Report From the White House: Regulation vs. Capitalism

If you thought the debate over health-care reform was heated, hold on to your brokerage statements.

Earlier this week, the House Financial Services Committee dove into key measures of the White House's financial regulatory reform effort, and as expected, bankers, financial-industry lobbyists, the U.S. Chamber of Commerce, and -- of course -- politicians all lined up with thick red pens poised to overhaul the overhaul plan.

The Motley Fool was there, too. The big difference (besides being actually invited by the administration) is that David Gardner and I were not there to talk politics or party lines. We were there on behalf of you, our community of individual investors -- an extremely engaged community, as you've proved with the 400-plus comments you posted when we asked for questions to take to the White House.

Why the White House needs Fools
In the Eisenhower Executive Office Building, just a stone's throw from the West Wing, we met with Austan Goolsbee, a member of President Obama's Council of Economic Advisors -- the key architects of the financial-industry reform plan. Our summit took place in a regal room furnished with private donations, not taxpayer money. (Hey, we had to ask).

Why Fools? Why now? The administration isn't about to let its plan get nitpicked into oblivion. And the only way to do that is to keep the topic of financial regulation reform high-profile and as public as possible. "The farther out of the public eye we are -- the less transparency we have -- the more this is just sitting down in the bowels of some congressional subcommittee and the more the rules are being written by the people who are being regulated themselves," Goolsbee told us.

Here we go again
As longtime Fools know, we're not shy about using our podium to spotlight transparency, accountability, and advocacy.

Our community-led grassroots campaign aided the passage in 2000 of the SEC's "Regulation Full Disclosure," which provided level access to corporate information for all investors. We have long spoken out about greater financial-industry transparency, corporate accountability, and improving financial reporting.

It's no surprise that these themes are once again making the rounds in Washington and causing agitation on Wall Street. And that's why David and I headed into D.C. -- to find out what the president's financial regulation reform plan means for individual investors.

Regulation vs. capitalism
Check out Part 1 of our interview with Goolsbee. (For more details, refer to the 89-page white paper for a little light reading.) Here we ask him to highlight the major points of the reform plan. We also get into how (and whether) capitalism and increased regulation can co-exist, and how the end result might play out in our investment returns.

What are your thoughts about regulation and the free markets? Tell us what you think by entering a comment below.

 

Tomorrow on Fool.com, we'll present Part 2 of our interview, during which Goolsbee answers one of your questions about enforcement and accountability. 

Longtime Fool Dayana Yochim is a confirmed Beltway outsider. The Motley Fool is investors writing for investors.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 15, 2009, at 3:03 PM, Irish2477 wrote:

    As an accountant, and citizen it is inconceivable

    that any lawmaker is against transparency in the financial industry, corporate accountability, and full disclosure. Any accountant will tell you this is 101.

    If these corrupt institutions want to run their business like that than they should not be publicly traded, afforded any government protections, or be allowed to hoodwink the public. . For the lawmakers they need to start protecting the citizens that voted for them, not the corporations that have bought their votes. I believe they take an oath when sworn in, time to adhere to the oath.

  • Report this Comment On October 15, 2009, at 5:01 PM, blesto wrote:

    They say that "Freedom isn't Free".

    As citizens of a free society we have laws and regulations that define our behavior.

    Financial institutions of a free market society should also be well regulated.

    We have rule of law for a reason. The way our so called free market is now, is more close to anarchy.

  • Report this Comment On October 15, 2009, at 5:04 PM, scn9677 wrote:

    I look forward to tomorrow's video. It would be nice to make everyone play by the rules. I always feel as an individual investor that even if I thoroughly study the market I am still at the mercy of the whim of the big boys.

  • Report this Comment On October 15, 2009, at 5:20 PM, lwnoronha wrote:

    Capitalism without Regulation doesn't work. Looking for this paradigm is a fool's errand. You have to protect the masses from the capitalists or else the latter will rise up against the former and you also have to protect the capitalists from themselves or else they will lead everyone over the cliff.

  • Report this Comment On October 15, 2009, at 5:39 PM, atreusinc wrote:

    Applause to the Fools for going to the hill. All that can be done to encourage transparency, citizen engagement and tight regulation of financial markets is good news for investors and for the world. Fat profits for rip-off artists is not capitalism. It's what happens when we let foxes guard the henhouse.

  • Report this Comment On October 15, 2009, at 6:04 PM, jadedfellow wrote:

    Not an effort to defend or condone behavior that is inappropriate and deceptive with my comment as presented but a great many of the problems with the system have been government induced. The functioning of an economy is complicated (understatement) and for the government to arrogantly assert they can understand the issues is absurd. We have not had a truely capitalist economy from the day government got involved and redistributed or inhibited the flow of capital. If we really expect to address the issues identified above it must be done in a manner that includes the effects of poor regulation decisions, tax policy discrepancies, preferential industry practices and so on. Capitalism is a highly diverse system and if the interdependencies of the various components are excluded in any analysis the analysis is flawed. I believe we have been on a course for quite some time that the regulatory process is simply regulating the faulty regulations that were previously inacted. Capitalism works if each individual components(inclusive of individual people) becomes accountable for their responsible application of their component of capital. We do not have a Capitalist economy, it is a highly regulated/controlled socialism and understanding this makes investing a whole lot easier.

  • Report this Comment On October 15, 2009, at 6:43 PM, guiniepig wrote:

    Like any game, the rules are there to insure fair competition; if properly done and run. Under the republican policy of letting the industrys write the rules and self regulate, we ended up in the current crises we're in. Granted, the people in the industry know best what is needed to make the best rules, but; the conflict of interest usually just leads to a path of corruption of the people in charge, if they aren't already corrupt.

    I am all for tight regulation, it is the only the industrys that are well regulated that I invest in. I learned that from a CEO that started short selling his companys stock, after he ran it into the ground and skipped with millions. (I didn't know about the short selling until after he left and I had lost every thing, - I was young and dumb. )

  • Report this Comment On October 15, 2009, at 7:19 PM, notdamama wrote:

    There are some good ideas putt forward. My main concern is -"HOW WELL DO THE DEEDS CORRESPOND TO THE WORDS?" Transparency is a wonderful concept. Let's see if bipartianship is REALLY a part of the process!

  • Report this Comment On October 15, 2009, at 8:21 PM, xetn wrote:

    What a load of crap. To think that capitalism is the culprit in this crisis is complete hogwash, since we do not have capitalism, we have socialism. At the heart of every boom/bust episode since the founding has been money expansion by the fractional-reserve banking system and since 1913 the Fed. They are the primary cause of these boom/bust cycles. They are also the primary cause for the loss in purchasing power of the dollar (over 95% since the founding of the Fed). Now the administration wishes to give the great villain even greater power to cause continued damage.

    Governments always try to cover up problems of intervention with more of the same, just like the Fed is trying to solve the financial crisis with more debt piled on top of more debt.

    I know you all want someone to hold your hand and make sure that all your mistakes are taken care of by big bro. You want all the rewards of investing with out the risk. You refuse to take personal responsibility for your own actions and are will to hand ever more power over to the government. Just remember that no fiat currency has ever survived in the history of the world. That is what your dollars are now, fiat, worthless pieces of paper.

  • Report this Comment On October 15, 2009, at 8:50 PM, MDexpat wrote:

    Jadedfellow, I have been listening to people like you for years, and I must say that this same old tune grows tiresome. Pure capitalism (at least as you perceive it), like communism, is merely a theory. You remind me of the Soviet Union apologists of old; "the system would work if it hadn't been implemented poorly." The fact is, jadedfellow, your idea of capitalism never has existed and never will. Why? Because people, especially in a democratic system, will want to protect themselves collectively from the actions of the few. People will always demand action from their government because in a society where the rule of law applies it is the only appropriate course of action. And I, for one, would ahve it no other way.

    I am a prudent investor, I have no debt, I have always done my due diligence in picking stocks, yet like everyone else I suffered losses in the latest crisis. Why? Because other people, exercising their right to make bad decisions - did just that, they made bad decisions. So people like me have only one recourse, and that is to rely on the government (as imperfect as it is) to set rules to minimize the damage that individuals can inflict on the system. It isn't a perfect solution, but it is better than the anarchy that you seem to advocate. There have to be rules and only the government, with the force of law, has the power to enforce those rules.

    I will agree with you however that the responsibility for the current crisis squarely rests with the government. It is the government's unwillingness to regulate and its encouragement of risky behavior that got us into this mess. Why were people allowed to buy houses with no money down and then buy those houses with ARMs? Why were banks allowed to securitize these mortgages and sell them to even greater fools? I never participated in any of this, yet I lost money. And as one of the people footing the bill, I say enough is enough, it is time to clean house and change the rules.

    Jadedfellow, I will grant you this one gift, I don't have a lot a faith that the government will pass the legislation that is necessary. Never again should we allow people to buy houses with zero down, never again should we allow people to accumulate revolving credit balances they cannot pay back, never again should we allow people to buy houses priced at a value beyond their ability to pay and most of all never again should we allow banks to securitize these loans into incomprehensible securities that instead of spreading risks merely hid them. But do I hold any hope of any of these changes coming to pass. No, but neither am I willing to leave this to the market to handle, for the real market (and not your theoretical market) has proven itself incapable of preventing this nonsense.

  • Report this Comment On October 15, 2009, at 9:34 PM, standridge wrote:

    Not everyone has to be taken care of by big bro.

    But the ones who do will not make it in the new society which is growing as we speak.

