This morning’s must read MSM piece is over at NYRB: The Wall Street Leviathan. Jeff Madrick simultaneously reviews:

Financial Crisis Inquiry Commission Final Report

Inside Job

Regulating Wall Street: The Dodd-Frank Act and the New Architecture of Global Finance

Reforming US Financial Markets: Reflections Before and Beyond Dodd-Frank

This should give you the flavor of the article:

“Dodd-Frank Act has largely pushed responsibility for writing and implementing the new rules onto existing regulators, including the Federal Reserve, the Securities and Exchange Commission, the Commodities Futures Trading Commission, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency. This will likely prove a damaging flaw. These regulators are by and large the same agencies that tolerated the excessively risky behavior in the first place. Even if they write effective rules they will face pressure from Wall Street lobbyists and mostly Republican legislators to soften restrictions and eliminate some of the critical ones. If the restrictions remain intact, which is likely in view of the Democratic majority in the Senate, the question remains whether the regulators will enforce them vigorously once the economy recovers and the crisis fades in memory. Several agencies have already missed the deadlines to write new rules. Some are worried that the Consumer Financial Protection Bureau will be neutralized by Congress. Wall Street spent $2.7 billion on lobbying between 1999 and 2008 and is lobbying vigorously again…”

That is a damning indictment of a government controlled by Wall Street.

My only quibble:  Madrick writes “the Financial Crisis Inquiry Commission (FCIC) is the most comprehensive indictment of the American financial failure that has yet been made.” Numerous prior works have been both comprehensive and devastating (The Big Short, The End of Wall Street, Bailout Nation). And these authors did not have an $8 million dollar budget or a huge staff.

But that’s only a quibble, and the FCIC report is a giant 576 pages of tiny print (662 pages in PDF form).

It is a beast of an article, well worth your time to read . . .

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Source:
The Wall Street Leviathan
Jeff Madrick
New York Review of Books, APRIL 28, 2011
http://www.nybooks.com/articles/archives/2011/apr/28/wall-street-leviathan/?pagination=false

Category: Bailout Nation, Bailouts, Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

6 Responses to “The Wall Street Leviathan”

  1. jeff in indy says:

    “…the question remains whether the regulators will enforce them vigorously once the economy recovers and the crisis fades in memory.”

    ever wonder why we even bother to pass laws or regulations?

  2. Dow says:

    The article reads like a summary of the posts from here at BP for the last 3 years.

    If the restrictions remain intact, which is likely in view of the Democratic majority in the Senate, the question remains whether the regulators will enforce them vigorously once the economy recovers and the crisis fades in memory.

    Are we supposed to believe that having a Republican majority would make a difference?

    Enough with TBTF. Chop ‘em up.

  3. Petey Wheatstraw says:

    Thanks for the excerpt, BR.

    576 pages of tiny print? I’ll wait for the movie.

    When boiled down to its essence (regardless of the details of who actually killed Cock Robin):

    The vast resources and the political and governmental power structures of the United States have been captured by corporatist interests. All three branches of government are complicit. They know it. We know it. They know we know it (HT: Donald Rumsfeld).

  4. socaljoe says:

    History has shown that the group psychology of humans leads to excess resulting in boom followed by collapse. Legislators and regulators can not prevent this natural cycle because they are part of the human group subject to the same psychology.

    This is especially true where the leadership is democratically elected… in other words, the population will always vote themselves more immediate benefits than what is good for them over the long run.

  5. praeco.4col says:

    Shorter socal: “After all we cannot expect a functioning government based on ethics or the common good, so why bother? Just let the financial thieves and the looters take what they want and eventually they will move on……till they find a more lucrative con.”

  6. dead hobo says:

    The further you get from Wall Street, the more obvious is is that nothing significant will change. New Yorkers are pretty slow in some respects.