Friday, July 16, 2010

Financial Regulations Pass in Senate! No Panacea Maybe , But Reason to Hope

Yesterday The Senate, by a 60-39 vote, passed bill to regulate at least some of the cavalier tactics used by Wall Street, the mortgage industry and the credit card oligopolies.  This legislation will likely be signed by President Obama next week.

While its clear a great deal of this is tantamount to fixing the lock on the barn door after the horse has escaped the corral, it is also clear that nothing can be done until we replace the mind-set that big shareholders and hedge fund sharpies can police themselves. Even three Senators in the Republican Party agree with these measures. There will now be a nw Consumer Financial Protection Bureau, regulation of the Derivatives Markets, and a requirement that all investment agencies over 150 million face sharper regulation and more transparency and a greater institutional stake in their investments.  Securitization, the process through which bad mortgage loans could be bundled up to spread throughout the economic system will be tough to cover. Best of all, this may herald the end of taxpayer bailouts of major investment banks.       

Were these new regulations likely watered down by financial lobbyists?  Will new financial chicanery arise, possibly methods difficult to detect and enforce in all cases?  Too late for millions of Americans to fully recover from the effects Wall Street and the sub-prime mortgage panderers already set up?  The answer to all these questions has to be yes.

   But in a democratic society you cannot make the good the enemy of the perfect.  And we are not the first generation to face tough times.  Not everyone has received the message yet--that a just society cannot exist with only rules for individuals but car-te blanche for corporations. 

But as the economy recovers, and I believe it will albeit very slowly, this point will be remembered I believe as the beginning  of the end of the Era of "Irrational Exuberance" (Former Fed Chairman Alan Greenspan's phrase)  and a return to greater accountability.  We may not be going forward fast, but with the passage of this bill by an overwhelming margin, we are not going to down the same road again anytime soon.  

35 comments:



  1. Still believe in Obama hope, heh?

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  2. insurance co's are still on the loose..raising rates by 30% in leaps and bounds on auto's mostly...and in Republicans held states no less...Ignorance is king among conservative Republicans...very sad indeed

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  3. You know, people keep talking about replacing incumbents, but I think they only mean the Democrats. I think the republicans are more obstructionist, but that's just my opinion. Remember, they are ALL pro-business! No matter what you believe, repubs will put big business first.
    I'm thankful that 3 repubs voted for this, but it's probably because this has no teeth, and they know that.How many times have the overseers been in bed with the companies they are supposed to be overseeing?
    This is a decent first step, I think, but not a be all, end all.
    Thanks for this Doug. It's very well written and I enjoyed reading it.

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  4. This is most likely their protest against the health care laws. Mortgage insurance and most likely life insurance rates will also skyrocket, but car insurance is REQUIRED in every state! You have to pay it, there's no choice unless you can,and are willing,to give up driving.

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  5. Good friends all,

    If I may interject... delete if not appropriate...

    Imho, if one would check with each state's insurance directorate, one will learn the vast majority of accidents caused by illegal immigrants have no auto insurance. Hence, you and I have an additional cost, called "non-insured clause" on our state mandated tax (known as auto insurance).

    I just love all the so licenses (tax) our local, county, state, and federal impose on us... do you not not agree???

    as ever, el diablo, I remain

    Zee (aka Chuck)

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  6. no doubt..I saw it coming back WHEN..and it will only get worse until something is done..

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  7. Good friend wellhell2, et al

    if I may ask... what do you recommend by "something is done."???

    peace...

    as ever...

    Zee...

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  8. Given who came before him and his dad and the Gipper, the bar is not exactly set very high.

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  9. Yes insurance companies and auto dealers slipped away from regulations.

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  10. Well put Jacquie. Thanks for your insight.

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  11. In my state, gas taxes pay for the roads we drive on. I prefer paved roads to rocky goat trails on my car's transmission. Taxes aren't fun to pay, Zee, I'll grant you. But I'll take taxes over bad roads, no police and fire departments and closed public schools.

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  12. Hmmm.... so we keep lowering the bar until when you want....

    The Russians take over???

    The Chinese take over????

