Posts filed under “Regulation”

Capitalist Fools

Terrific piece in Vanity Fair by Nobel prize winner Joseph Stiglitz. I especially love the accompanying art work nearby.

Stiglitz is da man:

“The administration talked about confidence building, but what it delivered was actually a confidence trick. If the administration had really wanted to restore confidence in the financial system, it would have begun by addressing the underlying problems—the flawed incentive structures and the inadequate regulatory system.

Was there any single decision which, had it been reversed, would have changed the course of history? Every decision—including decisions not to do something, as many of our bad economic decisions have been—is a consequence of prior decisions, an interlinked web stretching from the distant past into the future.

You’ll hear some on the right point to certain actions by the government itself—such as the Community Reinvestment Act, which requires banks to make mortgage money available in low-income neighborhoods. (Defaults on C.R.A. lending were actually much lower than on other lending.) There has been much finger-pointing at Fannie Mae and Freddie Mac, the two huge mortgage lenders, which were originally government-owned. But in fact they came late to the subprime game, and their problem was similar to that of the private sector: their C.E.O.’s had the same perverse incentive to indulge in gambling.

The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal. Looking back at that belief during hearings this fall on Capitol Hill, Alan Greenspan said out loud, “I have found a flaw.” Congressman Henry Waxman pushed him, responding, “In other words, you found that your view of the world, your ideology, was not right; it was not working.” “Absolutely, precisely,” Greenspan said. The embrace by America—and much of the rest of the world—of this flawed economic philosophy made it inevitable that we would eventually arrive at the place we are today.

Short, sweet, too the point.

I wonder if anyone int he Obama administration — like Summers or Geithnier — have the cojones to deal with his kind of truth telling.

>

Source:
The Economic Crisis: Capitalist Fools
Joseph E. Stiglitz
Vanity Fair, January 2009

http://www.vanityfair.com/magazine/2009/01/stiglitz200901

Category: Bailouts, Corporate Management, Markets, Regulation

FDIC Chairman Sheila Bair on CRA: NOT Guilty

“Let me ask you, where in the CRA does it say to make loans to people who can’t afford to repay? Nowhere.” -FDIC Chairman Sheila Bair > This is old news to readers of the Big Picture, but I wanted to at least excerpt this: “I want to give you my verdict on CRA: NOT…Read More

Category: Credit, Real Estate, Regulation

What Did the Repeal of Glass-Steagall Do ?

Here is a question that I have been wrestling with: What exactly did the repeal of the Glass-Steagall Act accomplish? Were there positives as well as negatives? Should the Gramm-Leach-Bliley Act be repealed, and Glass-Steagall reinstated? > ~~~ What say ye? >

Category: Bailouts, Credit, Finance, Legal, Regulation

Bush WH Ignored Mortgage Meltdown Warnings

“In hindsight, it was spot on.” -Jeffrey Brown, former top official at the Office of Comptroller of the Currency, one of the first agencies to raise concerns about risky lending. > A brutally damning article about the warnings the Bush administration received and ignored was published this morning by the Associated Press. The AP summed…Read More

Category: Bailouts, Credit, Finance, Legal, Real Estate, Regulation

The Lost Generation

The Obama team is keeping its cards close to the vest. That’s probably a good way to manage expectations, good politics and it may even be good policy. Until the new team can get in place, there doesn’t seem much point in sending signals or taking responsibility for actions they cannot control. More to the…Read More

Category: BP Cafe, Regulation

Regulation after Bush

What does the future hold for regulating Wall Street? Regardless of who wins today’s election, both Barack Obama and John McCain have staked out different positions on issues involving economic regulation – and each is very different than the outgoing president. The Economists’ Voice looks at what we might expect in the post-Bush era: While …Read More

Category: Markets, Politics, Regulation

Bush’s Push For Deregulation

In the final months of his administration, Pres. Bush and his aides are requesting a series of regulation changes ranging from issues concerning the environment to the economy:

CBS Sunday Morning:


Watch CBS Videos Online

Nov. 1, 2008

Category: Legal, Regulation, Taxes and Policy, Television, Video

Adam Smith Was a Socialist

I hate politics. I cannot stand the maneuvering to avoid discussing issues, and instead focus on name calling. The latest idiocy is the entire Socialist meme, which, having seen the banking industry nationalized, is a bizarre charge to make these days. It is especially odd, given the nature of wealth distribution in a capitalist system…Read More

Category: Markets, Politics, Regulation

Seven Deadly Sins of the Meltdown

Category: Bailouts, Economy, Investing, Markets, Politics, Regulation

Greenspan: “I Suck”

Category: Federal Reserve, Regulation