Botching Financial Reform
I have to admit a morbid fascination with watching all of the sturm und drang of financial reform wind its way through Washington DC.
This is worse than slowing down to look at a car wreck — its watching a surgeon botch an operation that you know how to do correctly.
I understand that positioning for the next election, partisan politics and lobbying money are a deadly combination to any possible reform. But its so obvious to me watching these folks push and shove good ideas away that they: 1) are utterly clueless how all of this (credit crisis, recession, housing bust) happened; b) have absolutely no idea how to fix any of it; iii) are primarily concerned with getting re-elected.
What surprised me was that for “two months, four pairs of Senate Banking Committee members — each with one Democrat and one Republican — have been meeting behind closed doors to reach a bipartisan compromise on regulatory reform.” For a brief moment, that almost made me think that perhaps they might do something that benefits the nation, instead of their own re-election campaigns.
Fat chance. The vote in the House went down along partisan lines,and the Senate remains mired in the usual senatorial silliness (greatest deliberative body in the world my arse).
Regardless, the latest collective acts of futility from the fetid DC swamp are detailed in this graphic from a NYT article this morning titled Curveball Alters Talks on Wall St. Reform:
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click for larger graphic
courtesy of NYT
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Source:
Curveball Alters Talks on Wall St. Reform
SEWELL CHAN and DAVID D. KIRKPATRICK
NYT, February 1, 2010
http://www.nytimes.com/2010/02/02/business/02regulate.html
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February 2nd, 2010 at 7:18 am
Makes you want to say the Hell with Democracy — give me a benevolent dictator (as in Chicago’s Mayor) or a philosopher king.
February 2nd, 2010 at 7:26 am
one week TARP, 18 months later zero reform, people are there actions, they obviously are still totally clueless, corrupt, inept, can’t do math, all of the above
February 2nd, 2010 at 7:42 am
Prepare for townhall meetings this summer AGAINST reform.
February 2nd, 2010 at 7:49 am
BR: “What surprised me was that for “two months, four pairs of Senate Banking Committee members — each with one Democrat and one Republican — have been meeting behind closed doors to reach a bipartisan compromise on regulatory reform…”
That you are surprised, still, at anything is amazing.
The fact that these meeting among the committee members need to held secretly should tell us more about the meetings than anything that would come out of them.
The deals made behind closed doors are precisely what is wrong with this country, and to call it democracy is total bullshit.
We are country of republican democracy in name only. For decades true republicanism has been sabotaged at every turn, almost from the signing of the Constitution and Bill of Rights.
Our system of Justice has been twisted like a pretzel, perverted into a system of byzantine Laws that purposely thwarts the will of the people and elevates common scum to the ranks of self-anointed royalty.
No system can withstand this kind of flagrant abuse and survive, let alone provide a stage for prosperity.
Fuck ”em. Fuck every single god damned one of them. One begins to see why suicide bombers do what they do so effectively.
February 2nd, 2010 at 8:11 am
One of the sources of the problem in this area is just how stupid and gullible the legislators are. Most of them are lawyers – and not terribly good lawyers – who are utterly ignorant of math. As such, they have no real grasp of the situation in front of them – just as the SEC was clueless about the scope of the fraud presented to them re: Madoff.
February 2nd, 2010 at 8:11 am
give me a benevolent dictator (as in Chicago’s Mayor) or a philosopher king.
Nah. As a banana republic, we’d definitely get El Presidente:
http://www.youtube.com/watch?v=qff098NCNDE
February 2nd, 2010 at 8:13 am
Much of the needed reform would fall under the rubric of Common Sense (as in: never trade the milk cow for magic beans; if it seems too good to be true, it definitely is; there is no such thing as a free lunch; ect.). That said, there is also no painless way out of this mess, and TPTB know it. Here are their choices:
a) Enact appropriate policies and regulation that steer us out of the quagmire and prevent a repeat of the events that got us into trouble in the first place — a response that will cause universal pain, and one that guarantees all will suffer equally, and that some very powerful (wealthy and connected) people will be punished for their crimes, or;
b) Dissemble and obfuscate the issues to the point of absurdity for the purpose of transferring wealth to, and perhaps counting one’s self among, those who will hand out the favors when the entire house of cards comes down (i.e: to get while the gettin’ is good), in the hopes that there will be no negative consequences to themselves or their cronies in the long term.
I believe TPTB have chosen the second option. They’re counting on splitting the hoi polloi against themselves (they seem to be doing a right good job of it, too), in order to squirrel-away their treasonously-gained booty in the hopes that the entanglements they create along the way will be too gnarled, and the paper trail too spotty, to ever unravel completely.
I don’t think they’ve thought this through too well. They’ve failed to account for possibility of the black swan, or for the fact that the black swan might, instead, be a very hungry, very pissed tiger.
February 2nd, 2010 at 8:14 am
I sympathize with your frustration BR; but if you only have one person/family to corrupt, we get to the same place only quicker.