    This is the society of doing right. Erk Russell, a legendary football coach, once said Just Do Right. He went on to win multiple national championships and when he died, there was a football stadium full of people there to see him off because he practiced what he preached.

    If we all do the right thing capitalism works turns out to be the best way.

  • Report this Comment On October 15, 2009, at 9:45 PM, tbohern wrote:

    Capitalism cannot exist when shackled by government regualtion.Once regualtions of any nature are instituted under a capitalist system it creates malinvestment and mixed signals in the market.The current environment is a perfect example of the destructive power of regulation and yet somehow it is the free market which is blamed.Currently business has no way in which to plan for the future.What will tax rates be 5-10 years from now? What will my health care responsibilities be? What will happen under carbon cap and trade? What will the financial markets look like in a few years time with the talk in Washington? These and many more are questions being asked in the business community.Regualtion causes bubbles.The housing market was inflated because government intervention after the bust of dot com bubble made housing more profitable than other investment activities.There is no place for talk of corporate greed or emotional appeals for the death of capitalism in this discussion.The government created the malinvestment and yet the people clamor for the government to do it again?We are already seeing regualtions to prop up the housing market again despite the bust.Regualtion kills economies.Let the capitalists direct market activity into the most profitable sectors of the economy so we can all enjoy the benefits.

  • Report this Comment On October 15, 2009, at 9:59 PM, sorrysitizen wrote:

    Obviously the politicians and feds are owned by the banks and their soul commitment is to giving them whatever they want. Therefore, the only solution seems to be a revolution. We the people need to fight for justice. That is the only way we have been able to get anything done before. They are all theives and we should demand they be prosecuted and put in prison.Maddoff is in prison and these theives have destroyed so manyives in addition to financial caos world wide. They are more destructive to us than any Terrorist. It is the money they have stolen from us that just created 40-50% more wealth for them using OUR money! The politicians we voted for have turned their backs on us! DO NOT VOTE FOR ANY OF THEM IN 2010. Likely the new candidates will be as corrupt but throw the present crooks out! This Country is on the brink of self destruction by the actions of our politicians and the ceo's that own them. These politicians have made deals with the devil with our money. Isn't there a lawyer out who is willing to prosecute them for us?.Do you REALLY trust them to regulate anything in an honest way? Do you trust the devil?

  • Report this Comment On October 15, 2009, at 11:18 PM, topsecret09 wrote:

    On October 15, 2009, at 9:59 PM, sorrysitizen wrote: Obviously the politicians and feds are owned by the banks and their soul commitment is to giving them whatever they want. Therefore, the only solution seems to be a revolution I agree 100%............

  • Report this Comment On October 15, 2009, at 11:49 PM, coconnor55 wrote:

    It's a little like fishing. Anyone can fish on the high seas, and it's a limited resource, so everyone gets out there and tries to land everything they can get before it's gone. Substitute profits for fish and there you have it.

    Capitalism works pretty well but unfairly. Some regulation is necessary to level the playing field and keep markets and participants transparent and honest.

    Unfortunately, our approach to regulation is to pile on more rules upon rules (just look at our tax code as an example), rather than rewriting what we have to keep rules simple and to the point.

    If Congress were charged today with writing a new Declaration of Independence, we'd have an 1,100 page omnibus with 312 pork bills attached to it.

    Can we really enact meaningful reform under these conditions?

  • Report this Comment On October 16, 2009, at 1:32 AM, PaintItBlue wrote:

    Could you write something in addition to (or instead of) having a video? Am I the last one who doesn't have the bandwidth to play it where I could get away with listening?

  • Report this Comment On October 16, 2009, at 2:48 AM, jaagu wrote:

    Capitalism without rules and regulation does not work. I do not want to see Wall Street doing anymore crazy and risky business. Even over regulation at first is better than the current lack of regulation.

  • Report this Comment On October 16, 2009, at 3:30 AM, shadowhana12 wrote:

    Coconnor55, May I use your closing lines in my correspondence?

    "If Congress were charged today with writing a new Declaration of Independence, we'd have an 1,100 page omnibus with 312 pork bills attached to it."

    I disagree with your statement "Capitalism works...unfairly." Crooks who game a system make the system work unfairly, even socialism and communisim. Under socialism and communism it is too easy for the crooks to get control; there are no balancing checks. Thats why we need transparency and regulation to prevent fraud. We do not need to regulate salaries and what legitimate products to produce. The nice thing about open competition is that it does a large part of the regulation automatically.

  • Report this Comment On October 16, 2009, at 3:42 AM, wrkdiver wrote:

    I am soooo glad that our all-knowing, all-seeing President/Messiah is once again going to save us!

    Typical Washington Politician B---S---!!

  • Report this Comment On October 16, 2009, at 4:15 AM, RGGrass wrote:

    I guess I see this as trying to protect pieces of the pie. Capitalism actually tries to bake new pies enlarging the universe from which pieces can be taken.

    Yes there were abuses of the credit and securities markets. Reading the proposed reform plan means that bureaucrats will ultimately decide who can invest and where they can invest. Already we have rules to prevent the small investor from using all of the tools available and now they are going to control the "sophisticated investor" through even more regulation.

    Lack of regulation? Neither party is guilty of not regulating. The real question is when will people see that their future is dependent on what they personally do. I am afraid of too much government because the staff who perform in the name of government are not accountable to anyone for their actions, that is they are protected by federal civil service rules and from being sued for actions if the actions are done in the name of the government. If you are denied Social security and fight for it, eventually winning, the clerk who denied you in the first place is not accountable for the cost to you of the fight, the government does no reimburse you for the expense of the fight, and if you die before receiving the agreed back due you, sorry your heirs do not get the benefits, they are returned to treasury.

    These are the people we now want to control our finances even more?

    Government cannot remove risk from investing.

    Government cannot stop the Ponzi's of the world from finding new pigeons.

    Actual financial education starting in grade school about money finance taxes responsibilities and past frauds would do more then any new agency "protecting" rules.

    This website used to concentrate on financial education (how I miss the early lessons) and now has matured into a wild west forum where any of us can claim anything.

    Sell me another report Mssrs. Gardner.

  • Report this Comment On October 16, 2009, at 8:32 AM, MrsCathyGF wrote:

    Dear Mssrs Gardner, I applaud you for keeping skin in the game, since we fools simply have no choice. It is do or die. Right now, it feels like radical, anti-capitalistic bureaucrats are winning, and doing all in their power to snuff out ALL competition, in an insane way. When Al Sharpton can interfere with Rush Linbaugh's freedoms, we should ALL be deeply concerned about our freedoms. We are ALL up against a pack of rabid pitbulls who are completely blinded by rage. Rush opposes their policies, not their race, as they make it to be. Have at it.

  • Report this Comment On October 16, 2009, at 8:44 AM, maniehols wrote:

    First, thanks for your service and representation. For some time now I have been of the opinion that the Federal Govt. has gone to war with Wall St. The reason they have done this is to deflect the fact that Government looked the other way and the institutions put in place to regurlate simply looked the other way.

    Why will now be any different !

  • Report this Comment On October 16, 2009, at 8:45 AM, coconnor55 wrote:

    chool100: sure, you can use my comments as your closing line.

    As for your rebuttal to "Capitalism works pretty well but unfairly", I did follow that immediately with "Some regulation is necessary to level the playing field and keep markets and participants transparent and honest."

    I think, reading between the lines, we're both pretty much in agreement on transparency and regulation. We need to be careful *what* we regulate. Open competition will not regulate markets by itself - we had all five investment banks competing with each other to offer leveraged and complex investment vehicles only a few truly understood, compounded by complex insurance propositions on these. With transparency, it's likely that investors, even without understanding the specifics, would recognize this was getting out of hand and shift their money elsewhere.

    Still others would be reluctant to get out and miss the money train. This is where regulation comes in - not so much to protect them but to limit the impact on the rest of us.

    "but unfairly" really was a reference to people who are in it to get what they can in the absence of moral constraints - as you and others have put it - crooks. I prefer to use "morally deficient" - there are so many ways execs and traders can do to enrich themselves at the expense of others without actually doing anything illegal. The solution is probably a mix of transparency, ethics, and *some* regulation.

  • Report this Comment On October 16, 2009, at 9:32 AM, clydejazz wrote:

    Great comments by Irish2477, atreusinc, and MDexpat.

    My 2 cents: pure communism or capitalism have never existed and never will. Capitalism cannot work if a few people get all the rewards, but leave all the risks to the taxpayers. This is the same result as communism.

    In the end, the citizens of a capitalist banana republic and of a communist country live much the same.

  • Report this Comment On October 16, 2009, at 9:45 AM, dewey67 wrote:

    It is said that the true character of a person is measured by what they will do when they know they won't be caught. The past few years has shown that many, not all, of the people in biggest financial businesses are not people of character and bear very close watching.

    Capitalism without tight regulation leads to greed that can only be fed by fraud and deception. Strong regulation is needed but that regulation must also be well thought to avoid hamstringing the honest entrreperneur.

  • Report this Comment On October 16, 2009, at 11:47 AM, jadedfellow wrote:

    Dear MDexpat, Thank you for the comments and expections taken to my opinions. I should clarify some points to hopefully assist in broadening our collective understanding. 1.) For any type of society to continue to exist a determination of acceptable behavior is required as agreed by the overwhelming majority of participants, ie; we need Laws. If the law is violated then the agreed upon penalties are applied without variation. ie; the penalty is the deterrent to misbehavior 2.) Regulate by definition; to control or direct according to a rule. This is generally done via the conclusions and actions of less than an overwhelming majority and without consideration to the effects it will have on the aggregate components of a given society. 3.) Capitalism by definition is, an economic system, characterized by open competition in a free market, in which the means of production and distribution are privately or corporately owned and development is porportionate to increasing accumulaton and REINVESTMENT of profits.

