Time for Wall Street Insurance?
Why does the US taxpayer have to guarantee every single transaction done on Wall Street? Since when is that our obligation?
If the taxpayer is on the hook to bailout systemic risk, then don’t they have the right to prevent that systemic risk? Or alternatively, reserve for/insure it?
I keep hearing that Wall Street must be free to innovate, to engineer, to create new products — but other than iShares and ETFs, I cant say I’ve seen much in the way of brilliant insights or creativity.
Here is the thing that really gets me angry about all of this nonsensical “innovation” on Wall Street talk: Its a misnomer. This innovation without oversight is in reality has led to an enormous transfer of wealth – first from shareholders to senior executives, then from taxpayers to bankrupt firms and their counter-parties. The entire industry has been hijacked by a few rogue finance engineers, and its been an utter disaster.
Consider the FDIC: They are the insurer of bank deposits of $100k (now $250k), and in the event they run out of money, they can go to the taxpayer. But they pay for themselves via a small insurance premium banks pay (on behalf of depositors) on every account.
All of the trillions of dollars in bailout expense plus the blather about restricting innovation has led me to this unfortunate conclusion: We need Wall Street Insurance.
In order to pay for the next round of disasters some 20 years hence, we need to set up a a reserved insurance fund. This means every transaction, M&A, IPO, bond under-writing, stock trade, CDO, CDS, every RMBS, etc has a 1% premium on it.
That should add up to a few trillion dollars, and by the time the next debacle comes along, we can afford to pay for it.
March 18th, 2009 at 10:34 am
Of course, I am being sarcastic.
March 18th, 2009 at 10:40 am
BR,
though, w/this :”But they pay for themselves via a small insurance premium banks pay (on behalf of depositors) on every account.”
you know the Depositor pays that charge via lower interest rates paid to them, yes?
IOW, it’s never the Corporation that pays Taxes, it their Customers, no?
March 18th, 2009 at 10:43 am
I have been arguing for years that we need to require that all audits be insured.
In the early days of steam, boiler explosions were frequent and killed large numbers of people.
It was the insurance industry that formulated the design and inspection standards that made boilers safe. Same for electrical products. That’s why it’s called, “Underwriters’ Laboratories”.
If audits had to be insured — and we put in place sufficient regulation to prevent an AIG CDS type fraud, which has been successfully done in every other insurance market — the insurers would be watching the auditors just as they watch the boilermakers.
March 18th, 2009 at 10:43 am
“Consider the FDIC: They are the insurer of bank deposits of $100k (now $250k), and in the event they run out of money, they can go to the taxpayer. But they pay for themselves via a small insurance premium banks pay (on behalf of depositors) on every account.”
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Now-needy FDIC collected little in premiums
With fund going strong, banks didn’t pay for decade
By Michael Kranish
Globe Staff / March 11, 2009
The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006… …Congress believed that the fund was so well-capitalized – and that bank failures were so infrequent – that there was no need to collect the premiums for a decade, according to banking officials and analysts.
http://www.boston.com/news/nation/articles/2009/03/11/now_needy_fdic_collected_little_in_premiums/
March 18th, 2009 at 10:46 am
“These guys are like a pair of bookies”
March 18th, 2009 at 10:50 am
lb,
you should check out Aaron Russo’s other films
March 18th, 2009 at 10:50 am
“Why does the US taxpayer have to guarantee every single transaction done on Wall Street?”
We don’t. We only guarantee transactions for a certain group of people. I’ve noticed lately that my trasactions aren’t guaranteed at all.
March 18th, 2009 at 10:51 am
While the customers will indeed bear the cost (and they shouldn’t mind, especially to protect against counter parties going under), this could inspire the fast-money types to take even more risk!!
So, we are back to either tax them to submission or regulate them into a cage, or better yet do both!
And let’s see how the “best and brightest” get out of this.
