Those nomination of Antonio Weiss to a treasury post has gotten ex tell burned democrats up in arms.  Elizabeth Warren is protesting his nomination.  While having the fox guard the chicken coop is a legitimate question for someone who has spent his career in investment banking,

Bloomberg View suggests suspicions are misplaced.  “The undersecretary for domestic policy oversees capital markets, financial institutions, consumer protections and not-insignificant matters like the national debt. For the last couple of decades, as an investment banker at Lazard in the U.S. and France, Weiss has been in the middle of complex financial deals involving businesses, banks, hedge funds and foreign governments. This is exactly the kind of real-world decision-making experience that will come in handy when interest rates finally start going up again — as they’re expected to this year — and the markets get jittery.”

Senator Elizabeth Warren may legitimately be leery after Congress weakened the Dodd-Frank financial reform law.  But this is probably  case of oveerkill.  Let’s focus on putting teeth in regulations that are on the books, empowering community banks, and splitting off high risk banking operations from tax payer backup.

Dave Michaels reports:  The Nobel laureate economist Joseph Stiglitz who called for a tax on high-frequency trading, has been blocked from a government panel that will advise regulators on issues facing U.S. equity markets.

Democratic Commissioner Luis Aguilar had pushed for Stiglitz, who has said high-frequency trading isn’t good for financial markets and should be curbed, possibly through a tax.

“I think they may not have felt comfortable with somebody who was not in one way or another owned by the industry,” Stiglitz said in a phone interview.

White said Jan. 3 that she will announce the members of the advisory market-structure committee in the coming days — six months after she first proposed the idea together with a blueprint for renewed market oversight. Each of the five commissioners — two Democrats, two Republicans and White, an independent — was allowed to nominate one person to the panel. The commission then had to come to agreement on the final list, which is expected to have more than 15 members.

Stiglitz, 71, wasn’t the only nominee that sparked wrangling. Earlier in the process, SEC Commissioner Michael Piwowar, a Republican, opposed the involvement of TIAA-CREF Chief Executive Officer Roger Ferguson.  Ferguson, whose firm manages hundreds of billions of dollars in retirement savings, is a former Federal Reserve vice chairman. He is married to former SEC Commissioner Annette Nazareth, who now advises some of Wall Street’s biggest banks on regulatory issues.

The panel is expected to include representatives of Wall Street brokerage firms and academic researchers. IEX Corp. Chief Executive Officer Brad Katsuyama and former Senator Ted Kaufman of Delaware are expected to be named to the panel, two people with knowledge of the matter said.

Katsuyama started the IEX trading platform with the aim of leveling the playing field for investors by curbing the pace of buying and selling — eliminating opportunities for the fastest firms to trade in front of slower ones. He has said the government should consider forcing greater transparency of trading venues’ operations.

High-frequency trading, which uses computer algorithms to buy and sell large numbers of shares in fractions of a second, accounts for more than 50 percent of U.S. trading volume.

The dust-up over Stiglitz is emblematic of the frequent conflict among commissioners that has slowed progress on regulatory policy and enforcement matters under White. A recent case against Bank of America Corp. was stalled for three months as commissioners, divided along political lines, fought over additional penalties that could have expelled the bank from the profitable business of raising money for private companies.

A former chief economist of the World Bank  Stiglitz argued in an April speech that high-frequency trading can make markets less efficient while driving other investors to cloak their orders by placing them away from exchanges using dark pools, leading to less transparency.

President Obama has nominated a community banker to the board of the Federal Reserve.  This nomination met with favorable comments from Senator Sherrod Brown, Fed board chair Janet Yellen and Frank Keating. It maybe time to take community banking functions away from the big banks, or me at least give them a ,choice between community baking sand investment banking.  Clearly a bank like JP Morgan Chase which only make 20 percent of its money on these functions would prefer to be an investment bank.   Goldman Sachs’ Richard Ramsden today suggests that the JPMorgan Chase that Jamie Dimon has taken years building would be worth more in pieces.  Can a break up be far behind?

The problem wirh break up of course is that the 80 percent of JP Morgan Chase’s acitivities that fall outside community banking might not be covered by tax payer dollars.  At any rate, they should not be.

An interesting side note:  Small banks benefit from regulation.  Is the flip side of this statement also true?

JP Morgan Chase’s parts are probably worth more to investors than the whole after regulators proposed tougher rules penalizing firms for size and complexity, according to Goldman Sachs Group Inc.

JPMorgan could unlock value by splitting its four main businesses or dividing into consumer and institutional companies, Goldman Sachs analysts led by Richard Ramsden wrote today in a research note. Units of New York-based JPMorgan trade at a discount of 20 percent or more to stand-alone peers, they wrote.

“Our analysis suggests that a breakup into two or four parts could unlock value in most scenarios, although the range of outcomes we assessed is wide, at 5 percent to 25 percent potential upside,” the analysts wrote.

The move would reverse much of Chief Executive Officer Jamie Dimon’s work since taking over JPMorgan in 2006. Under Dimon, 58, the firm grew to become the largest U.S. lender by assets and the world’s biggest investment bank after acquiring ailing firms during the 2008 financial crisis.

Dimon has said the firm’s size creates opportunities to cross-sell products and better serve clients.

“Each of our four major businesses operates at good economies of scale and gets significant additional advantages from the other businesses,” Dimon wrote in a letter to shareholders last year. “This is one of the key reasons we have maintained good financial performance.”

The logic of a breakup would rely on the consumer business, commercial bank, investment bank and asset management unit being valued closer to so-called pure-play financial companies, the Goldman Sachs analysts wrote. The parts probably could operate with lower capital levels as stand-alone firms, resulting in higher returns on equity, they wrote.

The maneuver would risk some of the $6 billion profit JPMorgan says it makes tied to synergies between businesses, though a split into halves would preserve much of those benefits, the analysts wrote.

The Federal Reserve laid out a plan last month that may require JPMorgan to add more than $20 billion to its capital by 2019. The rules could get even stricter, prompting banks to consider new business models, the Goldman Sachs analysts wrote.