    My apologies for not being clear and concise which allowed you to draw the conclusion that I am an anarchist. Laws are fundamental to human existence and I was not advocating elimination, only an overwhelming agreement on what they should be. Regulation, in my humble opinion, creates gaps and loopholes that allow for behavior that is damaging to society in that regulation deals, for the most part, with isolated entities; thereby creating the opportunity for abuse, interpretation and corruption.

    If my opinions are right, wrong or indifferent is moot. My last statement was my point: Investors can only capitalize on investing if they apply the effects of regulation to the decision making process. Regulation has skewed the traditional risk evaluation models and negelecting it's impact will simply result in uninformed investing decisions.

    Please do not take my comments as antagonistic or denouncing your opinions; we are both entitled, I am just in a hurry but wanted to state a thought I do not hear expressed within the investment community.

    Information is a type of capital and if you wish to succeed apply all the information to the process, if you can comprehend the complexity of it.

  • Report this Comment On October 16, 2009, at 12:26 PM, DJA90CDAJ wrote:

    I am very, very worried. I want the government out of my business. We have drifted so far from the Federal Governments constitutionally granted responsibilities. They should handle National defense, which they dont seem to take seriously, large infrastructure projects, which they can normally acheive at twice the normal price and nothing else. DOn't TRead on Me.

  • Report this Comment On October 16, 2009, at 12:33 PM, jrs777777 wrote:

    I started reading the recommendations in the 80 page or so report and had to stop. There need to be guidelines and absolute fundamentals in place such as requiring a minimum of 15% down to buy a house, but these recommendations are strictly geared to total control by the government. I agree with DJA90CDAJ about getting government out of my business except in national defense and large infrastructure projects.

  • Report this Comment On October 16, 2009, at 12:37 PM, scn9677 wrote:

    Hey everyone, all politics and ideologies aside, we are were we are. Don't we all agree that everyone playing by the rules is a good thing? Without some controls the end result of all businesses is to maximize profits ergo become a monopoly. Certainly nobody believes that is good. Whether the government influence is good or bad it is not going away. It is good that they are listening to Fool so that there is some intelligent influence.

  • Report this Comment On October 16, 2009, at 12:42 PM, donbasilio wrote:

    The Statists are using every opportunity to expand their control over us. The liberals in congress created this crisis and now they will force even more regulations with hope of the end result - the ultimate utopia of equality and government in charge of every activity. Who gave this guy a PhD? Just listen to him how he answered the great MF question: "If Fredy & Fanny were the most regulated enterprises how did they create the problem?"

    But there is something even more. Just think for a minute. They were pushing us to believe that a crisis like this one happens once in a 100 years ( or at least since 1930). So the "compassionate" socialist in congress will create even more regulations and more control to prevent a crisis, that can occurs once every 100 years!!! .....

    Investors will soon realize that Statists, big Government, and more regulations accomplish nothing else but strangulation of the economic activity. Because the Statists Government can control our lives but they cannot control the laws of economics.

  • Report this Comment On October 16, 2009, at 12:45 PM, donaldo15 wrote:

    I think we have to be very careful when we start talking about regulation. Many people assume that is a magic pill that stops corruption in its track. The truth is that we have corruption in government, just the same as we have in the private sector. Government is merely a body of people that make decisions and to think that they are always acting in our best interests and that they are not influenced by greed and party agenda's is naive.

    So the question becomes, who regulates the government and is the government to big to fail?

  • Report this Comment On October 16, 2009, at 12:52 PM, larrywlb666 wrote:

    I think the problem is the government. As you mentioned with Fannie and Freddie with all their regulations and the size of their failure. We simply can not trust our government to do their job!! They have all the tools they need and have failed. The far left ideology of this administration will destroy the free market and capitalism!!! The government problem is both republicans and democrats. We need to clean house, implement term limits and force them to support America rather than PAC money, special interest money and lobbyists.

  • Report this Comment On October 16, 2009, at 12:59 PM, jadedfellow wrote:

    Dear xeten, tbohern and RGGrass, Regulation ebbs and flows can be used as a leading indicator in enhancing the investment decision making process. I fully support the folks here who advocate government protecting their unique self interests, since it will afford the opportunity for capitalizing on their false sense of security.

    ie; "ReguBubbleism" is here to stay so capitalize on it.

  • Report this Comment On October 16, 2009, at 12:59 PM, farrockgrad wrote:

    One change I would want to see in the corporate world is to ensure that independent Board mentions are truly that--independent. This is not the reality today and, as such, these so-called independents serve merely as puppets for key Management.

    I would suggest something along the lines of how individuals are excluded from contests if they are involved in any way. A questionnaire would be administered to prospective candidates and those with any tie-ins to anyone affiliated with the company would be removed as a candidate.

    While not perfect, this would serve to promote an atmosphere where the Board is more representative of shareholder interests.

  • Report this Comment On October 16, 2009, at 1:13 PM, rmarks1 wrote:

    What was said in this interview?

    1) Goolsbee show himself to be a nice, smart, well sponek person

    2) Said regulation is necessary for capitolism.

    3) Better to have a single regulatory agenct than to have differing rules spread out over many agencies.

    Nice try, I hope it works.

  • Report this Comment On October 16, 2009, at 1:32 PM, watchwhatheydo wrote:

    So today we hear that a Goldman Sachs officer will be the chief regulator. Are they kidding? Another case of the inmates running the prison.

  • Report this Comment On October 16, 2009, at 1:46 PM, GordonsGecko wrote:

    Despite all our rage, we are still just rats in a cage.

  • Report this Comment On October 16, 2009, at 2:09 PM, Lahjikle wrote:

    I'm so weary of helplessly watching as the game of influence politics goes on ad nauseum. We need campaign finance reform just as much as we need any other financial reform...perhaps more.

  • Report this Comment On October 16, 2009, at 2:44 PM, tgs10 wrote:

    Regulation is nothing more than "rules of the road" for folks who live together. When someone steps on others feet, it's time for a rule. Concerning health care reform, if we are to keep private health insurance (I hate to think my health care is dependent on a bottom line) then they should be profit regulated as any other public utility. It's your LIFE stupid!

  • Report this Comment On October 16, 2009, at 2:50 PM, fcarey529 wrote:

    Agree with ALL the comments about regulation, BUT. What we have right now is that all the banks are terrified, and not loaning ANY money to anyone! So how do we help the economy if no one can get a loan to buy a house, or start a business?

    Perhaps we should have simply given each FAMILY $500,000, instead of the banks! Some of them would put it in savings, some would pay off their mortgage, some would go out and buy a new car, etc. At least the economy would be moving towards recovery!

    What do you think?

  • Report this Comment On October 16, 2009, at 3:25 PM, zebra1234 wrote:

    First who is going to have over site of Financial Services Oversight Council with financal audit capabilities.

    Second here is an interesting book that people should read concerning the belt way crowd

    WHORES: Why and How I Came to Fight the Establishment by Larry Klayman

  • Report this Comment On October 16, 2009, at 3:35 PM, JPMillerHOU wrote:

    “Can capitalism and increased regulation happily co-exist?” was the catch line in the Fools e-mail about this article. Ayn Rand defined capitalism “is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.” I don’t even have to read the article to answer the question. That is the power of principle.

    Neither Ayn Rand nor I are objecting to laws against theft and fraud. Theft and fraud do violate individual rights. But so do regulations. A regulation on salaries violates the rights of the executive to contract for his services. A regulation on minimum wage violates the rights of the wage earner to offer his services. A regulation on bank lending violates the rights of people to come to mutually agreeable terms. A regulation on what insurance pays violates the rights of the doctor to practice his craft and the rights of the patient to pay for the services he wants. Indirect regulation that fires the executive of a company violates rights. Regulations that overturn superior bond positions violate the rights of people to contract.

    What we have now is not capitalism. It is a bastardized mix of socialism and sham free market pretense. For extensive justification of this position see Ayn Rand’s “Capitalism: The Unknown Ideal”

  • Report this Comment On October 16, 2009, at 3:37 PM, thugbah wrote:

    Capitalism would work fine if everyone was open and honest, and understood what they were doing. Unfortunately, this is not the case in our imperfect world, so that some regulation becomes necessary to deal with the effects of greed, dishonesty and stupidity. It seems that these human failings are at the root of every financial debacle of the past hundred years! The problem then becomes - who will establish and administer the regulations?

  • Report this Comment On October 16, 2009, at 3:49 PM, guarded wrote:

    The term "transparency", is hype. The government doesn't want to regulate, they want socialistic control of banking, industry, media, health insurance. Many in this administration have been bold enough to demonize capitalism, publically. That also demonizes you and me, the investors.

    Yes, we do need fair regulation on Wall Street, but from experienced people intending no harm, not self-serving individuals from academia who see "fair" as anything that grants them more power.

  • Report this Comment On October 16, 2009, at 3:49 PM, TopAustrianFool wrote:

    What non-sense... Government was the problem. The Fed inflated the currency by keeping interests low artificially, when there was som much demand for borrowing for the last 10+ years. This makes it a disadvantage to lend because it depreciates your returns. So bank being in the business to make a profit chopped their debts and passed them on to stockholders. If you buy stocks on a business and don't know what you are buying no amount of government regulation will keep you safe.