March 18th, 2009 at 10:53 am
The FDIC once claimed it was solvent (before Indymac, Wachovia, Washington Mutual, et al). Then it said it needed to increase premiums on its member banks, which in turn, might threaten their solvency, whose solvency, of course, is guaranteed by the taxpayer through TARP and other alphabet-soup government financial aid programs for banks.
It always, but always devolves to the taxpayer.
The FDIC, like all government programs, has never been more or less solvent than the taxpayers, even if it tries to take credit for how swell it manages things when there aren’t any insolvent banks.
March 18th, 2009 at 11:00 am
“Non-interest checking accounts will have two levels of fees:
The first $250,000 will be assessed at .1095 per $1,000 per month (.0001095 x $250,000)
Balances over $250,000 will be assessed at .1928 per $1,000 per month (.0001928). This is for the unlimited FDIC coverage. ”
This is part of the email I received from WACHOVIA WELLSFARGO for our corperate account. So… now its the depositor who pays via fees for the FDIC, gee I thought I paid that as a tax payer in the bail and now I pay again, so much for …..
March 18th, 2009 at 11:08 am
Moderately offtopic: WTF is up with C?
Not that I’m complaining, mind..
March 18th, 2009 at 11:13 am
I hate to disagree with almost-always-BR-illiant BR, but since I’m already bailing out a bunch of wall st. firms with my tax dollars, do I really have to pay 1% transaction fee for my future trades? With 1% fees on every buy and sell, i’ll either have to stop trading completely, or at the very least reduce the number of trades by over 90%. On the other hand, GS, MS and the rest will find a way to trade without the penalty. If you’ve heard terms terms such as “OTC excahnge”, “Foreign exchange”, “London office”, “Swiss bank account” and ” Cayman Islands corporation” you know what I mean.
The 1% tax proposal may be a good thing, but needs lots of refinement.
March 18th, 2009 at 11:24 am
I think it’s pretty clear from the comments above (and the boston.com article) that the banks do not pay for FDIC insurance on behalf of depositors. Either the taxpayers pay or the depositors, or both pay. The FDIC is not a model for insurance
March 18th, 2009 at 11:35 am
Transor Z Says:
March 9th, 2009 at 2:29 pm
Mandatory Corporate Life Insurance for publicly traded companies.
Corporate Life insurance companies would send auditors to review the books, conduct risk-assessment, etc. called “Independent Financial Examinations.” Analyze the company’s succession planning, long-term planning.
Eliminate Chapter 11. When a company fails, the policy kicks in. (Though the company couldn’t “suicide” in the first couple of years to scam a payout.)
Oh — and the other thing is that, in order to certify genuine corporate death, all of the corporate officers and board members of the deceased corporation will of course have to be shot.
The new corporate business model would protect creditors, eliminate a lot of “systemic risk” and create a nice incentive to make sure that the interests of top execs and board members coincide with those of shareholders and employees.
March 18th, 2009 at 11:35 am
Maybe Kuwait should have gotten in on some of that insurance action:
Parliament’s Fate Unclear Amid Kuwait Turmoil
http://online.wsj.com/article/SB123732738349962223.html
March 18th, 2009 at 11:35 am
So nice I posted it twice.
March 18th, 2009 at 11:35 am
If the taxpayer is on the hook to bailout systemic risk, then don’t they have the right to prevent that systemic risk? Or alternatively, reserve for/insure it?
No. The Masters of the Universe are best qualified to address these minor details. Taxpayers need only have their accounts automatically debited each month.
March 18th, 2009 at 11:44 am
By the time the next debacle comes along, a few trillion dollars will buy you a hamburger and coke. Actually I guess that is the next debacle. Thanks, Fed!
March 18th, 2009 at 11:45 am
To all the Masters of the Universe who have tasked their lackeys with monitoring the rumblings of the ‘chusma’, I present to you a once in lifetime opportunity to get out ahead of the re-feudalization of the West:
Buy your very own collector’s edition of a real English hamlet (or town as may be): Linkenholt
Remember, it’s very difficult to lay claim to a noble title without some peasants to backup your claim.
http://www.boingboing.net/2009/03/17/own-an-english-villa.html
To all you lackeys, I curse you with a thousand years neath a pooka’s yoke.
