Wow
The big news this morning is that the government is paving the way for the few remaining investment banks to become staid and stodgy bank holding companies like their European counterparts. The investment houses are trading some profitability and some of their business for future stability. To get a sense of how dramatic this change is, check out this quote:
Wow. Even six months ago the suggestion that any part of the European regulatory state had a place in the US financial system would have drawn raspberries from our red meat free marketeers. In fact, when the Fed suggested it wanted to review the trading of mortgage backed securities, the investment community and GOP pushed back saying such oversight was over regulation. (The plan never got off the ground, as you can see.) Now its the new reality under a Republican administration.
Isn't it odd how Republican America castigates Progressive ideas, right up until they become reality? Also, how long can McCain/Palin keep harping on over regulation when even they are forced to swallow this pill. There is more than a little irony in hearing Governor Palin prate on in a Reaganesque fugue when precisely the policies she champions (and I think she believes she thought of them herself)are the root cause of our current crisis.
In the same vein-- and I won't pretend that this really fits here -- Sen Obama made a salient point last night on 60 Minutes. When asked about the feds bailout, he simply responded that the government let this problem fester for so long, by the time they dealt with it they had few good options.
Why, you may ask, did this problem grow for so long? Because successive Republican administrations as well as the Clinton Administration acceded to repeated Wall Street demands for deregulation.This is not a crisis we could not see coming. Plenty of politicians and policy folks (some of them Republican) warned us about the dangers of our unregulated securities market. (Warren Buffet comes to mind.) We just chose not to listen.
"The marketplace won't give them leverage, the regulators won't give them leverage and so now we have formal confirmation that the model of freestanding investment banks is kaput," said Ed Yingling, president of the American Bankers Association.
Wow. Even six months ago the suggestion that any part of the European regulatory state had a place in the US financial system would have drawn raspberries from our red meat free marketeers. In fact, when the Fed suggested it wanted to review the trading of mortgage backed securities, the investment community and GOP pushed back saying such oversight was over regulation. (The plan never got off the ground, as you can see.) Now its the new reality under a Republican administration.
Isn't it odd how Republican America castigates Progressive ideas, right up until they become reality? Also, how long can McCain/Palin keep harping on over regulation when even they are forced to swallow this pill. There is more than a little irony in hearing Governor Palin prate on in a Reaganesque fugue when precisely the policies she champions (and I think she believes she thought of them herself)are the root cause of our current crisis.
In the same vein-- and I won't pretend that this really fits here -- Sen Obama made a salient point last night on 60 Minutes. When asked about the feds bailout, he simply responded that the government let this problem fester for so long, by the time they dealt with it they had few good options.
Why, you may ask, did this problem grow for so long? Because successive Republican administrations as well as the Clinton Administration acceded to repeated Wall Street demands for deregulation.This is not a crisis we could not see coming. Plenty of politicians and policy folks (some of them Republican) warned us about the dangers of our unregulated securities market. (Warren Buffet comes to mind.) We just chose not to listen.
posted by Jack Reed at 9:56 AM
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