    This is nothing more than government increasing their control through regulation in order to save us from something their own regulations caused in the first place. Remember. all socialist think they will be different, their system will work this time.

  • Report this Comment On October 16, 2009, at 3:52 PM, Carolchesnut wrote:

    No free market operates hand in glove with those who are supposed to be unbiased, who pass laws giving uncapitalistic advantage to the CEO's of certain large corporations which guarantee fraud, and unfair advantage to those who "invest" in the representatives and Senators who are elected supposedly to represent their citizens, but who actually represent those to whom they "owe" for the campaign contributions that pay such huge dividends to the donors, who then give more of the money to the "People's Representatives" and so on ad nauseum. An utterly corrupt and pernicious system! Of course it should be regulated, but making that fair under the present system also seems impossible.

  • Report this Comment On October 16, 2009, at 3:54 PM, canoebuff wrote:

    I owned and ran a business for many years. I believed the best way to run it was in such a way that if anyone could see my actions and decisions I would not be ashamed of them. I tried to get my people to act in the same way. You can be honest and ethical and be sucessful. If you can'tdo this I'd suggest you become a politician.

  • Report this Comment On October 16, 2009, at 3:57 PM, TopAustrianFool wrote:

    JPMillerHOU

    I agree with you, this is not capitalism. And the govt is looking to take advantage to increase control, not to protect anyone. You think the Harvard President ever read Rand, Bastiat, Hayek? I am an Ivy league school graduate and I will tell you that I never met anyone who knew any of these authors. Sad, sad...

  • Report this Comment On October 16, 2009, at 3:57 PM, ovaltrackn wrote:

    No more big government! I think we are close to being a socialist nation.

  • Report this Comment On October 16, 2009, at 4:04 PM, P2W2 wrote:

    SCIENTIFICAMERICAN recently posted an article that says it all:

    The Failing U.S. Government--The Crisis of Public Management--Nothing less than an overhaul of the systems that implement federal policies will suffice

    By Jeffrey D. Sachs

    from SCIENTIFICAMERICAN Online--October 2009

    The crisis of American governance goes much deeper than political divisions and ideology. The U.S. is in a crisis of policy implementation. Not only are Americans deeply divided on what to do about health care, budget deficits, financial markets, climate change and more, but government is also failing to execute settled policies effectively. Management systems linking government, business and civil society need urgent repair.

    The recent systems failures are legion and notorious. The 9/11 attacks might well have been prevented if the FBI and the intelligence agencies had cooperated more effectively in early 2001 when they were receiving various signals of a possible terrorist attack. Hurricane Katrina caused mass devastation and loss of life because recommendations to bolster the levees shielding New Orleans and other protective measures were neglected for decades despite urgent expert warnings, and because the federal emergency relief effort failed completely after the storm. To this day, reconstruction efforts in New Orleans are paralyzed and many poor communities there have been abandoned. The U.S. occupation of Iraq was marked by massive and shocking corruption, incompetence, and implementation failures by U.S. agencies.

    On the economic front, the current financial crisis is a remarkable systems failure. Government regulatory agencies completely dropped the ball while overseeing the surge of several dangerous financial instruments, especially sub-prime mortgages, collateralized debt obligations (CDOs), and credit default swaps (CDSs). The supply of CDSs in particular soared from nearly zero in 2000 to an estimated $60 trillion in 2008 with almost no regulatory attention. These unregulated CDSs underpinned the reckless lending that eventually burst in the Great Crash of 2008.

    The list, alas, goes on and on. Military procurement systems are, according to retired military leaders, so broken that they now jeopardize national security: the U.S. is buying armaments that are overpriced, unneeded and technically defective armaments. Our system for financing the costly federal health care system subsidizes the overuse of advanced technologies while underfinancing highly effective and lower-cost public health measures. Public construction systems are failing to keep up with urgent national needs. Roads, bridges, rail, water and sewerage systems and many dams are in dangerous disrepair around the country; large sections of New Orleans remain wrecked and highly vulnerable; and even ground zero of 9/11 remains a hole in the ground because of endless bickering. Similarly, despite nearly a decade of planning, the government has failed to build and test even a single coal-fired power plant that captures and sequesters its carbon dioxide. This so-called Future-Gen project, vital for the transition to a low-carbon economy, has still not been launched.

    We need a better scientific understanding of these pervasive systems failures. It is wrong to think that they illustrate the inevitable failure of government. Other governments around the world more successfully manage infrastructure investments, health systems and environmental resources, apparently with greater flexibility, less corruption, lower costs and better outcomes. America should be learning from their experiences.

    Several factors are at play. A key one has been the flawed privatization of public-sector regulatory functions. Wall Street firms hold excessive sway over government regulators, so that dangerous behavior has been unconstrained. Private insurance companies and health care providers block measures to curtail the overuse of costly technologies. Private military suppliers drive the procurement of unneeded weapons systems.

    A second has been the collapse of planning functions within the federal government. A remarkable feature of the recent debates over climate change, energy systems, infrastructure rehabilitation and health care reform is the lack of detailed forward-looking government proposals and plans. The Obama administration has stated general principles (very admirable ones) but too often without clear targets and the operational strategies to achieve them. Planning has been replaced by lobbying and backroom deals in Congress that are nearly opaque to the public.

    A third, and paradoxical, factor is the chronic underfunding of government itself. It sounds like the old joke about the bad restaurant: that the food was lousy and there wasn’t enough of it. The public is wary of putting more funds into government having witnessed one public sector failure after another. Yet without investing more resources in skilled public managers in health care, energy systems, and national security, we are probably doomed to remain stuck in the hands of vested interests and lobbies.

    Fourth, today’s challenges cut across technical specialties, government departments and public and private sectors. In health care and energy, for example, the private sector holds the key technologies but the public sector is needed to finance research and development, to regulate sustainable practices (for example, for emissions reduction and primary health standards), and to ensure access for the poor. Public health must be addressed not only through curative medical care but also through nutrition, food systems and a safer built environment. Energy systems must respect ecological as well as economic constraints. Yet our government agencies are not designed to take a holistic approach.

    In short, we have arrived at a point where the challenges of sustainable development —including public health, infrastructure, energy and national security—require changes not only to policy but also to basic public management systems. In many crucial areas, tinkering will no longer suffice: we need an overhaul to regain government control over regulatory processes, reduce lobbying, restore public planning and ensure the adequate financing of skilled public managers, and align public management systems with holistic strategies.

  • Report this Comment On October 16, 2009, at 4:05 PM, TopAustrianFool wrote:

    The Motley Fool is officially in bed with the enemy.

  • Report this Comment On October 16, 2009, at 4:06 PM, TopAustrianFool wrote:

    Jeffrey D. Sachs is a communist with a PhD in ridiculous economics.

  • Report this Comment On October 16, 2009, at 4:28 PM, Redcartfool wrote:

    Good regulation and capitalism are compatible. In fact good regulation can help the market thrive. It engenders confidence in consumers and keeps the crooks and quack at bay.

    I don't understand the cynics here who don't trust the government we elected but somehow trust the CEO's who just gave themselves a bonus after the company went into the crapper.

    We are going to get regulation. Let's make it fair and transparent. Small investors need a voice at the table. Go fools.

  • Report this Comment On October 16, 2009, at 4:29 PM, docdoug wrote:

    I gave my son a bat and a ball, encouraged him to play baseball in the lot behind our house. Should I punish him for hitting the winning home run through my kitchen window?

    The task of capitalism is to respond with its best collective efforts to the regulatory environments the government creates.

    For doing this, we should not be punished.

  • Report this Comment On October 16, 2009, at 4:53 PM, RandalV wrote:

    I agree with the dissenters and Ayn Rand on this one. All the government can do is strangle those who want to produce and create terrible barrier to entry for new producers.

    For those who look for protections, I will only point out exactly how bad the government has been at protecting people from rights violations (ie Madoff) despite the enormous and growing extent of its power.

    Motley Fool, I will assume you have your clients' best interests at heart. If you advocate anything other than the removal of restrictions, then you are doing much more harm than good. You are providing the sanction of the investment community to people who are killing us.

    Randal

  • Report this Comment On October 16, 2009, at 5:03 PM, jdlech wrote:

    First, I suspect anyone, lawmaker, executive and investor alike, who is unwilling to accept that government regulation needs to be dynamic. Expanding and contracting as the necessities of the times dictate; NOT by the dictates of whatever ideology happens to be in office at the time.

    Second, I want to hear far more congressmen admit they learned their lessons from the past; that deregulation is a big mistake if not followed by good oversight. NEVER DEREGULATE WITHOUT OVERSIGHT. Deregulation is fine, as long as someone is watching to make sure nothing goes horribly awry. I don't hear that from Congress nearly enough.

    Third, I want Congressional committees to quit acting like little fiefdoms. If they cannot stop it, then someone will have to do the job for them. Nearly all the current regulatory problems are caused by each committee as they protect their sphere of influence like little lords protecting their fiefdoms. This is the reason reform never passes. And this is why we have overlapping regulating bodies while companies have learned to play one agency against another. If we are to stop companies from gaming the system, we need to end the games in Washington. End it there and the rest will follow.

    Fourth is the insidious game of 'play along and you'll eventually get a job with us'. We all know that regulators with low five figure incomes are regulating people earning six figures. We all know that if they play softball with the companies that they will be rewarded with cushy six figure private jobs. This practice is just a subtle form of bribery and must end. Anyone who has overseen a company should never be allowed to go work for that company for at least 4 years after he or she retires or resigns.