March 18th, 2009 at 12:05 pm
Any time you’ve got a pot of money somewhere, someone’s going to be trying to get their hands on it.
March 18th, 2009 at 12:06 pm
A bit off-topic, but it appears the markets are replaying the end of last quarter (Dec. ‘08) with a little dressing up for mutual fund statement purposes, except that DOW 8,000 is the new 9,000 and S&P 800 is the new 900. I should have known this would happen but am getting ready for the fall sometime in April, the new January, when reality hits home again.
March 18th, 2009 at 12:13 pm
I think this would make a great exercise.
We can find out just how much tax the public can bear.
We could levy the tax on the brokerage houses with the stipulation they cannot mark it up more than 3x when passing the cost along.
And we can let PIMCO, Goldman and JPM manage the trust for say 2% of asset value annually and 20% of profits (since its govt money these three would not have to pay income taxes on what they earn on this if say they agreed to reduced fees by 10%).
and to incentivize them no high water mark.
we really could get innovative and let the fund be a testing ground for new products. If it does not work out the taxpayer pays the cost directly rather than going thru all the gyrations to subsidize. If the product works out the investment houses get the good old SEC seal of approval and they make money on the new workaboe product.
Of course, the investment houses will have to pay some sort of fee to members of congress for the expert advise on some of these products or perhaps a heads up on ideas that might be made public.
This could be limitless.
I would like to think I am being sarcastic but its probably happening.
March 18th, 2009 at 12:25 pm
Annuities for EVERYONE!
March 18th, 2009 at 12:43 pm
“In order to pay for the next round of disasters some 20 years hence . . .”
_______
I don’t think we’ll be waiting 20 years. Maybe 20 days.
March 18th, 2009 at 12:50 pm
Barry says:
“Why does the US taxpayer have to guarantee every single transaction done on Wall Street? Since when is that our obligation?”
Essentially, this is how all systems work. Otherwise, what would be the purpose of having a system?
March 18th, 2009 at 12:55 pm
barry, FDIC used to tag the banks they supervised for deposit insurance but no more: banks recently convinced Bair that “in the current environment” they cant afford to pay additional costs to protect us from their horrible decision-making, now there will be a general levy on — wait for it — the US taxpayer to make up the shortfall in the insurance fund. as crazy Ben Bernanke — who claims he studied the Great Depression — allows more and more highly speculative institutions like GMAC, Goldman, Morgan Stanley, what next hedge funds? — to set up bank holding companies. we are truly in the land of the lost. today’s article WSJ about banks’ “covenant lite” loans going from 1% of their assets 2005 to 19% total assets by 2007, the peak of the credit binge? priceless
March 18th, 2009 at 12:55 pm
DL Says:
March 18th, 2009 at 12:05 pm
Any time you’ve got a pot of money somewhere, someone’s going to be trying to get their hands on it.
__________
I was at an Irish bar last night, there was a leprechaun there saying the exact same thing (he was also making the argument that gold is the only ‘real’ money). Dude was lit.
March 18th, 2009 at 12:58 pm
Sorta like calling to up your slip&fall insurance after a snowstorm instead of getting off your duff and clearing your front walk.
March 18th, 2009 at 1:00 pm
“That should add up to a few trillion dollars, and by the time the next debacle comes along, we can afford to pay for it.”
But you can’t just let a few trillion sit in a bank, hedge funds have much better returns!
March 18th, 2009 at 1:07 pm
Bring back the transaction tax. Wallstreet dug a hole for taxpayers. Implement a transaction tax until the hole is filled back in.
March 18th, 2009 at 1:08 pm
“Annuities for EVERYONE!..” What are you thinking?
NOoooo.. only annuities for RICH people who were BORN RICH
Because they’re the only ones who REALY REALLY DESERVE IT
March 18th, 2009 at 1:10 pm
Kyle Says:
March 18th, 2009 at 1:00 pm
But you can’t just let a few trillion sit in a bank, hedge funds have much better returns!