David Brin has some ideas about a Transparent Society (see links) that might be applicable. To cheat the republic you first have to be able to hide from a large number of it’s members.
http://en.wikipedia.org/wiki/Transparent_society
http://www.amazon.com/Transparent-Society-Technology-Between-Privacy/dp/0738201448/ref=sr_1_1?ie=UTF8&s=books&qid=1265116126&sr=8-1
Which leads me to a question that might be something more appropriate to the open thread: How much secrecy do capitalists need? If idealistic young hacker revolutionaries turn Wall Street into an uninterruptable real-time reality show, will the bottom fall out of F.I.R.E. ? The whole economy?
February 2nd, 2010 at 8:25 am
“I have to admit a morbid fascination with watching all of the sturm und drang of financial reform wind its way through Washington DC.
This is worse than slowing down to look at a car wreck — its watching a surgeon botch an operation that you know how to do correctly.”
You got a way with words! Very nice!!
February 2nd, 2010 at 8:29 am
“One begins to see why suicide bombers do what they do so effectively.”
I’ve wondered lately how long it will take until Al Quada makes common cause with some internal fringe group bent on destroying America. Then I considered that perhaps it won’t be a fringe group.
Revolution is next, and I don’t mean in financial system reforms. Just a matter of time.
February 2nd, 2010 at 8:31 am
Keep up the fight.. The more we know the more we can inform. The outrageous situation is not something that just happened, but has been obscured by the apparent economic gains of the last bubble.
The fact is that the Congress does NOT represent the American populous. This is the message that must be continuously demonstrated by those with a platform.
February 2nd, 2010 at 9:02 am
The CNBC turds are in the pocket of the FIRE crooks so no honest debate will take place on that network.
The claim that prop trading had nothing to do with the bust is so very disingenious.
The fact is that prop trading has a lot to do with the bubble blowing.
February 2nd, 2010 at 9:13 am
I’m with MA. This is a “dangerous meme”/shared personality pathology run amuck. If US cities ever got to “Black Hawk Down” chaos, there really is nowhere for TPTB to hide.
The Old Money is still married to this country. Museums and historic preservation converts their ancestral places into mausoleums. Their family names are on buildings, streets, and towns. Their influence behind the scenes is still immense. The aristocratic tendency will, counter-intuitively, rein in the vulgar excess.
February 2nd, 2010 at 9:14 am
FULL reinstatement of Glass-Steagall is required and easy to do (yeah – I know).
ANYTHING less is an affront, a disgrace, a disaster and lots of other derogatory adjectives.
February 2nd, 2010 at 9:16 am
Curveball – isn’t he the same guy who said Iraq had weapons of mass destruction?
February 2nd, 2010 at 11:18 am
> They’ve failed to account for possibility of the black swan, or for the fact that the black swan might, instead, be a very hungry, very pissed tiger.
I think that’s a given. There’s a populist firestorm coming. As for why they can’t reform, well, they all profit mightily from the system as it is, don’t they?
February 2nd, 2010 at 1:54 pm
You’ll recall our founders established a Republic. We began calling it a democracy when politicians de-volved into election whores and the populace failed to reject them. A democracy will work, as will a dictatorship or any other form of government as long as people evolve rather than de-volve; too bad we have not. We are not the first nation to fail at maintaining our ideals of service, freedom and responsiblity but we’ll certainly be the biggest.
February 2nd, 2010 at 4:49 pm
Says Barry Ritholtz: “Makes you want to say the Hell with Democracy — give me a benevolent dictator (as in Chicago’s Mayor) or a philosopher king.” –Alas, Barry will have to upgrade his fantasy of deliverance. Plato in” The Republic” ended on a sour note, with the failure of his philosopher kings due to bad math (they erred in their eugenic calculations–probably an allusion to the arrhetos [incommensurable] whose discovery shattered Plato’s thematic mentors in the Pythagorean Brotherhood). And I never heard that Chicago politicians knew anything about the banks beyond, “That’s where the money is.” Would Paul Volcker fit the bill, or has he already reduced himself to just another exhibit in Obama’s “populism” charade?
February 2nd, 2010 at 5:10 pm
The GOP is in a conundrum here, which is exactly where the President wants them. Obama knows that the GOP won’t allow him a single vote, so what soloduff calls a “charade” is actually brilliant political strategy. The President is proposing level-headed reforms that the GOP will never support, but he’s forcing them to go on record against reform and for the big banks. If, by some miracle, the GOP actually supports tough reform, though, then that’s good too.
So this is win-win. If the GOP blockades reform, they’re exposed as the boot-boys of Wall Street. If the GOP blinks and supports reform, Obama gets credit for an important win for the American people.
February 2nd, 2010 at 5:35 pm
Why do I feel like going into hiding until all this is over. I’ve heard Costa Rica is a great place. Maybe time to set up a new residence. Where are the grown-ups? As a society, we are devoid of leaders.