  • Report this Comment On October 16, 2009, at 5:11 PM, RandalV wrote:

    And Redcartfool, I'd argue that it is far more cynical to treat business people as guilty until proven innocent.

  • Report this Comment On October 16, 2009, at 6:08 PM, solhls wrote:

    More regulation is the problem, not the answer. Every economic crisis is blamed on Capitalism, but the fundamental fault lies with government intervention in the economy. Capitalism cannot properly be blamed when it has never existed without government meddling, which constantly is increased to solve the problems caused by prior interference. The financial crises was caused by government involvement in housing, which is not a proper government function. The crisis became a worldwide financial crisis because of the FEDs manipulation of credit to first cause a housing bubble with low interest rates and then destroy the market by raising them. Please let's stop blaming Capitalism.

  • Report this Comment On October 16, 2009, at 6:40 PM, mikane5 wrote:

    "The president has offered a reform proposal that would grant broad new authorities to government beaurocrats while intruding in private choice"---Rep. Spencer Bachus R-Ala, Senior Republican on the House Financial Services Committee. The "patriots" are much more concerned with sabotaging Pres. Obama initiatives than restoring the integrity of our Financial system!

  • Report this Comment On October 16, 2009, at 6:47 PM, BlueBoomerHD wrote:

    In a democratic, republic laws are made to detail what is acceptable to the affected society. Some have expressed a lack of confidence in our own government to get this correct, but have made no attempt to address why this has occurred.

    Government in our USA is supposed to be, "of, by and for the people," but the vast majority of the people make no effort to do their part and vote. In a presidential election year approximately 50% of the eligible voters actually do vote. In an off-year election, between presidential elections, often less than 25% of eligible voters do so.

    Given no need to answer to the people the government does as it pleases, often catering to those with serious money: Wall Street (i.e., the market).

    Wall Street has conveniently stuck to Adam Smith's, 'Wealth of Nations,' while forgetting that other of Smith's tomes, 'The Theory of Moral Sentiments;' meant to be companion pieces.

    If you read the first, you'll note a couple of things: first, when it was written it was a work of fiction (there had never been free markets); second, he did not suggest that self-interest was a panacea (hence the accompanying 'morality' publication).

    The market defines innovation as devising new ways to avoid: regulation, transparency and responsibility. It becomes necessary, since Wall Street's residents often do find ways to profit immensely from manipulating (a.k.a., pocketing) other people's money, to have the government regulate the market.

    Make sure that you're doing your one job, as a citizen in a democratic republic, and vote every time the opportunity arises. Because, you get the government you deserve.

  • Report this Comment On October 16, 2009, at 7:05 PM, kirbyjb wrote:

    I worked for a large company that wants to play fair. Fierce competition is fine, but they don't want the deck stacked against them. Making all companies play fair (and transparent so we can check) will improve Capitalism, not hurt it.

  • Report this Comment On October 16, 2009, at 7:22 PM, Wheretheflavoris wrote:

    Before we set up any centralized or other controlling regulatory authority, Congress and the Executive Branch must thoroughly cleanse the existing regulatory landscape of all GSE's and impractical or preferential regulations (start with the Carter years) and laws. I realize this will be quite an undertaking, especially for politicians who are unskilled at taking laws off the books (none were in office when Prohibition was repealed), but very adept at adding them. There will never be transparency for any regulatory body that has to operate in the murkiness that exists today.

  • Report this Comment On October 16, 2009, at 8:21 PM, gkirkmf wrote:

    It seems to me that most have missed the salient point in this whole debate. Who among you can disagree with the statement that over the past 70 years in this country we have had an extraordinary concentration of power and wealth? Everywhere one turns you find this fact staring you in the face. Businesses of all kinds have reached sizes which were never anticipated by our founding fathers. We have 450,000 citizens represented by a single congressman. We have a senate almost completely controlled by large corporations. We have a Supreme court which has ruled that these corporations have the same rights as citizens.

    Several writers in this forum have expressed the fact that they no longer trust the “organs” of the state to create laws which enable a fair playing field for all. It is no surprise that you don’t see many of these large businesses recommended by our Fools… They recognize that these huge companies are organized to pay huge management salaries to a pyramid of managers many levels deep, and returning little to their stock holders. They operate in an multinational environment, evading regulation in one country by moving functions from one country to another as laws and regulations change… (think Union Carbide – Bhopal gas tragedy ). They rig the rules, ignoring them or just gaming the system to advance their own profits (think blood sucking squid from Goldman Sachs - Goldman's trading methods). Think Lockheed Martin… Exxon… (Valdez anyone). How many huge drug companies have been “concentrated” in the past few years? Does this sound familiar ( Pfizer and Wyeth officially merged today. The new company will lay off about 15 percent of its staff ) How many airlines do we have left (think Delta-Northwest) ?

    Where is the logical end to our present course? One large company controlling all the banking in the world? One drug company? If we are ever to find our way to the mythical Ann Rand capitalist world, we will have to do it by breaking apart several hundred corporations in this country and around the world. Ann Rand did not contemplate bailing out the managers of Goldman Sacks, BOA, AIG , GM and the rest of the hands out companies in this country using money borrowed from the Chinese and the American tax payer. I found it extremely distasteful myself.

    So fools, I want to ask you…. How would you address this problem? How do we whittle down this concentration of power? Regulation??? Revolution?? Writing your congressman? Voting for boards of directors? Move to Switzerland? I have my own ideas, but I would like to hear yours!!!

  • Report this Comment On October 16, 2009, at 9:40 PM, foolupatree wrote:

    So, the current administration wants to create a new bureaucracy to streamline the duties of several other bureaucracies. Will the other six or seven bureaucracies be done away with? Also, will the single person with " his but on the line" be veted or will he be another czar? Trasnparency is good and should be the law of the land, but when politicians get involved transparency becomes clouded, usually by arrogance, at best.

  • Report this Comment On October 16, 2009, at 9:44 PM, MarshRose wrote:

    Well-meaning folks spout, "Government regulation! We must have government regulation!" No. No. No. Government regulation upon regulation upon regulation brought America to it current state. Capitalism, free-market economy and individual freedom with responsibility for consequences of one's actions need freedom to grow.

    An example of destructive government regulation: for decades financial institutions imposed a 20 to 1 borrowing rule upon themselves. You may borrow twenty dollars for every dollar in assets you own. Along comes a government socialist mentality that imposed regulatory seeds of destruction by insisting that banks borrow on a 40 to 1 ration, that is for every dollar of assets you may borrow forty dollars, which was to be used to give homes to the homeless at no money down, no buyer personal assets, and no requirement to meet monthly payments, backed by US government which means backed by US tax-payers. Freddie Mac and Fannie Mae, devised by Barney Franks and Chris Dodd became the shaky straw-base of this ludicrous regulation.

    How to return to a strong economy? By strict observance of Constitutional restraints against government interference in the private sector; across the board tax cuts, elimination of earmarks, void all laws, dictates, and fiats that abrogated Constitutional restraints against government intrusion in the private sector. Just these few actions would cause an immediate surge in the US economy.

  • Report this Comment On October 16, 2009, at 10:01 PM, bcpebert wrote:

    Are we socialist or a plutocracy? I would suggest that you read and investment paper from Citigroup published in 2005 before answering the question.

    http://www.scribd.com/doc/6674234/Citigroup-Oct-16-2005-Plut...

    There is a follow-up article that I have not read that may provide further insight.

    http://www.scribd.com/doc/6674229/Citigroup-Mar-5-2006-Pluto...

  • Report this Comment On October 16, 2009, at 11:27 PM, dph192 wrote:

    From the internet (it must be true!) the common law definition of Fraud: "Under common law, three elements are required to prove fraud: a material false statement made with an intent to deceive (scienter), a victim’s reliance on the statement and damages."

    So in the recent crisis, some people signed documents indicating that they were able and willing to cover 'creative' mortgages, then some banks resold that debt, then other banks bundled these, representing them as relatively safe, diversified investments when, in fact, they were not.

    For centuries the right of redress for the victim of fraud has provided a counter to greed-driven attempts to promulgate it. Where the error was an honest mistake, we've had bankruptcy courts for decades that are very efficient at managing the remaining equities of failed enterprises. I can't understand why those involved in fraudulent representation are promoted to high administrative positions, rather than being cleaned out in civil court and possibly prosecuted in criminal court.

    This discussion has not really come up with a definition of "regulation", so my question is, which is it?:

    1) enforcement of law, including basic rules for fraud, debt and theft

    2) additional rules, not passed as law, but contrived by government administrators supposedly to implement law

    3) interpretation of laws or rules by judges or other officials with prosecutorial privileges

    4) a semantically loaded term that means "enforcement of fair practices" to liberals and "arbitrary restriction of commerce" to conservatives

    If trillions of our dollars are arbitrarily doled out to friends of the current administration, it appears that there are no "regulations" that taxpayers can call up for redress...

  • Report this Comment On October 16, 2009, at 11:45 PM, Marshalldedr wrote:

    Mdexpat wrote: "Never again should we allow people to buy houses with zero down, never again should we allow people to accumulate revolving credit balances they cannot pay back, never again should we allow people to buy houses priced at a value beyond their ability to pay and most of all never again should we allow banks to securitize these loans into incomprehensible securities that instead of spreading risks merely hid them."

