary risks." The transparency in the bill is good, according to Ackman. He believes that hedge funds should be required to register with the SEC and adopt best practices. His own fund registered in 2004. On the other hand, he thinks both the Securities and Exchange Commission and the Federal Deposit Insurance Corp. should get a taste of their own medicine as well, and be more transparent themselves. "There should be disclosure by banks," Ackman said. "I was not of the view that Goldman Sachs (GS) committed a crime with Abacus. I think now you will see better disclosure though." Ackman also said he believes that rating agencies helped cause the financial crisis and that tighter regulation for them is a step in the right direction. "I would put rating agencies at number one for causing the crisis," he said. "People were using their money to invest in triple-A rated companies that were just as risky as internet stocks. Exposing rating agencies for liability is really a positive development." Ackman, who also called the Consumer Protection Act "a waste," added that he expects community banks will have a hard time under Dodd-Frank. "I think a lot of community banks are having serious issues because they had loans from construction. The financial reform bill cuts things off at $50 billion," he said. "Community banks have been allowed to fail and more will. The cost of capital will be higher and they will have leverage loss." --Written by Maria Woehr in New York.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV