In other words, not for anything that caused the banks to fail.


What ever happened to eh drive to reinstate the Glass–Steagall Act? That sounded like a good idea.

5/1/2010 6:17:24 PM

In what way? How would making banks less diversified have helped?

We know the cause, and his name is Barney Frank, and it has nothing to do with bank mergers.

5/1/2010 6:28:43 PM

Could you provide a refresher for what specifically Barney Frank was responsible that implicates him more than the Financial Services Act of 1999?

5/1/2010 7:47:17 PM

Quote :

"Munger also singled out Rep. Barney Frank, D-Mass., for opposing a proposal made by President George W. Bush's administration that would have transferred oversight of Fannie Mae and Freddie Mac away from Congress and the HUD. Frank said the entities were not facing any kind of financial crisis."

5/2/2010 10:25:48 AM

Quote :

""Fairly earned"? does he mean legally earned or earned with some sort of "social justice" tied to it?"

If by "social justice", you mean "not scamming people", yeah. He means "social justice".

5/2/2010 10:29:28 AM

http://mungowitzend.blogspot.com/2010/05/financial-regulation-will-help-not.html

Look, the genesis of the financial crisis was a trap, set by federal government offiicials and regulators.

It was a trap baited with four kinds of tasty cheese:
1. Down payment subsidies, encouraging people to buy houses more expensive than they could actually afford
2. Changes in the definitions of "conforming" loans, with much looser requirements for packaging and reselling by Fannie Mae and Freddy Mac.
3. Artificially low interest rates that served to finance an asset bubble in housing and commercial real estate.
4. An implicit guarantee, made by all of the last four Treasury secretaries, that any decline in housing prices would be treated as a "market failure," prompting government action to prop up prices.

5/3/2010 2:34:42 PM

What specifically did Fannie and Freddie do that were worse than what the private institutions have done?

5/3/2010 5:46:35 PM

Well now, it seems industry funded bailouts are nothing new to American politics:

Quote :

"Under the law that established the...Oil Spill Liability Trust Fund, the operators of the offshore rig face no more than $75 million in liability for the damages that might be claimed by individuals, companies or the government, although they are responsible for the cost of containing and cleaning up the spill. The fund was set up by Congress in 1986 but not financed until after the Exxon Valdez ran aground in Alaska in 1989. In exchange for the limits on liability, the Oil Pollution Act of 1990 imposed a tax on oil companies, currently 8 cents for every barrel they produce in this country or import."

http://www.nytimes.com/2010/05/02/us/02liability.html

One must wonder if the designers of the oil rig ever realized that however bad they designed the rig, the most they could ever be out is $75 million + cleanup. Given these rules and facing a design decision between many small spills, each one with a $75 million cap, or a system that limits small spills but might eventually blow up, a greedy maximizer might opt for the blowout, let society cover the costs.

5/3/2010 6:41:59 PM

Quote :

"One must wonder if the designers of the oil rig ever realized that however bad they designed the rig, the most they could ever be out is $75 million + cleanup."

Yeah, that's all they'll lose from this

Quote :

"Given these rules and facing a design decision between many small spills, each one with a $75 million cap, or a system that limits small spills but might eventually blow up, a greedy maximizer might opt for the blowout, let society cover the costs."

I imagine the greediest maximizer would want no spills, as any spill is a huge waste of money.

5/3/2010 11:17:29 PM

I presented a false conflict, assuming away the possibility of a magical failure free design. Re-reading, I still think I made that clear.

5/4/2010 2:34:05 AM

http://www.msnbc.msn.com/id/38258047/ns/business-stocks_and_economy/

Quote :

"Senate passes sweeping Wall Street reform WASHINGTON — Congress passed a sweeping overhaul of America's financial regulations Thursday, securing for President Barack Obama his third major, hard-fought legislative victory. Obama said he will sign the bill next week. "I'm about to sign Wall Street reform into law, to protect consumers and lay the foundation for a stronger and safer financial system, one that is innovative, creative, competitive and far less prone to panic and collapse," the president said at the White House. "Unless your business model depends on cutting corners or bilking your customers, you have nothing to fear." The bill has been Obama's top domestic priority after the passage of health care legislation and his early victory in setting up a nearly $800 billion fund to pump life into an economy hit with the deepest downturn since the Great Depression of the 1930s. The 2,300-page bill aims to address regulatory weaknesses blamed for the 2008 financial crisis. It gives regulators broad authority to rein in banks, limit risk-taking by financial firms and supervise previously unregulated trading. It also makes it easier to liquidate large, financially interconnected institutions, and it creates a new consumer protection bureau to guard against lending abuses. The measure also includes new protections for millions of American consumers. Only three opposition Republicans in the Senate backed the overhaul, a reflection of the party's solidarity in bucking Obama's legislative agenda. The measure has already passed in the House of Representatives, where Democrats hold a larger margin of votes. Partisan rancor in the United States has reached levels seldom encountered in recent history, with Republicans apparently gambling that they could gain strength or even win back congressional majorities by erecting roadblocks to Obama's reform agenda. Republicans are widely expected to recapture many seats from the Democratic majority in both the House and Senate in congressional elections in November. Americans' frustrations and fears spawned by near-10 percent unemployment and a sputtering economic recovery are playing into Republican hands. The Republicans also have largely welcomed into their ranks ultraconservative tea party activists and candidates who promise to reduce government size and power by, in many cases, uprooting social welfare programs."

Took them long enough. Could have been done much better though.

7/16/2010 10:22:48 PM

yep, the big banks love it. Now they have permanent bailouts so they can keep taking big risks. Oh, and the smaller banks? They have all of the regulations but none of the bailouts. Gotta love it when business colludes with government to shut out competition

7/16/2010 11:02:48 PM