    Please read the history of the CRA. Regulation that attempted to level the playing field directing banks and lending institutions to lend money to individuals that were below standard lending levels. Government pushed lending institutions becaus in order to expand they had to co-operate in order to be given the avenue (more regulation) to expand. It is government regulation that drives corruption. Government sticks its influence where it doesn't belong which drive avoidance behavior and making lemonade out of lemons thinking. This started 30 years ago by good hearted people that didn't think through the human condition and the drive for profits properly. Regulation of behavior leads to the opposite. It has been that way for eons.

  • Report this Comment On October 17, 2009, at 12:27 AM, jillianlei wrote:

    Many years ago we had transparency and regulations they were set into motion by Alexander Hamilton one of the founding fathers.These rules and regulations worked very well for two hundred years. Then thanks to Presidents, Region, SR. Bush, Clinton and then Bush JR. those regulations were stripped away and irresponsible greed reared it's ugly head. Thanks to the greed and secrecy of irresponsible bankers and some of the biggest men on Wall Street we now find ourselves in debt that might very well bury us. Wall Street did not cry when socialism bailed them out. Now banks that have received billions of tax payers money with hands opened wide now scream about rules. But now that they are flush and showing huge gains and swallowing smaller banks, what do they do with the money. Nothing! Many people on the small business side who have had excellent credit now find themselves holding their hands out to the very people who greedily took from the government and being told sorry you do not qualify. Yes it appears that Capitalist and government get along very well with Socialism as long as they get the money yet scream real loud when they lose it. It the Capitalist who hoard the money would do things the way it was originally set up, then maybe this country would be in better shape. On the other side of this coin we have Senators and Congressmen/women who hold open their pockets to big lobbies and financiers who buy what they want from the government. So I say that it looks as if Capitalist and Government works very well with each other. In closing it was proved during the great depression that you can not cut the budget as Hoover did and expect to go anywhere. When Roosevelt came in and opened the piggy bank and put people back to work and re organized the banking system then and only then did this country become the great and powerful nation that our founders dreamed of.

  • Report this Comment On October 17, 2009, at 2:12 AM, Glycomix wrote:

    In the video, David Gardner said Fannie and Freddie were highly-regulated and transparent. Fannie Mae and Freddie’s Mac’s finances are veiled by congress on purpose, to con the investor. Moody's was conned because Fannie and Freddie didn't report their true liabilities. Chris Shays points out that Fannie and Freddie are not required to tell anything. Congress exempted them from the financial reporting required in the 1933 and 1934 securities acts. They've never been forced to report their financial state under the 1933 securities act.

    Fed Chair Alan Greenspan warned that the GSEs were a "systemic risk"to the financial system in his address to the house Financial Committee in January 2005, when they were guaranteeing 25% of all mortgages.

    In 2006 50% of home loans were made by the GSE's. At that time they owed $2.8 Trillion more they than had in assets: William Poole, St. Louis Federal Reserve Governor, discovered that the GSE’s owed $1.8 Trillion more than they had in assets ($4.47 Trillion in Liabilities - $2.67 Trillion in Assets). Most of the debt $1.17 Trillion was owed by Fannie Mae and Freddie Mac ($2.82 in Liabilities- $1.65 in Assets). http://ideas.repec.org/a/fip/fedlrv/y2007imayp143-152nv.89no... A trillion Dollars is a million million dollars. Of the 115 Million

    In 2006, the GSEs owed 2.8 Trillion more than they had. How much more were they in the hole in September 2008 when they went bankrupt? Fannie and Freddie "guarantees" encompassed 76% of the mortgage market and caused the financial market meltdown in when they went bankrupt in September 2008. FHFA Administrator James B. Lockhart reported that Fannie and Freddie guaranteed $5.3 Trillion of which they securitized about $3 Trillion. Congress had manipulated the system so that the GSEs were required to make 52% of their guarantees in “affordable housing” loans, guaranteeing loans the poor or to targeted ethnic groups. http://www.cspanvideo.org/videoLibrary/video.php?dispid=2813...

    We STILL don't have transparency with Fannie and Freddie. Even after they were taken over by the FHFA in September 9, 2008, they still DIDN'T make a full financial report (See Chris Shays on timeline 106:01 of the above link at C-SPAN) http://www.cspanvideo.org/videoLibrary/video.php?dispid=2813...

    The GSEs have never been well regulated! OFHEO couldn't control them because they were always called on the carpet by angry congressmen who were given porkbarrel credit for loans made in their district.

    Bethany McLean pointed out in January 2005 that the GSE's are like tammany hall. They're a congress' corrupt bank that they use to spread pork to the poor. They paid off Senators, and congressmen with jobs; Senator Bennett's son was given a job as head of Fannie Mae in the region that included Utah. The people that vetted OBama's nominations, Franklin Raines and Jim Johnson, were CEOs of Fannie Mae. Raines was caught manipulating the Fannie Mae Statment to maximize the bonuses that the executives received. Jim Johnson was one of Amado's "Friends" who were given favorable loans by Countrywide. A Clinton http://money.cnn.com/magazines/fortune/fortune_archive/2005/...

    Also see Slate: http://www.slate.com/id/2200160/pagenum/all/#page_start

    On Oct. 11, 2009 Former Fed Chair Greenspan said in ‘Greenspan-speak’ that 50% of medicare is taken from borrowed funds and There's a limit to how much people will loan the US treasury.

    Greenspan: “We have a huge fiscal hole out there which is best measured by the fact that Medicare benefits are only 50 percent funded going all the way out. And what that implies is a very significant issuance of Treasury securities to meet the ever-growing and very indeterminately large federal deficit. You cannot continue to increase the federal debt. Of course, remember, over the generations, we have been very careful to keep the total level of debt well below the borrowing capacity of our economy so far as federal issuance [of debt] is concerned. That cushion is now being tested. And I'm getting a little concerned and I don't want to find out where the upper levels are.” http://abcnews.go.com/ThisWeek/Politics/transcript-alan-gree...

    OBama's spokesperson gave us window-dressing. He didn't tell us what taxes they'd input to pay for medicare not to mention their national healthcare without saying that it would cost $1.0 Trillion a year for the next ten years. Can the US add a new health entitlement program that costs over a trillion dollars a year when the entire revenue stream for the entire govenment is less than a trillion dollars? http://www.heritage.org/Research/Welfare/sr0067.cfm

    We need to increase taxes 30% at least to pay for medicare. How are we to pay for National Health Care? To pay for the new medical entitlements, the government will have to increase our tax rates by 230%. In Great Britian they charge a 30% sales tax called the Value-Added Tax(VAT). A VAT would destroy our local governments. We couldn’t raise taxes for schools and roads with a sales tax.

    If we have a current Debt of 11.2 Trillion, each taxpayer owes $97,222. In 2006 $1,0 Trillion divided by 115.2 tax-returns suggested that the average paid per return comes out to $8,680. We may get to the point that everything we have is not enough to pay for our debt. . (http://www.irs.gov/pub/irs-soi/08fallbulintax.pdf). That was before the economy started going downhill since Dec. 2006.

    A lack of political will to control the GSEs almost caused the destruction of the banking system causing the financial meltdown that was stabilized by the FDIC and Fed’s buying up the crap “Mortgage Based Securities” sold mostly by the GSEs. That effort saved the economy for a while, but put our financial system on a stack of cards. If we have a run on the bank, there is not enough good deposits in the Federal Reserve or the FDIC to stabilize the banks. A run on the banks will destroy the US.

    Overspending caused the destruction of the middle class during the Weimar Republic due to 800% inflation in 1922-23.

  • Report this Comment On October 17, 2009, at 3:23 AM, chopper106 wrote:

    There is no doubt that capitalism, without transparency and regulation will always paint itself into a corner, where the very rich get richer and the rest pay for that. The best system will always produce a level playing system. It is a joke to state that unregulated capitalism and competition coexist. The last thing big corporations want is real competition, as they strive for oligarchy and even monopoly.

    We have a wonderful start here, but the public needs to be protected from the very greedy, who will never self regulate. It is only government that can set the rules to make this a working democracy.

  • Report this Comment On October 17, 2009, at 5:19 AM, OneOut1 wrote:

    The Anti Trust Division of the Department of Justice has failed us.

    If it's too big to fail, it's too big to exist.

    Efficent Capitalism requires inefficent operators to fail, which forces capital to be redirected to more effecient uses.

    Unless we find a way to elimininate the system of legal bribery we have allowed members of Congress to create, nothing will improve long term.

    A corporation with money has more influence over your Congressmen than you do with your vote.

    Until we once again build wealth through value added production, we will never again be a wealthy country. Shuffling financial documents back and forth does not produce true wealth, only the illusion of it.

  • Report this Comment On October 17, 2009, at 8:49 AM, hikerdude7088 wrote:

    RGGrass,

    "Government cannot stop the Ponzi's of the world from finding new pigeons. "

    So true, but the government can be your Moffia Boss and make the guy sorry he cheated you!

  • Report this Comment On October 17, 2009, at 10:17 AM, rdytoretyre wrote:

    Bernie Madoff was nothing to those running the worlds largest ponzi schemes. Who runs the Social Security 'trust' fund, Medicare, Medicaid... 3 of the the largest unfunded schemes out there. Bernie is in jail.. where are those that created and still run these ponzi schemes. Government is hardly transparent

  • Report this Comment On October 17, 2009, at 10:58 AM, newally wrote:

    Obama's form of regulation is nothing short of Marxist socialism. It will not permit the Free Markit to co-exist.

