Why Wall St. Reform Plan Is a Huge Joke

01aaDilbert_02.jpgI 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.

More here.

4 Comments

  1. 20 years ago I decided I did not trust most investments or their agents. So I put my money in local real estate and now live a relatively secure lifestyle.

  2. From what I've read it seems that the focus of these reforms will be to make sure banks don't offer loans to people without proper credit checking, something they should have been doing in the first place. Also, I didn't see any information about watchdogging the financial institutions that turned mounds of bad loan paper into hundreds of billions of dollars worth of AAA rated securities with a wave of a magic wand, which is what really turned this whole situation into the fiasco that it is.

    How were they able to pass off these stinking securities as solid investments, who decided to sink all that money into them, and why are these people not hanging from meat hooks right now? I'm not trying to say that stupid people being taken in by shortsighted profit seeking banks didn't have a role to play, and its nice that the reforms make a nod to addressing that, but it was the financial wrangling of the big institutions that make this whole deal so monumental in impact.

  3. Oh, and seeing as how this is the only economy specific post up today, I just wanted to share a bit of research into financial distribution based on whose in the Oval Office.

    http://rodrik.typepad.com/dani_rodriks_weblog/2

    I've always felt this to be the case but I'm glad someone did some research into it. I think they stopped at 2003 because if they included oil industry data since then, the GOP might actually have pushed into generating more money for the upper class than the Dems. Either way its pretty damning info.

  4. NPR talked to a number of experts and every one of them agreed that not only would this not help the current problems (I wouldn't expect that.) but that if it had been in place already it would have done absolutely nothing to help prevent them. Now that part bothers me.

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