Financial institutions whipped by Obama!

[scandal 951]

Seriously though, shouldn't they try to enforce the laws and regulations we already have on the books

before introducing new ones?

It was the Fed's job to oversee banks and prevent excessive risk-taking all along.

Are you serious Mark?

Clearly the framework we had was insufficient. Massive amounts of our infrastructure had evolved outside the domain of any regulation or oversight. Banks were (and are) holding assets off-balance sheet. Ttrading in complex OTC derivatives such as CDS was dwarfing in notional values all the listed securities in the equity and credit markets. And the institutions who were big players in those markets - notably big hedge funds (think Citadel) , "insurance" companies (think AIG), and private equity firms were not regulated at all by those bodies that policed the traditional banking sector. Finally the separation of tightly regulated commercial banks from loosely regulated investment banks also has been shown to be a failed model, witness the collapses of investment banks Bear Sterns and Lehman.

We have a patchwork of regulatory agencies - the Fed, FDIC, SEC and others. Much of this was designed in the 1930s. Much of it was also deregulated in the 1990s and 2000s under Clinton and Bush. Meanwhile automated program trading of complex over the counter derivatives by massively captialized buy side firms, with conflicts of interest in the sell side firms cum underwriters cum analysts... has made 'regulation' a paper tiger.

Darn tootin' we need new rules. Even the industry agrees with this.

[mawilson 2,133]

Are you serious Mark?

Clearly the framework we had was insufficient. Massive amounts of our infrastructure had evolved outside the domain of any regulation or oversight.

I am serious. This crisis was a long time coming and the Fed did nothing.

As for new rules...

1) Off-balance-sheet accounting *should* be illegal. Is it even legal today? I understand that the FASB (Financial Accounting Standards Board) allows it in some cases, but probably not on the scale of what the banks are doing.

2) Banks should hold enough capital reserves against the risk of default.

[NickD 202]

Treasury department is constantly burning old money and replacing it with new money, so in effect that old money is lost and does not change the economy by printing new money. If the banks actually lost all that money, and if it were really lost, printing new money would be the same as what the treasury department does with no change on the economy.

But that money was not lost, it was transferred from one pocket to another pocket and mostly illegally. All the government has to do is to find which pockets that money is in, and take it back and give it to those, like us, that were told, it was lost.

[spookyturtle 9,465]

So many things you American's do not seem to care about

i'm glad he's going that route.

Huh?

what, i can't be happy about something obama's doing?

No.

well hmpfff.

People might start thinking that you're a liberal at heart. Remember, the real Obama haters hate everything he does. Not matter what, it's no good and he's no good.

[mawilson 2,133]

Treasury department is constantly burning old money and replacing it with new money, so in effect that old money is lost and does not change the economy by printing new money. If the banks actually lost all that money, and if it were really lost, printing new money would be the same as what the treasury department does with no change on the economy.

But that money was not lost, it was transferred from one pocket to another pocket and mostly illegally. All the government has to do is to find which pockets that money is in, and take it back and give it to those, like us, that were told, it was lost.

[Ban Hammer 12,940]

So many things you American's do not seem to care about

i'm glad he's going that route.

Huh?

what, i can't be happy about something obama's doing?

No.

well hmpfff.

People might start thinking that you're a liberal at heart. Remember, the real Obama haters hate everything he does. Not matter what, it's no good and he's no good.

so you're conservative now?

[scandal 951]

Treasury department is constantly burning old money and replacing it with new money, so in effect that old money is lost and does not change the economy by printing new money. If the banks actually lost all that money, and if it were really lost, printing new money would be the same as what the treasury department does with no change on the economy.

But that money was not lost, it was transferred from one pocket to another pocket and mostly illegally. All the government has to do is to find which pockets that money is in, and take it back and give it to those, like us, that were told, it was lost.

NickD -- -without even getting into al the rest of your (ahem) interesting posts, it's not the Treasury Dept which issues our money supply. It's the Federal Reserve.

Treasury is the fiscal agency, responsible for tax collection, debt issuance and spending. I.e. the IRS, issuing bonds, and defining the budget.

The Fed is the monetary agency responsible for controlling the money supply in the economy. The vast majority of which is electronic deposits, not physical currency. So printing presses are quite irrelevant. Money supply is managed by first determining FOMC targets for overnight interest rates and then by buying and selling Treasury instruments to achieve the desired interest rate.

Your post was quite entertaining though.

[Peikko 1,575]

Nanny state reform:

Link

Cut 'em down to size!!!!!