    Paul Newall

  • Report this Comment On October 17, 2009, at 11:00 AM, 53shadetree wrote:

    I haven't been "pleasantly surprised" by anything this administration has done and don't expect that trend to change.

    Any time they talk of more comprehensive regulation that is code words for 'take-over'. This administration is running so far outside the Constitution that it is not even funny. Hands off I say and if a business is found to be unethical processes or dealings then NAIL THEM publicly. Maybe the next company will think twice. Most important don't let Congress pressure banks and financial organizations to do stupid things in the future.

  • Report this Comment On October 17, 2009, at 11:53 AM, gprather100 wrote:

    When has this administration been open and transparent about anything. I do not believe that is the intent in this case and the effort should be opposed at every point. I believe it is means of exerting greater control over the financial system and individual investors.

    Goolsby's acknowledgement of your question about Fannie and Freddie did not acknowledge their major contribution to the problem and no serious action has been taken to rein them in.

  • Report this Comment On October 17, 2009, at 2:58 PM, mpabraham wrote:

    I'm a semi-retired small business owner and basically a free-market guy. However, when I see Goldman Sachs preparing to hand out an average bonus of $700,000 to nearly 32,000 employees, I have to pause. There must be some way to put the brakes on such exuberance.

    Just as occurred in the housing bubble, businesses that are going over the top in excessive compensation must be reeled in. Its sad we have to do it, but self-regulation just does not seem to work.

    In this era following near global financial collapse, one would think leaders such as those in Goldman Sachs would get the message. Sadly, government regulation, as in the housing finance, is probably the only answer.

  • Report this Comment On October 17, 2009, at 3:21 PM, xWileyCoyotex wrote:

    The root problem lies in the heart of man. Resolve that and any system will work. If not resolved, corruption will grow rampant until the system is dismantled and replaced with another supposed "bright" idea.

    Wiley Coyote

  • Report this Comment On October 17, 2009, at 4:36 PM, BigIsBAD5466 wrote:

    First, as the Username says, Big is BAD. Teh first regulations needed are those that do not let companies get SOOOOO BIG that they can cause "Systematic Risk".

    Second, in my opinion, it is too bad Captialist are NOT first Patriotic Americans. All they are after is the money, and it doesn't matter if it is in $, Lira, Euro or Yuan, whatever. Just give them the money.

    A Patriot thinks first of his country, and secondly if being a good entreuper (sic) and making money.

    There is a reason Small and Medium size business create more jobs than BIG business, They hire local loyal AMERICANS, They don't send the jobs over seas for others to do.

    Right winged Radio talks "Great American" and Patriots, but does not live it.

    Remember when you buy, buy from the AMERICAN company and/or the small business man in your community. That creates jobs and creates a sustainable investment in your country.

  • Report this Comment On October 17, 2009, at 8:06 PM, ziq wrote:

    veryverda,

    How is Al Sharpton interfering with Rush Limbaugh's freedoms? And why should I care? I have no use for either of them!

  • Report this Comment On October 17, 2009, at 8:50 PM, thelion3 wrote:

    Yes, there has been a lot of fradulant activities in the market place in lending and banking and we all we pay for this. But during the process of running for office and now while in office this administration talks about "transparency". The definition of transparency in the Dictionary is: "the quality or state of being transparent. something transparent, esp. a picture, design, or the like on glass or some translucent substance, made visible by light shining through from behind". Now maybe I'm just don't see it but I do not see the light shining through from behind the glass. Let the public know what is really in the bills and legislation about to be passed before it is passed.

  • Report this Comment On October 18, 2009, at 12:10 AM, LongTime108 wrote:

    The Common Sense Approach to Fixing the Economy. Written March 6, 2008

    Government policies had a fundamental role in creating the foundation of the current crisis and the change of those disastrous policy errors should be the priority for the policy makers in Congress and the Executive.

    In no particular order and as soon as possible, our political leaders should:

    Repeal Mark to Market. This would instantly make banks balance sheets whole and give them the reserves to resume lending. Instituting mark to market precipitated the credit meltdown and is at the foundation of the massive bank failures we are suffering.

    Enforce the Anti-Trust Laws. Don’t allow banks and other large corporations to become “too big to fail” by acquisition. The government certainly should not compound the error by fostering even more mergers.

    Break up the Largest Banks that grew by acquisition. Just as the break up of AT&T lead to greater competition and lower costs in phone service, breaking up the super banks will reverse the trend to higher costs and poorer service that conglomeration has brought in the banking sector. This will also create more shareholder value and put thousands of people back to work.

    Re-Erect the Barriers Between Commercial and Investment Banking. Depositor’s money should not be exposed to great risk. The separation of banking, insurance and stock brokering should be re-established.

    Restore the Policy that Banks Carry their Own Paper. End the madness of immeasurable and uncontained risk.

    Breakup and Privatize Fannie Mae and Freddie Mac. It is wrong that the risk be borne by the taxpayer and the profits accrue to private investors. If these institutions are broken up into corporations that are not too big to fail and that must stand on their own we will see both more competition and sounder lending policies.

    Repeal the Community Reinvestment Act. The government should never mandate that any company, citizen or group of citizens engage in unprofitable business or enter into agreements that are against their better judgment. This policy started us down the slippery slope that lead to the current real estate crisis. There are other similar laws that should also be rooted out.

    Cut Taxes on Employers. Past experience shows that permanent tax cuts and only permanent tax cuts leads to rapid and lasting job creation. The wonderful bonus for the politicians is that each dollar in tax cuts leads to multiple dollars in new tax receipts.

    In Fact, The Whole Tax System Should Be Simplified And Flattened. The current system is hugely expensive to administer and comply with, makes honest errors inevitable, and worst of all it is unfair and creates debilitating market distortions.

    Prohibit Companies Receiving Bailout Funds From Contributing to PACs and Making Political Contributions until all loans and investments are paid off. This will reduce both the appearance and fact of corruption and make prosecution of moral lapses easier. Taxpayer dollars should not be used for lobbying the government or rewarding cooperative politicians.

    Prohibit Regulators from Taking Jobs in the Industries they Regulate for a period of four to ten years from leaving government service. This rule should be extended to government purchasing agents as well. We would see fewer scandals and suffer less from corruption that doesn’t come to light.

    Return to the Policy of Maintaining a Strong Stable Dollar established by Alexander Hamilton and abandoned by Richard Nixon. The Bush policy of promoting a weak dollar to preserve jobs by encouraging exports and inhibiting imports didn’t take into account that commodities like gold and oil that are traded in dollars would go up in price proportionately. Four-dollar gas busted the budgets of many wage earners. They bought the gas to preserve their jobs but fell behind on their mortgage payments, which pricked the real estate bubble. The policy backfired as it always has in the past.

    When the dollar’s value fluctuates, business people and investors can’t accurately access risk and forecast returns. Nor can households establish and maintain budgets that bankers can rely on. We are experiencing the consequences.

    The declaration and enactment of these policy reforms will cost little and will restore the confidence needed to reverse the downward spiral the economy is in.

  • Report this Comment On October 18, 2009, at 2:15 AM, sabertoothtiger wrote:

    In olden days, if regulators ensured scales were accurate, they were not at odds with free trade. Fair is not the enemy of free. Why pose a false question of whether regulation and capitalism can co-exist?

  • Report this Comment On October 18, 2009, at 3:38 AM, jojibro wrote:

    Capitalism is inherently amoral and must be tempered in ways to actually allow for "... life, liberty and the pursuit of happiness..."

    To the extent capitalism goes unrestrained, we lose the essence of democracy which is not only for the "landed gentry", but for all.

    Democracy is not the Darwinian boxing match those in love with the religion of capitalism would vehemently espouse.

    There are very good reasons governments require driver's licenses or traffic lights or motorcycle helmets.

    IT IS FOR THE PUBLIC GOOD- something that capitalism totally ignores and eschews.

    Survival of the fitest was originally practiced as a societal norm, and periodically perfected much to the world's horror.

    Do we not ever learn?

  • Report this Comment On October 18, 2009, at 5:06 AM, RGGrass wrote:

    On October 17, 2009, at 2:58 PM, mpabraham wrote:

    I'm a semi-retired small business owner and basically a free-market guy. However, when I see Goldman Sachs preparing to hand out an average bonus of $700,000 to nearly 32,000 employees, I have to pause. There must be some way to put the brakes on such exuberance.

    Just as occurred in the housing bubble, businesses that are going over the top in excessive compensation must be reeled in. Its sad we have to do it, but self-regulation just does not seem to work.

    In this era following near global financial collapse, one would think leaders such as those in Goldman Sachs would get the message. Sadly, government regulation, as in the housing finance, is probably the only answer.

    My real problem with the government setting rewards is that between jealousy and vindictiveness actual rewards for high achievers will be stopped. Also, where will the government start and stop setting of rewards? Will it be just with publicly traded companies and top compensation? How about the highly paid athletes? What about entertainers? Who will determine the "right" compensation for providing service to customers? What a slippery slope we start on when we let government tell us what is best for us.

    When our leaders tell us that someone is too big to fail it means that they have something personally at risk if the company fails. This stimulus package is a strong pork barrel reward put in place right in front of us. But these are the ones who will, in the new regulations, determine who gets what, based on social, racial, or political agendas. Al or Glenn or Oprah or Rush... each is out for their own agendas.

    mpabraham, you stated that you own a small business. Would you have wanted the local mayor to examine your books and decide how much you could keep with the rest going for local public works? (His brother in law needs the work and the other sister could use a little extra welfare)

  • Report this Comment On October 18, 2009, at 11:43 AM, likedaysofold wrote:

    Regulation of banks, electric companies etc. worked great in the 50's and sixties and we had great capitalism going on then. Greed of some individuals will always hate regulation because they will always want to screw everyone including their own families to get more money in unscrupulous ways. The poor and lack of intelligence of a lot of people have to be protected somehow against these greedy ones. Everyone is not smart enough to protect themselves against these people. There are millions of these people not a few.

