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The regulator "did not sufficiently assess the susceptibility of highly illiquid, complex instruments," to ratings downgrades, Scott Polakoff told the banking committee in prepared testimony today. "In hindsight, OTS should have directed the company to stop originating credit-default swap products before December 2005."

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aDm4OdFvcWUw&refer=home
by rootless2 on Sat May 5th, 2012 at 07:26:25 PM EST
[ Parent ]
Quote mining and Gish Gallop. Tiresome.

Are you seriously going to argue in a sober voice that the Commodities Futures Modernization Act did not matter to AIG's failure?

Would you also have argued that if it had passed in 2001 instead of 2000?

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 6th, 2012 at 03:38:50 AM EST
[ Parent ]
The law did matter, but the OTC and other regulators still could have taken action.
by rootless2 on Sun May 6th, 2012 at 08:46:31 AM EST
[ Parent ]
With Timmy and Rubin running around in the administration?

Keep on dreaming.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 6th, 2012 at 09:27:22 AM EST
[ Parent ]
2005 was during the Bush administration.
by rootless2 on Sun May 6th, 2012 at 10:20:19 AM EST
[ Parent ]
When the Commodities Future Trading Commission tried to kill exotic derivatives in the latter half of the '90s, Rubin, Summers, Greenspan and Geithner told it to shit down and shut up while they legalised bucketeering.

Are you claiming the OTS would have had better luck under a Gore presidency than the CFTC had under the Clinton presidency? If so, on what grounds?

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 6th, 2012 at 10:37:44 AM EST
[ Parent ]
Absolutely - because those guys were capable of changing their minds when data forced them to.
by rootless2 on Sun May 6th, 2012 at 10:52:15 AM EST
[ Parent ]
The Russian experience with Messrs Summer, Rubin and Geithner argues otherwise. (Leaving Greenspan to one side, as you surely did not mean to include that Randian hack in your statement in the first place.)

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 6th, 2012 at 10:59:45 AM EST
[ Parent ]
Thanks - I did not mean to include Greenspan.

Even Clinton says derivatives dereg was a mistake.
http://abcnews.go.com/blogs/politics/2010/04/clinton-rubin-and-summers-gave-me-wrong-advice-on-deriv atives-and-i-was-wrong-to-take-it/

Even Rubin admits he was wrong although in his typically self-serving way
http://www.thedailybeast.com/newsweek/2009/12/28/getting-the-economy-back-on-track.html

While some people saw one or more of these factors, virtually no one involved in the financial system--whether institutions, investors, regulators, analysts, or commentators--recognized the breadth of forces at work or the possibility of a megacrisis, and this included the most experienced among us. More personally, I regret that I, too, didn't see the potential for such extreme conditions despite my many years involved in financial matters and my concern for market excesses.
by rootless2 on Sun May 6th, 2012 at 11:30:41 AM EST
[ Parent ]
Perhaps I misremember the American constitution, but I was of the impression that Al Gore would no longer have been president by the time Mr. Rubin allowed data to change his mind...

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 6th, 2012 at 11:36:37 AM EST
[ Parent ]
second term would have ended Jan 2009.
by rootless2 on Sun May 6th, 2012 at 11:55:06 AM EST
[ Parent ]

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