______
We wouldn’t be in this predicament if trillions of dollars would have stayed out of half-assed, bogus, fraudulent “investments”.
Risk is risk. While it’s true that you have to play to win, it’s also true that you have to play to lose.
Like Mark Twain (also attributed to Will Rogers) said:
I am more concerned with the return OF my money than the return ON my money.
March 18th, 2009 at 1:17 pm
Had a talk with my banker this morning about FDIC insurance….
Apparently the FDIC rules are changing by the day…This 600 million dollar bank paid 47,000 dollars to the FDIC in 2007 for FDIC insurance…know what they have been assessed for 2009?
1.8 million dollars…
There has been a “special assessment” by the FDIC for the second quarter ‘09 that originally was >800k..he tells me that may decrease to between 400-500 thousand dollars, so the 1.8 may only wind up being 1.4 million for the year…
One other thing we talked about…a fellow in the area worth several hundred million dollars sold some land 2-3 weeks ago, and called my banker about wanting to put it in the bank. My banker and he talked about it..(they are good friends)…and the individual said he didn’t care if he made money or not, he just didn’t want to lose it…well, my banker talked to him for a long time, and apparently (I didn’t know this before this morning) some checking accounts, no matter what the amount, are guaranteed the entire value by the FDIC…
Well this would have been a 4 million dollar, no interest checking account…my banker tells me that all bankers salivate over this kind of money in non-interest accounts…what do you think happened…?
He declined the money…told me after the FDIC calculations that he would have lost 16,000 dollars this year on this account due to costs to insure the account under the new FDIC rules…
….Ain’t life under the bailout programs grand?
March 18th, 2009 at 1:19 pm
Sounds like wall street has the same definition of Innovation microsoft has.
30 years is the credit cycle…. 30 years…
March 18th, 2009 at 1:29 pm
Quality circus going on today on Capitol Hill. Heaven help us all.
@ Bruce, get your charcoal and lighter fluid ready, I am 33 SPX points to the good. SPX 745 is in the dust.
March 18th, 2009 at 1:31 pm
Insurance like FDIC is actually shared between depositors, shareholders, employees, and taxpayers. It is not always the customer that pays. A 1% fee would be a very large proportion of returns, and yet still be inadequate to cover the frequency and magnitude of losses that occur. One can’t really prevent transactions from going underground though, so it would have to be asset based rather than transaction based.
March 18th, 2009 at 1:32 pm
You are getting too emotional.
It would kill the average retail investor and trader if you added a 1% tax to every transaction.
I’m not a big player. I hedge all my trades. yet, last years I bought and sold approximately $38 million dollars worth of options. You want me to pay $380k for the right to trade? You cannot be serious.
Imaging mutual funds. They already do a lousy job for their clients. Tack on a 1% transaction fee and clients will no longer be able to afford them.
It’s find to tell us that revenue must be collected, but you must consider the source. Your ideas would destroy wall street for individuals.
http://blog.mdwoptions.com/options_for_rookies/
March 18th, 2009 at 1:36 pm
Bruce N Tennessee @ 1:17
As Art Laffer would say, when you bail someone OUT of trouble, you get someone else INTO trouble.
March 18th, 2009 at 1:38 pm
@ Bruce: Tremendous. So the FDIC is now exacting huge premiums from smaller (and most likely healthy) banks to subsidize the risk of the TBTF institutions?
I have a very bad feeling we’re going to see a long procession of brain-dead results like this in the coming months/years.
March 18th, 2009 at 1:39 pm
Did someone bring up Voodoo Art? That guy killed America.
March 18th, 2009 at 1:46 pm
@CNBC Sucks: He’s got a sweet hair dye job though. Wins points with me.
March 18th, 2009 at 1:50 pm
Mannwich @ 12:06
I’m more or less in that camp. I added to my shorts yesterday.
