Friday, April 23, 2010

Ubi Sunt?

Once again, Los Angeles Times business columnist David Lazarus asks the right questions and provides some damned good answers. His subject today is the push for financial reform in Congress.

He cites the Republican's objections to the plans being discussed by the Democratic majority and notes how nearly identical they are to the objections being voiced by the banking community (no surprise there). Then he launches into a righteous rant on what we really need to make certain we never get suckered by the banksters again.

Actually, what we want to do is set up a system whereby the government does what it was supposed to do all along, rather than sitting idly on the beach as the sharks go into a feeding frenzy. ...

Where were financial authorities while Goldman Sachs was allegedly defrauding investors by selling securities without telling anyone that they'd been largely designed to go down in flames?

Where were they as Washington Mutual handed out home loans to virtually anyone with a pulse and then resold the toxic debt to others, exacerbating the mortgage mess and leading to the largest bank failure in U.S. history?

Were government officials even awake as Lehman Bros. hid $50 billion in debt from bank examiners and investors with dubious accounting tricks before going bankrupt? ...

The three main agencies overseeing consumer finances — the Office of Thrift Supervision, the Office of the Comptroller of the Currency and the Federal Reserve Board — have left people largely to fend for themselves as banks have indulged in what can only be characterized as sociopathic behavior, heedless of any sense of right and wrong.

It's time to make some repairs.

Legislation that's already passed in the House and is now pending in the Senate would do this. Among other things, the Senate bill would:

• Consolidate the consumer-protection responsibilities of half a dozen federal agencies into a single Consumer Financial Protection Agency with the resources to regulate mortgages, credit cards and other consumer products.

• Create a Financial Stability Oversight Council responsible for identifying and monitoring risks posed by brain-freezingly complex financial products and corporate structures.

• Establish new regulations for derivatives, the complicated and risky financial instruments at the heart of the mortgage meltdown.

• Impose new requirements on hedge funds worth more than $100 million. Such funds are currently responsible for huge financial transactions but operate mostly outside the regulatory framework.

Are all of these bullet points contained in the plan the Democrats are pushing? Of course not, but it's the plan that we actually need. At this point, the Dems are doing a little tap dance with their Republican counterparts just to get some reform bill passed in time for the November elections to show that the Democratic Party is for the little guys. After that, maybe the issue will be revisited (you know, kinda sorta like healthcare reform).

The important thing, however, is that at least the Democrats are actually talking about the need for government to get back to the business of regulating the sociopaths whose greed needs constant feeding. If they pass a bill which does at least that, weakly or strongly, that's a nice start.

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