I blew coffee through my nose when I read the details of the Bush administration “overhaul” of Wall Street regulation announced this morning.
The so-called reforms, called the broadest since the Great Depression, would create a new regulatory maze but do virtually nothing to deal with the roots of the problem, which The New York Times charitably called an “alphabet soup of sophisticated financial products that have fueled the current financial crisis.”
Indeed, the reforms do not rein in practices like those that have lead to the subprime mortgage meltdown, while the oversight given the villains of the current crisis — hedge funds and private equity firms – would be minimal and mainly consist of collecting information.
Henry Paulson, who became Treasury secretary after a long career on Wall Street, explained why the feds were going so easy on his pals by claiming that any real effort (my term) to tighten regulation could hamper America’s ability to compete with foreign rivals.
Indeed, the reform plan is a huge joke unless you’re a Bear Stearns or Merrill Lynch — and the joke is on Main Street Americans.