March 18th, 2009 at 1:51 pm
BIG time.
Brokers Recalling Loaned Shares in Citi
Since this morning Bloomberg reports that major brokerages have been calling in the loaned shares that have been used for legitimate short sales in Citigroup.
This in part explains the rally in Citi today, as the shortsellers cover their positions ahead of a 2:30 PM deadline today by which they must return the borrowed shares.
It does seem rather calculated, particularly its conjunction with the Federal Reserve announcement.
We have not seen this in the general news, just on the Bloomberg TV analyst reporting.
There is the implication that this is a calculated market operation being conducting among big traders and the major brokerage houses who hold the shares for borrowing from customer accounts. Marketwatch seems to imply that this is being precipitated by ‘the authorities.’
Nice timing to help bolster the financials after the FOMC announcement. This has the Larry Summers/Robert Rubin touch.
It would be a good thing indeed if the Obama Adminstration did something meaningful to curb naked short selling and enforce the existing regulations. But if they are doing so for only their favorite companies, then this is not market regulation, it is crony capitalism and insider trading.
Seeking Alpha
Citigroup Inc. – Shares are being squeezed once again today and the company has a valuation some 23% higher today with shares stretching above $3.00.
Intrigue continues in the June 5.0 strike options where arbitrageurs are using conversion plays that typically land a credit to take advantage of the squeeze. The volume in that line has more than 150,000 contracts trading both sides today with puts bought and calls sold when investors can position long of the stock.
Earlier in the week rumors did the rounds that the authorities might be on the hunt for hard-to-borrow stock certificates in select financial names.
This in itself has created a surge at AIG and Citigroup as desperate short-sellers try to cover their positions. The conversion trade could be established earlier in the week for a credit of 20 cents, but given the near-panic buying in the stock has shifted to a 1.10 cost to traders.
POSTED BY JESSE AT 12:26 PM
March 18th, 2009 at 1:51 pm
An underdiscussed aspect of this entire debacle is that Private Mortgage Insurance was largely skirted by using second loans, allowing little or no money down on properties. As someone above noted, insurance companies are better than auditors, they’ve got skin in the game.
March 18th, 2009 at 2:07 pm
RE: Bruce N Tennessee at 1:17pm–
On that $4 million non-interest bearing account that will cost the bank $16,000 to insure.
I am figuring that cost to be 0.4% per year. And the banker rejected it? There has to be something more to the story.
March 18th, 2009 at 2:10 pm
This story is absolutely true. I saw it in a movie.
Once upon a time there was an ancient and mighty Sorceror. He was possessed of magical objects of great power. Among these were a pointed cap with moons and stars on it and a magic wand. One day, the Sorceror left his castle to go away on business, and left things in the care of his Apprentice, named Mickey. Mickey’s compensation was in the form of annual bonuses linked to sweeping and mopping the castle and carrying water to the Sorceror’s lab.
Mickey was a bright young lad — a bit too bright, in fact. And lazy. And, truth be told, selfish and greedy. Many times he had watched the old Sorceror work his magic in his laboratory, and Mickey envied the old man’s power. So on this day, Mickey saw his chance to work some magic of his own. As soon as his master left, Mickey grabbed the hat and wand and went to work feathering his own nest.
Mickey waved the wand at his boring old broom, shouting “Hocus Pocus!” and other legal terms of art. The broom suddenly came to life and began mindlessly carrying buckets of water to the lab for Mickey. But this was not enough for the young lad, whose Harvard MBA told him that two brooms could bring more water than one — and improve the volume of water moved and hence his bonus size. So again — “Hocus Pocus!” and the broom magically divided into two! Again and again Mickey divided the brooms.
Unfortunately, however, Mickey was much too clever for his own good. The brooms, you see, began flooding the castle. And, as the castle was up on a hill overlooking a town, the entire town was about to be flooded! Everything was out of control!
