It seems like looking at a drunken teenage driver that has driven a sports car into a ditch, and saying that the solution is to give them a 4-by-4 so that if they drive into a ditch they can keep driving.
If what they did is not illegal, it should be. But I find it inconceivable that many laws were not broken. The problem has been political: a lack of will to enforce laws on some of the most powerful individuals in our society. (That will may be emerging in the form of rage amongst the general population.)
This lack of will was, IMHO, partly enabled by the presence in our population of a large number of traditionalists who see business and political leaders in the context of strong fathers. Calvinists will always tend to defer to the wealthy. To them the fact that these folks are wealthy is a justification of their claims of authority, per se. Finding ways to reduce the incidence of that mindset amongst the next generation will be the best insurance against a recurrence of this type of crisis. With a substantial majority of people who function as self aware adults rather than as manipulable children such shenanigans would me more difficult to sustain. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
Any idiot can face a crisis - it's day to day living that wears you out.
Better than any television I've seen since June. Fai de bèn a Bertrand, te lou rendra en cagant
Now, the argument for each deregulatory step was that the people doing the finance knew more about what would work and what wouldn't work than the regulatory authorities, but starting from the 1950's, through to the Fed getting permission to take garbage as the debt instrument for a 3-month repo loan, its been a fifty year slide downhill into "do what you want, make a million, if you go broke, its your own damn fault".
And the reason the regulations were in place was because we know how financial systems like that work. Under the pressure of competition, financial firms that do not "keep up with the Joneses" get squeezed out of the market, so its abandon prudence or abandon market share, and then once financial fragility is in place, something interrupts the money train, and a Banking Panic is set off.
It used to be illegal to do the stuff that put the bread and butter home mortgage and small business 90-day finance of the wage bill business of the commercial banking system at risk ... but that interfered with maximizing profit in go go times, and so they changed those laws, one by one by one, starting under Eisenhower from before I was born.
Now, once the Fed started lending with 3-month repos on assets that were overvalued at 85 percent of face value rather than undervalued ... by then there was clearly a capitalization crisis in place, and so people desperate to avoid things going bad before they could get out with their golden parachute might have cut corners. But I would not be surprised if most of the damage was done adhering to the letter of the law that has had its spirit completely forgotten decades ago. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
... that provides enough scapegoats to allow the systematic policy that put those firms under water in perfectly legal ways to escape unscathed. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
