The StarTribune has a commentary on the current turmoil in the financial markets. While the latter half of the commentary turns into an endorsement of Obama,* the first part identifies the cause clearly and concisely: “The banking and investment industries have been inadequately regulated, and consumer protections were diminished.”
All the fancy highly sophisticated financial products created by these guys had inadequate scrutiny. Couple that with too little capital reserves for the inherent risk in their activities and “KA-PLOOEY” The same could be said for those messes of the past. Any one remember the S&L crisis or ENRON and Arthur Anderson?
While the Democrats aren’t blameless, mostly because they have been spineless, the Republicans starting with their god Ronald Reagan and continuing through the current Bush administration have mad their economic raison d’etre to loosen oversight and reduce “unneeded government regulation.” I would add to this their push to limit lawsuits and damages, which as I regularly argue are the market regulating itself. Who better to represent the market than the people who make the market? Who better to determine the level of damages to the market than those very same people?
As the commentators note “While the rhetoric is appealing, we are now seeing some of the results. The country needs sound regulation to prevent the financial industry from abusing its influence to the detriment of non-market participants.”
To put it a little more simply, the markets are based on everybody telling the truth and the only way to ensure the truth are sound regulations and consumer protections that have real teeth and are enforced with vigor.
* Peter Gillette, one of the authors of the commentary, is former vice chairman of Norwest Corporation, now Wells Fargo, and was commissioner of trade and economic development under Republican Gov. Arne Carlson. For those of you outside of Minnesota. Gov. Arne Carlson was what used to pass for a moderate Republican. Fiscally conservative, but with an understanding of social issues and responsibilitys and the role of government.
If you are in Minnesota, contact The Glover Law Firm, LLC, for a free case evaluation. In any other state, you can find a consumer rights lawyer using the National Association of Consumer Advocates lawyer database.
{ 2 comments… read them below or add one }
Who was responsible for blocking the regulation? Looks like the left was blocking attempts as far back as 2003. See New York Times article:
http://query.nytimes.com/gst/f.....nted=print
And when did the current crisis have his genesis?
http://ibdeditorial.com/IBDArt.....0789279709
You might want to look into Franklin Raines (Clinton white house budget director – ran FannieMay and collected 50M), Jamie Goerlick (Clinton justice dept official – worked for FannieMay and took home 26M) and Jim Johnson (Obama’s VP search committee took in millions as well). All of these people have big ties to the democrats and have made millions off of the policies laid out by Clinton.
While there were likely all kinds on both sides blocking the regulatory attempts, it seems that former Rep. Mike Oaxley,(R-Ohio) who is mentioned in the NYT article as the person who was going to draft legislation based on the Bush proposal is quoted in the StarTribune today as blaming Bush for the problem. Bush opposed Oaxley’s bill in the house
http://www.startribune.com/bus.....c:_Yyc:aUU
After Bush killed the House bill, the Seneate put together a bill which while partially addressing Freddie Mac and Fannie Mae, also would have deregulated things by exempting the new regulatory agency from certain securities reporting requirements and abolished the federal Housing Finance Board. While much has been said of the supposed opposition of Democrats, little has been said of the general lack of support among Republicans that resulted in the bill being tabled and then dying. If the Republicans, who controlled the Senate had wanted to get the bill out of committee they could have. They didn’t so it died. That Dodd might not have liked it would have meant nothing if the Republicans wanted it.
Additionally, the latest on this mess is that Rick Davis, Senator John McCain’s campaign manager, was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations.
http://www.nytimes.com/2008/09.....ref=slogin
And when donations from the board and Freddie and Fannies lobbyist are examined as opposed to donations by employees of Fannie and Freddie John McCain is clearly getting the lions share
http://uspolitics.about.com/b/.....othing.htm
As to when this whole mess started I would push it back farther than the Clinton era to 1968 when it was first privatized.