    The Radical Islamists take over?


    What do you want?

    Me????


    I want another George Washington and his cohorts!!!

    It is what I want for my children and grandchilderen...

    I know, that is not a popular wish...

    But, it is...

    as ever, el diablo, i remain

    Zee (aka Chuck)

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  13. Good friend dnoakes, et al

    May I gently suggest you carefully and diligently study your state's laws and taxation system...

    You may become very dismayed...

    On closed police, fire departments, schools... why are they the first to close...


    Are there not many, many, many local and county employees less important then the aforementioned???



    I just do not understand why a local city or county "simple paper pusher" is more important than than a local city or county police officer or fireman!!!!


    Do you????????????????????????????

    peace...

    as ever...

    Zee...


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  14. I guess we have somewhat different concerns Zee (Chuck), and outlooks.

    Probably not worth getting in a fuss about though. Or using heavy typeface .

    Have a good evening.

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  15. Good friend dnoakes, et al

    Agreed...

    peace...

    as ever...

    Zee...

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  16. Good friend dnoakes, et al

    On your comment, "Or using heavy typeface."

    Please accept my apology, okay?

    I do "heavy typeface" as I do not see many type fonts and type font levels clearly. I try to be sure what I type is what I intend to type.

    Again, please accept my apology.

    I do not/did not mean any negative intention.

    Peace, my good friend, okay?

    as ever...

    Zee...

    Post Script: Many complain I do not respond quickly; it is because I take the time to insure what I type is what I intend to type... sometimes, it takes three or more iterations... and, alas, I still may have an error...


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  17. Good friend dnoakes, et al

    I see someone deleted my response to the above... so be it... I shall not again post it... if one gets e-mail of these messages; one will have a copy!!!

    No freedom of facts and opinions here!!!

    peace...

    as ever...

    Zee...

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  18. Well the horse has certainly bolted Doug, although I would prefer to use the metaphor of turning off the bath taps to reduce the impact of the tsunami myself. Casino capitalism has turned fiscal policy into a race track where the price of commodities is entirely determined by the 'bookies' at Goldman Sachs.
    High frequency traders -- a field led by Goldman Sachs -- use computer algorithms to automatically bet huge sums of money on minor shifts in price. These bets send signals to the market which can themselves cause the price of assets to shoot up or tumble down.

    By placing high-volume trades, the largest speculative traders can thus intentionally “fix” prices in any direction they want.

    This is the apotheosis of laissez faire capitalism in which the US Treasury has no real influence at all and where the shortfall between Gross Domestic Product and the cost of goods and services means that debt is a permanent feature of the economy.

    Writing in Global Research in April 2007, Richard Cook noted that the U.S. Gross Domestic Product in 2006 came to $12.98 trillion, while the total national income came to only $10.23 trillion; and at least 10 percent of that income was reinvested rather than spent on goods and services.

    Total available purchasing power was thus only about $9.21 trillion, or $3.77 trillion less than the collective price of goods and services sold.

    Where did consumers get the extra $3.77 trillion?

    They had to borrow it, and they borrowed it from banks that created it with accounting entries on their books.i.e. by methods now jargonized into “quantitative easing” (in effect, printing money).

    The scale of this debt sink hole gives the new Consumer Financial Protection Bureau the appearance of 'window dressing' in my view just as the $550 million "fine" on Goldman Sachs is merely a gesture intended to obscure the enormity of the rip off.

    Goldman's stock rose sharply on the news of the fine, which was around half the $1 billion that had been feared. It posted a 4.4% gain to close at $145.22.....some regulation, some punishment... we seem to be dealing in peanuts here Doug.

    Of course Adam Storch (age 30) looks after Goldman's at the SEC so that's why their "fine" is so incredibly lenient, the corruption here is on a imperial scale, the US economy is entirely in the hands of the Wall Street Mob.

    http://www.huffingtonpost.com/2009/10/16/adam-storch-sec-hires-exg_n_323526.html

    The CFPB is I fear all "kippers and curtains" as my old Granny used to say... a bit of a toothless tiger I think.

