I love watching two guys get it on. Interested?
The lobbying for the future of financial reform doesn’t end when Mr. Obama signs the law. In fact, it could be just beginning, as regulators and congressional overseers get down to the business of writing the high-stakes rules.
“This bill represents the most significant overhaul of the financial system since the 1930s. But serious work remains: the proof of the bill’s worth will come not from what is written in the bill, but how the regulators interpret the bill, write the rules and then enforce them,” says John Taylor, president and CEO of the National Community Reinvestment Coalition. “Based on the job they did for the past decade, I will believe reform is here when I see it.”
“By delegating so much to the regulators, Congress is inviting everyone interested in the outcome to make more campaign contributions, as they intervene in the regulatory process to influence the regulators,” says Thomas Ferguson, a professor of political science at the University of Massachusetts, Boston. “Nothing is settled. It’s a gold mine for members of Congress.”
Ooops, my bad math above, but the example stands as is.
Awake==semantics or you said “…it allows ‘regular’ people to use an asset that they own as a collateral for a loan.” Now that collateralized loan can thereafter be leveraged, or buy stock on a margin, or whatever, but the collateralized loan is not the same thing as leverage. And as I said: BOTH have a whiffs of desperation as most GAMBLERS do.
Consistent you make the confusion and think you have a system to beat the odds? OK. I agree. You can beat the stock market. But what of the other 999,999 people?
Whiff? What’s that smell?
Hey, all you libs who hated the patriot act because the govt could spy on us: how come this bill is OK when it lets the govt look at every single purchase any of us makes. Would you support this exact same bill if Republicans passed it? Somehow I doubt it.
http://globaleconomicanalysis.blogspot.com
Full blog post:
Financial Reform Bill was a Stunning Success
Quite a few people sent me eMails asking my opinion on the financial reform legislation just passed by Congress, legislation that will undoubtedly be signed with much fanfare by President Obama.
This may surprise some people but I think the bill exceeded the wildest of expectations. Moreover, I can prove it.
To fully appreciate how amazingly good this piece of legislation was, we must look at the pluses (what the bill accomplished), the minuses (objectives the bill failed to meet along with any damages done), and the critical issue (reasonable expectations as to what the bill might have accomplished). Let’s start with the minuses.
Financial Reform Minuses
* Glass-Steagall: Paul Volcker supported provisions that were hopelessly watered down, so much so that they can accomplish nothing. This was a complete failure.
* Derivatives Reform: Banks successfully lobbied for derivative exceptions big enough to drive the planet Jupiter through. They succeeded. Derivatives reform is meaningless.
* Too Big To Fail: The reform bill did absolutely nothing to rein in the widely recognized “too big to fail” policies of the Fed. This was a complete failure.
* Preventing the Last Crisis: There is not a single thing in the bill that can possibly be construed to have prevented the last crisis. This was a complete failure.
* Preventing the Next Crisis: There is not a single thing in the bill that can possibly do anything to prevent the next crisis. This too was a complete failure.
Financial Reform Pluses
* None. The bill accomplished virtually nothing.
No doubt quite a few inquiring minds will be wondering how a financial reform bill that failed at 100% of its objectives while accomplishing virtually nothing can possibly be considered a “stunning success”.
This is where it pays to consider the crucial point: reasonable expectations.
Reasonable Expectations
The best way I can explain reasonable expectations is via an analysis of the Medical Reform bill, promoted, passed, and signed by President Obama even though a majority of US citizens were dead against it.
Medical reform did nothing to promote competition between states, nothing on tort reform, nothing to allow drug imports from Canada that would lower prescription costs and most importantly, nothing on reducing costs any step of the way.
That’s the positive side of medical reform.
The negative side of the balance sheet is that medical reform will cost a trillion dollars while increasing costs on small businesses at a time we can least afford to make that critical mistake. Furthermore, the bill panders to public unions and their luxury 100% paid for plans that put upward pressure on healthcare costs.
Medical Reform vs. Financial Reform
Medical reform not only accomplished nothing, it actually made matters substantially worse.
In sharp contrast to medical reform, I cannot come up with any financial reform provisions that make matters substantially worse.
Given the absolute best we could ever expect out of a major piece of legislation supported and promoted by Obama is nothing, and given that nothing was accomplished with no major detriments making matters much worse, the financial reform bill must be considered a stunning success.
Indeed, we should all be thrilled by it.
