Comments on: How to Regulate Derivatives

By: Goldman Sachs Is Robbing Us Blind : Federal Jack

Goldman Sachs Is Robbing Us Blind : Federal Jack — Fri, 16 Oct 2009 06:07:59 +0000

[...] So bankers, facing an onslaught of web-driven transparency and reduced profitability during the last decade along with an increasingly educated customer-base became anxious to change the laws in 2000 and are even more anxious to protect those changes now. [...]

By: FrancoisT

FrancoisT — Thu, 15 Oct 2009 00:29:36 +0000

“Its astounding this has not been resolved yet . . .”

No Barry…what would be astonishing is that it would have been resolved already.

I’m aware that government studies is not your cup of tea, but in the current environment where Washington is the econ big dawg, the fix ought to start in DC, not on Wall Street.

3 things MUST happen, if we stand any chance of avoiding an even bigger crisis within the next decade or so:

1) Repeal the money/free speech equivalence spawned by the Valeo v. Buckley 1976 decision by the Supreme Court. Consider this: If money is free speech, what is the absence of money? No speech, of course…which is exactly where ordinary people are in the US of 2009. No meaningful power of speech for them.

2) The corollary of the above is a logical extension; public campaign financing only. That is, what gets into the hands of the politicians comes from public funds.

3) Strip the corporations from their personhood status. This one is a doozy. but it ought to get done. Corporations are artificial entities, don’t vote and have no business (pun intended!) being considered legal persons.

Only then, will Congress and the political parties stand a fighting chance of doing what’s right for the common good.

BTW, we could also use 3rd parties. No one will make me believe that the immense complexity of the American social fabric is adequately reflected and served by a two parties system that with each passing day, look more and more like an extension of corporate America and special interests groups.

Most people seem to think reforms to our system should be economic in nature. Well, that is just not the case, since most of the problems we have now come from the FIRE sector, which is essentially a creature of the politics.

By: FrancoisT

FrancoisT — Thu, 15 Oct 2009 00:09:19 +0000

Blarney Frank, in an interview with Dylan Ratigan, said that people shouldn’t make too much of early drafts of this legislation.

http://www.huffingtonpost.com/2009/10/14/barney-frank-vows-to-shar_n_321254.html

Right! And I’m the 3rd son of the 2nd wife of the Pope. What is obvious is that they publish early drafts as test balloons to see where the wind blows.

And of course, quite a few smart people just won’t buy Frank’s pitiful attempts to justify the giant loopholes.

http://tinyurl.com/yhqechh (From Naked Capitalism)

By: macunix

macunix — Fri, 09 Oct 2009 13:44:03 +0000

hey, i was inspired to register after reading “bailout nation”!

most of the discussion i hear about regulation seems to be about re-inventing the wheel. this ignores the fact that we once had a system that worked pretty well, that incorporated the lessons of the great depression, and was systematically destroyed by the ideological far right. we don’t need a new system, we need our old American system that brought so much prosperity to the middle class. repeal the CFMA, what a fine idea! maybe bring back somethinng like Glass-Stegall, tool.

By: alfred e

alfred e — Fri, 09 Oct 2009 02:56:47 +0000

@BR: This is one of your best posts ever.

This is a poison that will not go away until collapse, if then.

We are doomed.

I predict $5 gas in less than 1 year. Again. And then there’s natural gas. Essentials the a-holes are manipulating with free Fed money.

By: Brett Tibbitts

Brett Tibbitts — Thu, 08 Oct 2009 20:12:24 +0000

Barry, I understand how Phil Gramm's role in the passage of the Commodity Futures Modernization Act repulses you. But how about Larry Summers (Treasury Secretary at the time of passage of the Act and currently Obama's top economic advisor) and President Bill Clinton? Larry Summers pushed just as hard as Gramm for passage of the Act and famously mused at the time how he had rarely seen such bipartisan support for a bill. And of course Bill Clinton signed the bill into law. Are Clinton and Summers just the dupes of Gramm in pushing for passage of the Act? ~~~ BR: They come in for criticism in Bailout Nation for those exact reasons. But GBL and CFMA were Gramm sponsored idiocies . . .

By: impermanence

impermanence — Thu, 08 Oct 2009 19:16:45 +0000

This is simply another chapter in the sad story of how using other people’s money to enrich oneself ends up in calamity.

By: Bloomberg Reports Derivatives Regulatory Legislation Contains Large Loopholes | Proinvests.com

Thu, 08 Oct 2009 17:27:10 +0000

[...] make the language very clear.” And Barry Ritholtz, over at The Big Picture, basically says: NO, NO, NO, YOU’RE DOING IT WRONG. Any plan that seeks to reverse the unregulated wild west that derivatives have existed in since [...]

By: Thursday links: trending and thinking Abnormal Returns

Thursday links: trending and thinking Abnormal Returns — Thu, 08 Oct 2009 16:18:13 +0000

[...] “Current legislative proposals fail to treat derivatives like all of other financial instruments. This is the very least any legislation should include.” (Big Picture) [...]

By: Mark E Hoffer

Mark E Hoffer — Thu, 08 Oct 2009 15:38:03 +0000

this: “In addition to the full repeal of CFMA, derivatives should be 1) Traded on exchanges ONLY; 2) counterr parties must be adequately capitalized and transparently disclosed; 3) appropriately reserved for; 4) Where derivatives are acting as insurance, state insurance commissions should have oversight and audit capability.” while a good, and workable, idea, to me, misses the point, of CFMA and OTC deriv.s, to begin with.

OTC derivatives were the Tonic of the (mis-)Securitization Ginmill..
before CFMA, virtually, noone wanted to, even, get close to deriv.s. It was a major hang-up.