When the Sorceror came home, he was furious with Mickey! He immediately snatched back the hat and wand and upbraided Mickey for placing the entire kingdom in jeopardy. But, since a contract is a contract, the Sorceror promptly cut Mickey an enormous bonus check for the huge volume of water moved. Then he called an emergency meeting of the Sorceror’s Guild to figure out what to do next.
The End
March 18th, 2009 at 2:11 pm
Our epitaph for this entire time period: “Mistakes Were Made”.
March 18th, 2009 at 2:14 pm
Transor Z…I like the fable…
By the way…yes, the bank the salt mine does business with is healthy….they made a profit of 8.1 million last year on deposits of just under 600 million…
March 18th, 2009 at 2:18 pm
Must be a big salt mine. SPX rallying Bruce, prepare the patties… lefty is already a bit peckish.
March 18th, 2009 at 2:21 pm
hr:
I know nothing about banking…but I do know that building , and new mortgages in this area have ground to a halt…
I pass a brand new strip mall on my way to the mine every morning…and within a 1 1/2 mile radius there are two other “strip-malls” that now are 1/3 empty….
I think the new guys are probably wishing they’d never started the project…
By the way, too, my banker tells me he can’t meet the same deals that banks in the area who’ve taken federal money are giving…e.g. Regions…that his costs are now apparently greater than the TARP’ed banks….
I do know he’s sharp and if he’d felt he could have made money, he’d have taken the money….
I imagine the playing field in banking looks like a night game with most of the lights out..you probably don’t know where on the field you are…
March 18th, 2009 at 2:22 pm
I love the paragraph about the transfer of wealth. Good work BR.
March 18th, 2009 at 2:28 pm
leftback @ 2:18
Enjoy it while you can. The SPX probably won’t spend more than a week above 800.
March 18th, 2009 at 2:29 pm
And HR…this was a checking account…may have made a difference in his mind that the entire sum could leave in a month…
Again, I am no banker…
March 18th, 2009 at 2:39 pm
>> I imagine the playing field in banking looks like a night game with most of the lights out..you probably don’t know where on the field you are…
…but the TARP guys are wearing night-vision goggles.
March 18th, 2009 at 2:56 pm
Lefty:
Glad you are doing well…the salt mine is losing a partner in June due to divorce, so we won’t be quite as big…I imagine all of us together don’t make enough to pay for your cab fare…
March 18th, 2009 at 3:08 pm
Ahhh, a Pigovian Tax!
I know BR is being cheeky, but he may be onto something!
March 18th, 2009 at 6:58 pm
BR post is right on, especially on the transfer of wealth. This has been the whole point of the supply side theory. The fact that the stealth aspect of it has been exposed by the meltdown must have poor Art in a total conundrum. AIG is Wall Streets insurer .. the only problem is that the taxpayers are funding the f*cking premiums that were past due for the last 10 years.
March 18th, 2009 at 7:06 pm
gordo365 is correct. Transaction taxes (stamp duties) should be introduced widely. The alternative is huge increases in corporation and personal income taxes, which is a more socialist method for governments to raise revenue. Of course, both types (indirect and direct) of tax will be used to help balance the budget because there is no alternative. Arguments that, say, a 1% tax on financial services would reduce the amount of such services are not born out by experience in other countries where indirect taxation is much greater than in the US. Canceling tax relief on mortgage interest had zero effect on the demand for homes in the UK, for example, and stamp duty of 6% on house purchases in France doesn’t dampen sales. It’s odd, perhaps, that European governments that have “socialist” reputations use far more capitalist methods for raising revenues than the US.
March 18th, 2009 at 7:24 pm
Brilliant !!
A one percent transaction tax on every stock and bond transaction.
This will solve our biggest problem, falling real estate prices, almost over night!
I can see it now.
In no time at all, every last penny (minus 1%) will have been pulled out of the stock and bond markets and INVESTED IN REAL ESTATE !!!! Housing prices will ZOOM!
There won’t be a single bad loan in the entire world and we will all be saved.
Ahhh….the unintended consequences. Gotta love ‘em!
