Linette Lopez
Dec. 30, 2011
Image: Flickr: Mister Bombay
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That's not going to happen on Wall Street. Bankers may not be physically hungover when they go back to work on Tuesday morning, but they'll definitely still be feeling the effects of their biggest 2011 woes.
We're talking about big problems that aren't going away, so you may want to keep them in the back of your mind while you're downing champagne.
Because in 2012, you'll need to hit the ground running.
1. Basel III and the Volcker Rule
Banks are happy that the Fed isn't making new capital requirements
any higher than what was decided at Basel III,
but that doesn't mean they're embracing the new standards with open arms.
They're going to have to raise a sizable chunk of money.
One analyst says Bank of America alone will have to raise $45 billion by 2019.
Raising that cash will be harder once the Volcker Rule goes into effect
(potentially in July 2012) and banks can't engage in proprietary trading anymore.
The commenting period on that legislation ends on February 13, 2012.
2. Judge Rakoff
Since the 1970s, the SEC has settled cases with banks
without the latter having to confirm or deny its guilt.
When New York Judge Jed Rakoff rejected a
$285 million settlement between Citigroup and the SEC,
he was basically rejecting that whole system.
Now the two parties will have to go through the hassle of a trial
unless the SEC can win its appeal against Rakoff's ruling.
If the SEC doesn't win this one,
who knows how many other judges will try
to make banks defend themselves in court
3. Occupy Wall Street
Image: Daniel Goodman / Business Insider
The protesters lost their home base in Zuccotti Park,
and they haven't been making a lot of noise lately,
but our sources say they're gearing up to start demonstrating again in the spring.
In the meantime,
they'll be back on Mayor Bloomberg's street on January 6th
to protest his treatment of the press.
4. Congress
The nation's approval of Congress is at a record low.
Everyone has their reasons — for Wall Street,
its the uncertainty the governing body's spats add to markets.
From the debt ceiling debate
(which lead to a downgrade of the U.S.A's credit rating)
to the argument over extending the payroll tax cut,
Wall Street has been watching antics in Washington with obvious disdain.
5. Layoffs
We already know that banks are going to have to raise capital,
and one way to speed that process along is to cut expenses.
Morgan Stanley announced that it would be cutting 1,600 jobs world-wide
in the first quarter of 2012. In New York alone, 580 people may lose their jobs.
6. The U.S. Presidential election
This election is a clincher, no matter what party you support.
So some Wall Streeters are getting involved.
Blackstone Group's Steve Schwarzman
threw a fundraiser for his candidate of choice, Mitt Romney.
Hedgefunder Jim Chanos has been very vocal about his support of President Obama.
And it looks like JP Morgan CEO may be turning away from Obama
and throwing his support behind Mitt Romney.
7. Europe
Image: Ralph Orlowski / Getty
Where do we begin? For a detailed explanation of how Europe got to be such a mess, click here.
What you really need to know right now, though,
is that investors are still speculating against Spanish and Italian bonds,
which means European leaders are still under pressure to find a solution
that will make investors believe that everything will work out.
The word is that only the ECB has the power calm markets by promising that
it will buy an unlimited amount of sovereign bonds from danger countries.
The ECB, however, says that plan say that it would monetize debt,
which is illegal under EU treaty.
8.A stagnant global economy
Okay Europe is just one piece of this. Another piece is, of course,
China. Everyone is afraid that it's economy will slow
because of a lack of demand from the West.
That would be a blow to the entire global economy.
Here in the U.S., our GDP just isn't growing fast enough
and Q3 2011 growth was just revised down from 2.0% to 1.8%.
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