    If the Obama administration were talking about Social Credit there may be more room for optimism, but they and so far as I know nobody else in US politics is so the big debt shortfall continues and Wall Street laughs all the way to.....well, Wall Street.

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  19. Ah so you want slave owners to take over, well your in luck, Chuck :-)

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  20. the first thing that springs to mind is the Mayan system in which every 52 years all debts are erased and people start from scratch. Of course they had a homogeneous culture and a coherent spiritual system, yet I think we might have to resort to something like this in order to halt the inertia of indebtedness and 'irrational growth'.

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  21. Yes, the Goldman Sachs ties to characters like Storch are one reason I'm not overly exuberent about the new upcoming law. It will help matters I believe , but yes, the powers that be are still the Powers That Be. And the very problem you address--regulating markets when entiitles can do massive trading in a split second--is one that puts any checks against them in a permanent defensive posture.

    "Kippers and Curtains?" :-) Rather like a "dog and pony" vaudeville (i.e., music hall) act.

    Thanks for the link and providing a great deal of new input, AA.

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  22. I believe the Jewish kingdoms had a "jubilee" system where debts wee wipedout every 50 years as well, Darlene. This is another case of ancient cultures coming up independantly with reforms that mirror each other.

    But as you say coherent and homogeneous of culture and spirit are not the way you could describe the American system.

    But its good to draw from the past, and perhaps something like this wil be demanded from the public in time.

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  23. Sad thing is, no one read the darn bill before passing it. 2300 pages. sound familiar? Now it is up to the regulators to decide regulations. Just as it is the IRS to decide about health care. scary if you ask me. I believe in KISS, and this bill and the health care bill is definitely not KISS

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  24. Tough to follow the instincts of KISS when you are dealing with a complex labyrinth like international investment, Tess. Simple solutions to complex problems aren't always possible I'm afraid-if this is indeed a long term solution.

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  25. I think that's an interesting idea. It would stop a lot of loans since banks and lending institutions would wait when that 52 year deadline was approaching. There would also be a lot of people who would get loans at that deadline with intention of paying them back.

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  26. Read this man's rants and learn what life would be like if they manage to 'take their country back'.

    Instead of roads, lights, and order, you'd have a proto-feudalistic throwback to the 18th-century - where 'root, hog, and die' were the watchwords of life.

    I've always felt that 'forward' is better than 'backward'.....

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  27. To continue the metaphor, Reagan and his cronies began the process of building the casino - or, if you prefer, giving the keys of the asylum to the inmates and saying, "Go play!" That they eventually burned the place down should not surprise any of us.

    That said, there are two ways of creating money from thin air - both require a government license - the private banks can do it; so can the government itself. Both have been active until all-Hell-won't-have-it, as my Grandfather used to say.

    Go here and enter '1985' for a starting-year; '2010' for an ending-year, and '$100.00' as an amount (an even amount like that will make it easier to see) - you'll quickly understand that by a benchmark of 1985, the dollar is now just a little more than worthless.

    This, by the way, is called inflation - and the primary cause of that process has been the Neocons; first under Reagan; then under both Bushes. -->

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  28. much stronger federal regulations on insurance co's to start with....when you are under mandate to buy a product it should be closely regulated as the utility co's.

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  29. Good friend welhell2,

    Sincere thanks for your polite reply.

    peace...

    as ever...

    Zee...

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  30. Yes, I agree Astra. The folks from 18th Century Virginia just called...they don't want anybody on Multiply coming back there. They got Eli Whitney's cotton gin up and running and that's all the high tech those plantation folk need.

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  31. Exactly. I saw these movies back in the 80's. It was the Ronald Reagan Production : "Tripled National Debt" on a double bill with " Savings and Loan Debacle". And when Bush II tried to out -Reagan Reagan, all hell broke loose in 2008. Let's Go Forward please!

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  32. An interesting and more than a slightly disturbing blog and follow up discussion Doug. As always in these areas I'm left with nothing to say, you and Aaron especially seem to say so much better than I could what I believe. It does strike me as odd to say the least that where there is clear evidence, or at the very least anecdotal evidence, that people can still support the right!

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