How Regulations Collapsed the World Financial System
- Thread starter buzzy2
- Start date
the price shocks caused by war activity was partly responsible for tipping the consumer over the edge causing the housing crisis that overwhelmed the lax capital regulations imposed by washinton.
http://bigpicture.typepad.com/comments/2008/09/regulatory-exem.html
Satow interviews the above quoted former SEC director, and he spits out the blunt truth: The current excess leverage now unwinding was the result of a purposeful SEC exemption given to five firms.
You read that right -- the events of the past year are not a mere accident, but are the results of a conscious and willful SEC decision to allow these firms to legally violate existing net capital rules that, in the past 30 years, had limited broker dealers debt-to-net capital ratio to 12-to-1.
Instead, the 2004 exemption -- given only to 5 firms -- allowed them to lever up 30 and even 40 to 1.
Who were the five that received this special exemption? You won't be surprised to learn that they were Goldman, Merrill, Lehman, Bear Stearns, and Morgan Stanley.
What a bogus thread! Regulation didn't promote the irresponsible business practices of banks; they took on a huge amount of risk all on their own. If anything banks to be even more limited on the amount of risk they're allowed to take.
Or should we let the free market do it's worst and hand over the banking system to the likes of future Dick Fuld's?
Or should we let the free market do it's worst and hand over the banking system to the likes of future Dick Fuld's?
You're dealing with the Ayn Rand idiots.
They think everyone is a boy scout.
So "regulation" is the problem?
Do you want your half-witted neighbor opening a bank in the corner without reserves?
The problem is NOT regulation. The problem with the current crisis is the greedy f*'s paid off the current bevy of politicians.
Lack of regulatory over sight is what caused this problem.
better to stick with your Ayn Rand none sense.
Reality is probably too harsh for them.
when iran fights wars it uses cheap disposable people. when america fights wars it uses massive debt borrowing and resources. to think that the war didnt set up the conditions for the oil bubble is naive.
that made it worse but the consumer tipping over started the domino effect.
two times in our history we have tried a guns and butter economy. johnson tried it with viet nam and bush tried it with iraq. in both cases the market eventually cracked.