Comments on: Regulatory Reform For Finance: Three Views

By: HG

HG — Sat, 20 Jun 2009 06:42:19 +0000

I’m not usually one to defend Summers and Geithner but saying that they “want a minimal degree of reform with a great deal of window dressing”…sounds a bit harsh. To me it feels as though no one wants to go WAY overboard (which would be predictable in a situation like this) but the administration recognizes change is needed…

By: michael donner

michael donner — Thu, 18 Jun 2009 23:53:43 +0000

great post by Karl Denninger at market ticker http://market-ticker.denninger.net/

the best take-a-way for me was how completely Obama missed the root of the problem..not getting lending going again and reinflate (some of the ‘reasons’ for his plan)…rather TOO MUCH DEBT already and tapped out borrowers, student loans, credit cards, auto payments, home mortgages, lost jobs….so regulating the FIRE so they can continue lending and scamming us back to 2005 is clearly not the answer.

By: michael donner

michael donner — Thu, 18 Jun 2009 23:48:49 +0000

Obama gave the best, most pitch-perfect speech about financial reform at Cooper-Union NYC during his campaign. Obama spoke eloquently and with ease about the need to reinstate a new 21st century Glass-Stegall and how Wall Street was not the friend of Main Street, how Mom and Pop must be protected from powerful unregulated hedge funds and the vicious short-selling traders who only profit through speculation and manipulation. It sounded so good.

On stage with Obama that day was an impressive cast of economic talent/clout. Highly respected anti-neolibs like Volcker and I think Stiglitz were present but then paradoxically, so was the free-market/neo-liberal crowd like Larry Summers and Robert Rubin, the very man who was almost solely responsible for killing Glass-Stegall in the first place. ( I think we all know the rest of the story) So I wondered which economists on stage that day were the real Obama economists and which ones were the campaign props? (parts stolen)

those were simple, clear ideas that we already voted for. what happened i wonder?

By: News Day: MN unemployment up to 8.2 percent / Foreclosures dip / Preventing the NEXT economic meltdown – or not / more « Mary Turck

Thu, 18 Jun 2009 14:17:29 +0000

[...] warning to inspire new regulatory zeal. Not so. For perspectives on the watered-down reform plan, here and here. If you haven’t bookmarked Baseline Scenario yet, it’s worth doing so – [...]

By: Etl World News | The new financial regulatory reform

Etl World News | The new financial regulatory reform — Thu, 18 Jun 2009 12:00:55 +0000

[...] Drum is unhappy. Paul Krugman is critical. My mental model of Simon Johnson is even more critical. Need I cite Yves Smith? Felix Salmon is [...]

By: When Market Incentives Lead to Bad Outcomes, Continued « The Baseline Scenario

Thu, 18 Jun 2009 11:35:18 +0000

[...] financial reform watered down to “minor technocratic tweaks” (although I hold out some hope for the Financial Product Safety Commission, or whatever it [...]

By: The Defanging of Obama’s Regulation Plan - Economix Blog - NYTimes.com

The Defanging of Obama’s Regulation Plan - Economix Blog - NYTimes.com — Thu, 18 Jun 2009 10:53:17 +0000

[...] himself seems to recognize that previous consumer protection was scattered and ineffectual. A strong agency could help protect us all both in boom times and during [...]

By: Ted K

Ted K — Thu, 18 Jun 2009 04:46:36 +0000

It’s hard for me to criticize President Obama, because politically it’s hard to say if he could get more done than this. Many things a President may want to do, are very difficult to enact because of politics and the banking lobbies. One of the better outlines of the things which should have been included in the reform package was given by Robert Reich on his website. It’s not perfect, but with just 3 major points Reich does an excellent little essay. The only thing I can think at the moment to add to Reich’s wish list on finance reform would be to MAKE ALL CREDIT DEFAULT SWAPS ILLEGAL.
Obviously Obama’s reform package as revealed today falls WAY short on many of Reich’s essentials. It’s extremely extremely disappointing. I don’t blame Obama for this extreme disappointment. I just feel sad our system has presented Obama with this sad political reality. The political reality that what bank executives and bank lobbies say is considered more important than depositors and families suffering foreclosure. Here is the link to Reich’s essentials of market reform.
http://robertreich.blogspot.com/2009/06/three-essentials-of-financial-reform.html

By: donailin

donailin — Thu, 18 Jun 2009 03:19:50 +0000

You ask for too much. This is congress we are talking about who gives the up or down vote.