February 2nd, 2010 at 5:36 pm
The GOP is in a conundrum here, which is exactly where the President wants them.
Oh, f411, just when we were hoping you were f411 2.0!
If the GOP is in a conundrum, it’s a momentary conundrum as to which orifice to penetrate — and whether or not to use KY. “Going on record” is only an issue when you’re facing focused opposition. In O’s own phrase, the DEM’s are “heading for the hills” on healthcare and reforms facing midterm elections.
There are SO MANY wonderful nuggets (i.e., moronic compromising statements) buried in committee reports and even committee hearings, you obviously have no idea and have never spent much time in the Archives (or even electronic research). There’s an embarrassment of riches for indicting members of both parties for hypocrisy, flip-flopping, lying, and stupidity.
Making them go on the record. Please.
February 2nd, 2010 at 6:04 pm
Let me add my 2 cents here. The present train wreck we have with the economy is a direct result of Reaganomics. I hated that guy, not only because he was an old prick. He was an idiot and completely unfit for office. As bad as his deeds were (and I won’t bore you by enumerating them here) what was worse is what he didn’t do. He did not care to deal with industrial policy when we needed that the most. Instead we got entropy and investment in financial shenanigans and it continues to the present. My state was one of the most prosperous in the country when I was young. Now we are a basket case and we don’t have hardly anything to replace the manufacturing jobs that we have lost. Reagan was the worst president ever and anyone who glorifies him is a schnook.
February 2nd, 2010 at 6:52 pm
@BR: I know what you’re doing.
You’re prepping this blog to write your next book. “The only fix that works”. Co-authored by little Timmy.
Chicago? The city that works????? Been there, done that.
Honestly, I think you are prepping us to write your next book The Only Fix That Will Work.”
And the first chapter will be “The only fix of the financial community that will work”.
And you’ll ask all of us to help with it.
OK. When do we start?
February 2nd, 2010 at 8:01 pm
TV ELECTION, BARRY’S CAMPAIGN?
So do you favor any particular reforms or just like to criticize everybody? Do you really want to boost comments by saying something or continue to be all things to all people? Sounds a bit like an election campaign. What would you be running for, more TV appearances, more wealthy clients with conservative views about money? Disappointing to say the least.
Criticism is for children, responsibility is for adults.
SS
February 2nd, 2010 at 8:10 pm
@ LeeX –
I concur with your comments on Reagan who BR was holding up the other day for his political toughness. That may well be but in response to Barry I commented here on Reagan’s campaign visit to Philadelphia, Mississippi, one of the most racist acts by a major U.S. political figure in recent times. Even beats former Senator Allen of Virginia’s – - that of “Macaca fame”- – hang noose that he kept on his desk for all visitors black and white to see.
Google Philadelphia Mississippi if you are unaware of what happened there. We have a great sense of humor here so one is encouraged not to take the “boys” too seriously when they get carried away.
SS
February 2nd, 2010 at 8:21 pm
Send each member of Congress a copy of “Bailout Nation” and deduct the COGS as a “Charitable donation”?
February 2nd, 2010 at 8:42 pm
Barry, we need more level-headed, analytical, results-driven people speaking about these reforms to the public and to our politicians. We need more Barry Ritholtz’s and Elizabeth Warren’s. People who regularly read your blog recognize your dislike for both political parties and the current political climate, but that is the system we currently have. I also don’t think anyone would suggest that you are beholden to any special interests.
You do a great job of discussing these issues on your blog and through other various media. I guess my question for you is what are you doing to ensure that politicians are hearing these ideas? Do you communicate with or advise any politicians or their staff? Why don’t you use your blog as a bully pulpit to encourage your readers to write to their representatives / senators?
February 2nd, 2010 at 9:03 pm
Barry Ritholtz Says:
February 2nd, 2010 at 7:18 am
Makes you want to say the Hell with Democracy — give me a benevolent dictator (as in Chicago’s Mayor) or a philosopher king.
———–
Sometimes one needs to get away from it… when so much seems “theater” …when there is so much that needs to be done…but it seems it all fritters away and goes down the “memory hole.”
Folks who’ve been at this for years….active, working….are just flumoxxed. (sp) Drains energy “the push back that’s so successful” and the cries for justice…just seem to be so puny in force throwing mud at the brick walls of the enforced castles.
I guess things just take time… And, there needs to be breaks to just do what one can focus on and time to recoup and space out, dream time… because so much is so bizarre it defies logic.
February 2nd, 2010 at 9:58 pm
Intentionally “botched” is more like it.
February 3rd, 2010 at 8:48 am
Fortunately, thanks to the Supreme Court, we can expect nothing to happen – the financial services industry will simply buy what remains of the Congress’ soul
February 3rd, 2010 at 9:27 am
[...] to watch the death of regulatory reform in slow motion. The process is likely to get mired in business as usual DC politics, not to mention the ability of Wall Street firms to find loopholes in the proposed measures. [...]