Importance of an Open Mind
However … I am always suspicious that major legislation like this contains provisions that will sow the seeds of the next crisis. Thus I am ready, willing, and able to admit that I was wrong if someone can show me how this bill makes matters substantially worse than before. If so, I will retract my statement that this bill was a “stunning success” and instead claim it was “stunning success compared to health care” or some other appropriate statement.
Moreover, if someone can convince me this bill actually does something that is net positive in a major way, I am ready willing and able to scream “Hallelujah! Praise be Obama” three times at the top of my lungs in downtown Chicago.
Some nitpickers will point out that the bill includes new transparency rules regarding the Fed. However, I doubt the new transparency rules accomplish much, if indeed anything. As a counterbalance, I strongly suspect there are some minor negatives I missed.
I need be convinced there are major net pluses or minuses to scream in downtown Chicago or to issue a retraction.
Otherwise, I sit comfortably with my opinion that “Financial Reform was a Stunning Success”, arguably the very best our wildest imaginations could ever have expected, given that it accomplished virtually nothing while doing no further major economic damage.
Mike “Mish” Shedlock
How cute – the two men at the root of the sub-prime lending mess that caused the financial meltdown are the ones coming up with the “fix”. It is so heartwarming how the Democrats give people second chances.
I find it STUPID..
that the Concepts of business, are very easy to learn. but the USA has to REGULATE/TELL/FORCE these corps to DO THE PROPER THINGS..
What OTHER country has this bad of a problem?
We can LOOK and see what went WRONG.
Auto industry, WASNT SELLING, but was STILL building vehicles.
DELTA, employees paid Low wages while those on TOP, take home ALL THE MONEY..
EXON, CEO’s saying “WE DIDNT KNOW IT WAS HAPPENING”..???
BANKS shot Themselves in the FOOT??
Corps hiding money..
Corps paying off our Representative to change Laws to Favor Corps.
The Stock market is being used to generate MONEY, not for the Individual, but for the CORPS. They WONT/DONT pay their OWN R&D with MONEY they earned, they Rasie the price of Stock abit, and that money PAYS for it.
WHY are major corps Even involved in the Stock market? There is little reason for them to be there. Unless they wish to manipulate the market.
Its not that this is NOW happening. Its been here along time.
Simplify the business TAX laws so its easier to SEE where the money is going.
Lets take those companies that ONLY distribute goods THEY have made in other countries..
AND SHIP them TO THOSE countries. its LESS then 1% of the population..
MONEY isnt bad.
Its the person NOT using the MONEY well..
WE shouldnt need to FORCE/regulate these people to RUN companies and Consumerism/commercialism PROPERLY.
Do you REALLY want to scare these folks?
EQUAL wages across the board. ALL wages the same, unless you do a Job NO ONE WANTS or is Dangerous.
#45 ascg…when I read detailed analyses of the meltdown I never see where Fannie Mae or Freddy Mac were central to anything. On the periphery, yes. The root? Never comes out that way in the honest reports. Never.
However, I see it all the time when it comes to reforming Wall Street, especially from teabaggers. Is that a coincidence?
#48 OBOB
I do not orally rape people, and if I did you probably wouldn’t know it, so I am not sure why you are insinuating I am a teabagger.
The fact is, Fannie and Freddy collapsed, as did many other financial institutions, because of subprime lending. This lending was forced onto them in the late 90s by the Clinton administration. Banks later came to realize taking advantage of people with bad credit and selling off the loans could be profitable, but at first they had to be pressured make loans to people with bad credit.
Check out Barney Frank’s quote here when Bush wanted more oversight. http://tinyurl.com/cmf3u8
Blaming the poor for the current financial crisis is the epitome of GOP bullshit.
49,
did you ever LOOK at those Loan papers?
They said something like this..
1. the interest rate will be ?? for 10 years.
2. AFTER 10 years the interest rate will Rise 5%.
3. It wont matter if you pay AHEAD of time, as this loan INCLUDES all interest that COULD/WOULD be paid over the 30 year loan, and must be paid Property and INTEREST for the 30 years.
Even if the Interest rate as Flexible. AND a 0% interest from the Gov. These companies were charging a FORTUNE after 10 years.
If the interest rate had STAY’D low, nothing would have happened. at least VERY little would of happened.
ASCG…sorry, didn’t mean to tie you in as a ‘bagger, but that’s who most often reflexively blames Barney.
I read the article. So there was a power play between the administration and congressional Dems in 2003. SOP, right? Frank had no power in 2003, he chaired no committees. He controlled nothing.
Part two, and to my original point, FM/FM fell because of other systemic problems, they were not the root of the collapse. In most opinions, the true root was credit default swaps and poor lending practices by the originating banks, then exacerbated by the rise in food and fuel prices. FM/FM were pulled down by external forces. That’s not to say they don’t need better oversight, but to blame them foremost seems off-base.