Congress: The land of the compromised.

By: chas

chas — Thu, 18 Jun 2009 01:12:31 +0000

“I am especially happy to see that the CRA’s will be appropriately controlled—”

Looks like you missed my point. There were plenty of regulations on the books to have prevented the crash. But, they weren’t enforced because the enforcers knew they would not be held accountable. A regulation on paper doesn’t buy you anything. It is no guarantee of compliance. Accountability for enforcement does. How do you hold them accountable? You fire them as a start.

Geithner even argued for reduced capital requirements at banks while Chairman of the NY Fed.

From Wikipedia -

“In May 2007 he worked to reduce the capital required to run a bank.”

By: Seeking Safety

Seeking Safety — Wed, 17 Jun 2009 22:35:25 +0000

Does the recent announced regulatory reform by Obama mean that the emerging markets can now put up a straight face to the US and simply say that we do not regard your financial system safe and therefore no US i-banks can participate in their markets? What is in the mind of Goldman Sach’s knowing that the largest part of their future growth may come from these markets?

By: Bayard

Bayard — Wed, 17 Jun 2009 22:16:53 +0000

OOPS: derivatives is what I meant.

By: Bayard

Bayard — Wed, 17 Jun 2009 22:15:54 +0000

You obviously haven’t done much reading about the crisis, but I do agree with what you say about B, G, and S. However, that having been said, we definitely need to get a freshly invigorated regulatory environment going. The old one has too many problems: specifically, too many holes, and not enough regulatory attention. I am especially happy to see that the CRA’s will be appropriately controlled, since what they did in rating deritivates was perhaps the largest contibutor to the crash.

By: Bayard

Bayard — Wed, 17 Jun 2009 22:08:27 +0000

I used to do real estate transactions, and had to spend literally hours helping my customers understand the minutia of the mortgage process and documentation. And most of them were college graduates!! I could see then that the way these massive documents were structured could only be understood by attorneys. Half of the loan officers I dealt with didn’t even understand everything about what they were selling!! That is really scary. I believe that it was William Shakespeare who said “kill all the attorneys.” I wouldn’t go that far, but I would say that the transparency issue is perhaps the most important one of all. Attorneys are paid to help firms make money. Part of their responsibility is to effective mask risks and emphasize rewards. They do this very well. It’s not illegal, but I believe that is is truly unethical. That said, I also know that we cannot ever truly legislate morality, and it is dangerous to do so.

By: chas

chas — Wed, 17 Jun 2009 22:04:15 +0000

They still don’t get it. Writing more meaningless crap regulations is a waste of their, our & mostly the economy’s time. Giving people more authority & responsibility over the financial sector without holding them accountable is an exercise in futility.

Bernanke, Geithner & their thousands of subordinates were given authority & responsibility (and paid fat salaries) to prevent a crash of the financial system & they failed miserably. And Obama still hasn’t held them accountable. If fact he’s added insult to our intelligence by giving these same inept failures authority over fixing the crash they had the authority & responsibility to prevent.

I think accountability is a meaningless concept for Obama. Look at his association with the illustrious Rev. Wright. Does anyone think that Bernanke & Geithner would have given trillions of our dollars to the stupid bankers if they knew they were going to be held accountable for the results?

Either these people are too stupid to see this or they are knowingly doing extreme damage to the long term viability of the country they happen to live in. Like Congress. I’m voting on stupidity.