JayBondman
March 18th, 2009 at 7:52 pm
Ok, ha ha. We all know this has been one huge cluster f(*k of a mess. No, all of this shouldn’t be guaranteed. Yes, there are serious problems with the existing system. And yes, just like we all experience throughout life (so it shouldn’t be a surprise) the biggest screwups get the most attention and have the most dollars spent on them. This is the way life works, fellas. The lifer in prison is going to get more state and Federal dollars over his life than any single, law abiding citizen. The loser in the family is the one that parents end up spending all their time and resources on. Such is life as a human. In the animal world, these would be the stragglers at the back of the pack that the predators would tear into…we all know this, but since we are human, we over ride the darwinism. Unless you’re in the mob–then you are deposited somewhere in the meadowlands…
So what? Now, I would argue that some of these “products” and “solutions” would have worked fine if they had been populated with good investments to begin with. But they weren’t. They were populated with crap. First, by accident, then later it appears that it was on purpose in an effort to dissipate the crapiness of the the crap.
Let’s remember some of the examples from Richard Bookstaber’s book: The more complex the system, them more opportunity for catastrophic failure and the less ability to mitigate it. The system is only as good as its weakest link. With mortgages, the weakest link wasn’t on Wall Street, guys. The weakest link was the mortgage officer and the oversite of their workflow. They weren’t being compensated for quality of mortgage aps, they were compensated for quantity of mortgage aps. There were few qualifications to becoming a mortgage officer, whether at a bank or at a mortgage brokerage shop. There was little oversite. The system was set to fail at point one. The best outcome possible was failure in the end.
Now, you can fault Wall Street for being enablers–providing a venue for banks to get their crap off their books. But there was a natural point to stop lending and banks themselves chose to get creative and do paired mortgages, ninja loans, negative amortizing, teaser rates, … You can rail on Wall Street all you want, but they weren’t the mastermind, only a participant.
Now, what of AIG??? Is that Wall Street? Umm, I think that is the insurance industry. The only financial entity to successfully duck having a Federal Regulatory Body dedicated to oversite. I want their lobbying groups because, damn they’re good. Somehow, they’ve convinced the Federal government that most of their business is already well regulated because each state has it’s own insurance commission… yeah, right. Somehow they were able to create an insurance product, not call it “insurance” so it could be unregulated: voila!! CDS-credit default swap… You want to talk about an industry that made schmucks out of all of us? Insurance boys, insurance… The mob can’t do it better than them.
Maybe the path we’re taking is going to be a longer, more drawn out, more painful path by propping up JPM, C, BAC, etc… but it seems we are too far down this path to change coarse… There probably was a better way that might have been more painful short term, but better long term–but that time has past.
You know, it would be nice to hear some contrition from these politicians too! These buffoons that are haranguing Wall St and everyone else are the same confederacy of dunces that unlocked the liquor cabinet, cranked the stereo, and raided the fridge at this party! And now that we’re all busted, they’re the backstabbing people you hated in school.
You want to affect change? Do it at the voting booth. Actually take some time and vote your proxies based on what YOU think, not some proxy service or tossing it. You want this system to be better? Don’t be complicit when everything seems to be good. What is it that grizzled veterans say? “Vigilance is the price of freedom”
We are all angry, but it does no good towards solving the problems we have. You want to help? Get involved in the political game. Write congress people. Help Obama keep on task and not go too far left! Help at a charity. Give to your church food pantry. But don’t be haters leaving flaming messages on blogs. What good does that do?
March 19th, 2009 at 5:22 am
@b_thunder
Well the idea of a transaction tax is not exactly new, and I guess could be made to be semiglobal.
That leaves the problem of taxhavens, but you have them now and they won’t go away easily.
March 19th, 2009 at 8:26 am
Will this 1% Tax go into the “lock box” Al Gore spoke of setting up or a a “Trust Fund” similar to the Social Security Taxes we pay go into? The government will piss it away faster than it comes in on stink bug research or some other waste.