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The article begins as follows:
"The current series of proposals for reforming Wall Street and bankers are toothless facades of what real regulation should look like.
It seems that each new proposal for reforming Banking and Wall Street is more banker friendly – and ineffective – than the previous one. They are milquetoast, meaningless, appeasing nonsense. The reformers are in a race to see who can offer up legislation that is least offensive to bankers.
In order to legislate reform that will prevent the next meltdown from occurring, I suggest that anyone who introduces new reform legislation must answer the following questions about their proposals:"
Do you agree with the author that the current legislative proposals are not strong enough? Of the 10 causes / questions, which do you think is most important?
Personally, number 4 really stands out to me as something that we need to address. From the article:
"4. Insulating Main Street from Wall Street: Glass Steagall separated FDIC insured depository banks from the more risk embracing investment houses. Prior to the repeal of Glass Steagall in 1998, the market had regular crashes that did not spill over into the real economy: 1966, 1970, 1974, and most telling of all, 1987. These market crashes did not freeze credit for the real economy.
How does your proposal prevent the inevitable future market crashes from spilling over to the real economy – especially as applied to real credit availability?"Link:
http://www.ritholtz.com/blog/2010/03/10-questions-for-finance-reformers/
I thought this article was really interesting. Point number 6 reminds me of the video we watched in class. These Wall Street employees were encouraged to anything that is not explicitly legal instead of working with integrity.
ReplyDeleteThis is a fascinating approach to the problem but it is, in my opinion, an over simplification of how markets work. It may just be that I am reading the author's words too literally but the idea that we can avoid future calamities by solving the problems that caused the last one is short sighted. I think the questions do a good job of ensuring that this same crisis doesn't happen again soon.But I digress...
ReplyDeleteSome of the questions (2, 4, 5, 8, 10) I really like and think are where this regulation scheme should focus much of its attention. I feel if question four were adequately addressed then question number three wouldn't be necessary. On the other hand I think there is some public backlash (6, 9) that supports things like pay control and government restructuring of large businesses, short of anti-trust issues, I don't feel the government should be willing to reach into private corporations and alter what they are, and are not, allowed to do behind their own closed doors. Finally I feel this is a national problem and that, largely, the individual state's regulation of financial markets is a system that will not and can not work in the modern economy.