Mervyn King, the governor of the Bank of England, tonight called for banks that are "too big to fail" to be cut down to size as he opened a deep rift with Alistair Darling over the future regulation of the City.

While the chancellor used the annual Mansion House gathering of City grandees to oppose a break up of the big financial institutions, King sketched out plans for a much more radical overhaul...

[NickD 202]

Treasury department is constantly burning old money and replacing it with new money, so in effect that old money is lost and does not change the economy by printing new money. If the banks actually lost all that money, and if it were really lost, printing new money would be the same as what the treasury department does with no change on the economy.

But that money was not lost, it was transferred from one pocket to another pocket and mostly illegally. All the government has to do is to find which pockets that money is in, and take it back and give it to those, like us, that were told, it was lost.

NickD -- -without even getting into al the rest of your (ahem) interesting posts, it's not the Treasury Dept which issues our money supply. It's the Federal Reserve.

Treasury is the fiscal agency, responsible for tax collection, debt issuance and spending. I.e. the IRS, issuing bonds, and defining the budget.

The Fed is the monetary agency responsible for controlling the money supply in the economy. The vast majority of which is electronic deposits, not physical currency. So printing presses are quite irrelevant. Money supply is managed by first determining FOMC targets for overnight interest rates and then by buying and selling Treasury instruments to achieve the desired interest rate.

Your post was quite entertaining though.

Treasury department was just an example on replacing cash that is burnt, doubt if Wall Street is burning money that they claim is lost forever. Still insist that money is in someone else's pocket. But doesn't make any difference if it is cold hard cash that with direct deposits, bill pay, checking accounts, credit cards, I haven't actually seen in a long time or a computer transfer of funds.

Let just say this money was transferred from one pocket to another via a computer transfer.

[mawilson 2,133]

Treasury department was just an example on replacing cash that is burnt, doubt if Wall Street is burning money that they claim is lost forever. Still insist that money is in someone else's pocket. But doesn't make any difference if it is cold hard cash that with direct deposits, bill pay, checking accounts, credit cards, I haven't actually seen in a long time or a computer transfer of funds.

Nick,

If your house was worth $500,000 two years ago and now is worth $300,000, who "stole" the $200,000?

Whose "pocket" is it in?

[scandal 951]

Treasury department was just an example on replacing cash that is burnt, doubt if Wall Street is burning money that they claim is lost forever. Still insist that money is in someone else's pocket. But doesn't make any difference if it is cold hard cash that with direct deposits, bill pay, checking accounts, credit cards, I haven't actually seen in a long time or a computer transfer of funds.

Nick,

If your house was worth $500,000 two years ago and now is worth $300,000, who "stole" the $200,000?

Whose "pocket" is it in?

The J00s

[Ban Hammer 12,940]

Treasury department was just an example on replacing cash that is burnt, doubt if Wall Street is burning money that they claim is lost forever. Still insist that money is in someone else's pocket. But doesn't make any difference if it is cold hard cash that with direct deposits, bill pay, checking accounts, credit cards, I haven't actually seen in a long time or a computer transfer of funds.

Nick,

If your house was worth $500,000 two years ago and now is worth $300,000, who "stole" the $200,000?

Whose "pocket" is it in?

madeoffs

[Heracles 417]

But that money was not lost, it was transferred from one pocket to another pocket and mostly illegally. All the government has to do is to find which pockets that money is in, and take it back and give it to those, like us, that were told, it was lost.

Someone always profits as that is the way the system works.

[Heracles 417]

madeoffs

Notice how he still has a smile. The money has been funneled into various places.

[Heracles 417]

Treasury department was just an example on replacing cash that is burnt, doubt if Wall Street is burning money that they claim is lost forever. Still insist that money is in someone else's pocket. But doesn't make any difference if it is cold hard cash that with direct deposits, bill pay, checking accounts, credit cards, I haven't actually seen in a long time or a computer transfer of funds.

Nick,

If your house was worth $500,000 two years ago and now is worth $300,000, who "stole" the $200,000?

Whose "pocket" is it in?

There is more than one way to skin a cat. Guess who is buying all of these foreclosed homes? The same small players that played a big part in this crises. Yep, they are buying these properties on the cheap, only to flip them in a few years to make even more money. At the expense of the average Joe's they exploited. Basically a pyramid like scheme.

The problem with regulation is it only targets large corporations while ignoring the thousands of small players who had a big part in this mess. From realtors, property flippers, brokers and so on. Yet these same guys have managed to stay under the radar, while the banks and large financial institution are canned.

Where the heck is their regulation?

Edited June 18, 2009 by Constellation