Fascism worked for America for nearly a century, until the time the population awoke to a country without any industry that can employ a middle class. The one per centers are so stupid or deluded with their ideology that they missed their generational destructive outcomes.
Folks and a few baarothers out there this financial leverage stuff had always worked, until the time there was no middle class, due to little employment and the massive living costs increase due to a industry to service work focus change.
There is no financial reform bill that can get us out of this. The banks will be zombies now. Even if they were organized via bankruptcies, there is no middle class to whom they would deal with. The hippie generation hath brought forth offspring unfit to work, a generation intention upon dislocation with reality in its many forms.
Perhaps one action could have saved America, and that would have been LaRouche’s home owner protection act, whereby the middle class would have been saved, but no the fascist bankers who run America will not have it.
Folks its either the bankers or survival.
Look at the economist nutters who are about to lose their minds in the coming years.
You see headlines about the need to continue stimulus and paranoia about deflation (the bursting of their asset bubbles, and lack of a new bubble to blow).
Shit is going to happen.
54,
sTIMULAS??
What are you going to Stimulate?
Give it to the corps and it will be Bonus checks at the end..
Give it tot he POOR and the Stores will raise prices to get the MOST of your buck(no sales, no discounts, YOU GOT MONEY SPEND IT). the LAST one to the poor went to pay BILLS.
So the money wont do much good either way. But, If you give it to the poor, AT LEAST bills get paid.
I would rather THREATEN the corps.
For those business that give VERY few jobs to the USA, SHIP them to the same nations they SHIPPED our jobs.
REGULATE TOP wages, NOT min wage. Everyone gets paid the SAME, except for hazardous jobs, and those jobs NO ONE WANTS/will do..
Everyone pays into Social Security. NO matter if you have a retirement fund or NOT.(many corps are taking the retirement and USING IT) Ask Delta retired persons WHAT HAPPENED. AND no TOP amount restriction/limit. AND a MAX amount you can get when you retire.
The problem with the idea of keansian (however he’s spelt) budget deficits is they are supposed to be temporary, to cover the mysterious whatever that causes these occasional economic malaise.
But it aint temporary any more, isn’t it. It is permanent, until we can earn as a working middle and working class.
The corporate owners do not empower the economy. All their fabulous profits in the last thirty years does nothing. The middle and working classes have been destroyed, knocked back 70 per cent.
This has never happened in the history of mankind. Globalisation, offshoring. Never before have we stopped people earning a living like we have done.
#52,
I agree that FM/FM were not the root of the problem in themselves. And yes, it is a combination of both the subprime lending market and the derivatives worked together. But these were the guys were the ones pushing for increased home loans to unqualified people in the 90s, with FM/FM at the forefront. After this, home values compared to historical inflation-adjusted values began to skyrocket.
http://mysite.verizon.net/vzeqrguz/housingbubble/
These unrealistic levels, combined with mark-to-market, gave people investors an unrealistic idea of what their assets were worth.
And from the financial regulation point of view, it is not just regulating derivatives that would have stopped this. Mortgage-backed securities have been around forever and are considered to be at the top of safest investments. This assumption is baked in to all kinds of investment products. This assumption is what failed, and would have led to a huge loss of capital and credit regardless of what the rules were. Sure, banks were playing hot potato with their bad loans, but all of them owned a big stake of bad loans, regardless of who ended up owning what in the end. In some ways, derivatives actually helped by allowing big banks to hedge against the mortgages in their portfolios. People got all in a tizzy when they found that the big banks were betting against their own loans. But in the end, that was acting as insurance, and the failures would have been much worse if there wasn’t some mechanism for them to hedge their portfolios.
#55
don’t ask me. Exactly what stimulus? We all know it went straight into the bank accounts. Nothing got transferred except digits.
We have just stimulated zombie banks into wandering off into the landscape arms outstretched.
Even profitable firms cannot get short term credit for placed orders. Unbelievable. Something must be done. Nothing has just been voted into non-existence.
#57 ascg…sounds like we agree more than we disagree. The impression I got was that FM/FM encouraged mortgages to ALL qualified borrowers, the idea was to push lenders towards minorities etc. The banks themselves, especially the TV-marketed mortgage companies, gave billions to poorly-qualified borrowers without prompting, then played the hot potato game to get rid of the bad ones.
My question is that if it was all those poor people screwing the economy, how come so many middle-class people lost their homes?