  • Report this Comment On October 18, 2009, at 6:30 PM, thetaxgal wrote:

    I believe in capitalism. I believe in free enterprise. However, I also believe in regulation. We will always have dishonest and corrupt people. This has been true since the beginning of time. And when power that is in the hands of a corrupt person or group, we all suffer.

    We need regulation and any company that has a great deal more power, should be subject to more regulation. When a company has the power to hold the nation for ransom (AIG, GM, Citibank), they are too big. Small companies need the freedom to do business without massive regulations, but large companies, that have the potential to negatively impact our economy need to be regulated or broken up.

  • Report this Comment On October 18, 2009, at 7:26 PM, globalsailor wrote:

    I actually don't think that the last bust was caused by bad regulation. It was caused by people not knowing what they were investing in. The information concerning most of these banks was out there and those people who are so concerned about "diversification" bought some really awful companies. The stock market dropped because companies weren't making money and people didn't have the money to ride out the rough spots.

    If the companies don't perform the government can't do much to save us.

    I'm quite sure that companies like AIG actually reported the notional value of their derivatives. The only thing we can blame the government for is for not allowing such a company to dissolve in bankruptcy.

    Same goes for CEO compensation. If you don't like the way your CEO is compensated don't buy the company.

    However, all that said I would like to see it easier for shareholders to elect their board of directors. Maybe an instant run-off vote would help.

  • Report this Comment On October 19, 2009, at 12:47 AM, bc0203 wrote:

    I'm sorry, but I think we've been to this dance before, on healthcare.

    First, they hold court and seem to be taking everyone's opinon into account before taking action, then they go ahead and do what they were going to do in the first place.

    I'm not sure I'm so willing to drink the kool-aid this time around...

  • Report this Comment On October 19, 2009, at 11:51 AM, atthelakejim wrote:

    Every time we have a financial crisis someone tries to convince us it is the worst since 1929--usually someone who thinks he can take advantage of the current crisis. And again this time it seems to be someone who thinks we will believe that government will prevent this from ever happening again. Bull. We need regulation in the marketplace--it's the set of rules for all to follow. We do have too many agencies with their own axes to grind setting those rules, but a single agency is a much bigger potential problem. Much easier for that agency to screw up the entire country. Politicians seem to not understand the difference between policy and rules or regulation. We need a consistent policy and then agencies to make and enforce rules that are consistent with the policy. Transparency is a great talking point. I wonder when we will make some progress toward greater rather than less transparency.

  • Report this Comment On October 23, 2009, at 12:09 PM, sigmull wrote:

    Unfortunately Mr. Goolsby puts the Obama adm proposals in the most favorable light yet passes over the most serious objections. The interviewer does not ask tough questions that is if he wishes to interview and not just permit more administrative propaganda.

    The Motley boys need to hone their interview skills if they are going to do political economics interviews.

    SM702

  • Report this Comment On October 23, 2009, at 12:50 PM, Parsoncole wrote:

    I find it quite absurd for one representing this administration to be promoting transparency. It is the least transparent administration in recent history and apparently for good reason. (Look at the czars appointed with no confirmation process or oversight.) I am extremely troubled by the direction our government is going in opposition to the will of the people on almost every issue. Enough already!!!!

  • Report this Comment On October 23, 2009, at 1:10 PM, trurl9 wrote:

    Watch the Frontline documentary: The Warning. Brooksley Born tried to warn the administration about the financial crises, but she was shut down and out by corrupt and powerful Washington insiders.

    http://www.pbs.org/wgbh/pages/frontline/warning/

  • Report this Comment On October 23, 2009, at 1:23 PM, Sage89 wrote:

    Transparency is only a word used to get elected. Everything this administration does is under the cloak of darkness and is sugar coated with untruths.

  • Report this Comment On October 23, 2009, at 1:36 PM, sheltonclan wrote:

    This administration claims to desire transparency in business...yet cloaks itself with a protective circle of advisors and czars, diminishing the authority and historic checks and balances of the Senate and House (see letter by Robert Byrd, D-WV, earlier this year). Chicago politics has come to Washington.

    This proposition is absurd. Capitalism is not the problem. Corruption in the problem. Enforcing existing laws are the solution. Are so many of us truly so naive as to believe that socialism - or "more regulation" - will not be able to be corrupted?

  • Report this Comment On October 23, 2009, at 1:39 PM, aeropater wrote:

    I remember reading about something like this when I was in school. There was a very large country that due to government mismanagement/corruption experienced a financial collapse. This problem was corrected by instituting centralized control over the country. This system eliminated all of the greed and cheating. It insured that only the highly intelligent and dedicated government officials would be in control and insure that all citizens would be totally protected.

    I'm old and I get confused easily ....but I don't think this experiment was a roaring success.

  • Report this Comment On October 23, 2009, at 2:10 PM, bdroc wrote:

    What good is increased government bureaucracy that will add costs to business and taxpayers?

    1. We should enforce existing regulations. CEOs, CFOs, and independent auditors attested to the effectiveness of internal controls, but it turns out that the controls were not effective. We could improve quite a bit by simply beefing up SEC enforcement.

    2. The proposed regulations do not deal with the independent agencies who gave high ratings to toxic mortgages. Seems to me that this is more of a political witch hunt than an honest attempt to resolve issues.

  • Report this Comment On October 23, 2009, at 2:17 PM, toshinobe wrote:

    The Washington's eye is here to stay. The czar, a single point of authority, however bothers me. Before I can approve such chair, I would like the government to disseminate the check and balance protocol within the government and the public having an input from the capitalist like myself and the Fools as a way to have a transparent operation. This can be done within the context of online visibility.

  • Report this Comment On October 23, 2009, at 2:55 PM, tvmcc22 wrote:

    Until the posts of 10/23, I thought the Fools' community had departed from rational economic thinking. Today restored my confidence in my co-investors. The historic level of business regulation in the U.S. and our executive compensation formulas, along with many other free-market mechanisms, have supported the strongest, largest and most successful economy the planet has ever known. There have always been dysfunctions at the micro-level (monopolisms, schemes, greed, etc.), but not until the current administration has there been such a massive assault on the structures that made us great. We must all remain vigilant to unscrupulous operators, but we also must resist the belief of our government that it knows how to protect us from these evils - otherwise, it becomes the evil that will affect us most!

  • Report this Comment On October 23, 2009, at 4:07 PM, rbrttrff wrote:

    Regulation vs. capitalism? Regulation is necessary to preserve capitalism. Free-for-all capitalism would have led to complete ruin during the great depression had it not been for regulation.

  • Report this Comment On October 23, 2009, at 5:39 PM, gns1624 wrote:

    Ok, if your intent is to represent our collective Fools interests, could you please get this administration at least to address your questions, i.e. Given the failure GSE's like Freddie and Fannie, why should one expect better results with more government involvement? This administration "champions" more transparency and accountability as the way to greater financial stability, and have engineered the replacement of CEO's and others in charge of AIG, GM, BofA, etc. Yet Barny Frank and Chris Dodd, who had major roles in the lack of transparency and accountability in the functioning of Freddie and Fannie, and whose failures will cost tax payers far more than the total of net of the private sector bailouts remain as Chairman committees writing new regulation. If this administration is really serious about the role of government in more regulations, can't you ask them about first enforcing transparency and accountability in the existing government run organizations?

  • Report this Comment On October 23, 2009, at 8:42 PM, jvinijvini wrote:

    I guess I would be considered a liberal, but I am also a realist-yes, you can be both. I know that businesses, large and small is what keeps this country going. Businesses keep people working, they provide health care, they put money in people's pockets which helps keep other people working, and the amazing cycle keeps going. Without a free market, there is no innovation, no new products or technology and no room for inspiration. I am all for cutting corporate tax rates to stimulate business. HOWEVER, there needs to be regulation and intelligent incentives. Provide tax incentives for new hires so profits don't simply go to corporate executives. Enforce and improve anti trust laws so insurance companies, for example, who have monopolies in states, are forced to either compete with out of state insurers or to provide coverage at fair prices. THE FACT IS this country is great because of our free markets, but there has to be regulation as well. Regulation is better than competition with the government and recognizes that human nature and greed need to be kept in check a bit. In these days when money seems to take precedent over morals, I hope the White House provides some smart regulations (Glass Steagall, uptick rule) that stimulates business while at the same time making sure people not in power aren't taken advantage of.

  • Report this Comment On October 23, 2009, at 10:41 PM, junebug136 wrote:

    I'm betting the fault isn't with needing new regulations, it's with not inforcing the ones that are already in place.

  • Report this Comment On October 23, 2009, at 10:43 PM, junebug136 wrote:

    Sorry,I can't spell,enforcing was the word I meant to use.

  • Report this Comment On October 24, 2009, at 4:12 AM, rmiers1 wrote:

    Wall St, Major Media, Hollywood and others own our government. They have carefully groomed their straw people when it is certain that they can not participate themselves.

    They planted the seeds of disaster with terrible loans to uneducated and greedy people (they needed a goat)(they stopped any attempt to stop it) They bought off the SEC, allowed the sale of counterfeit stock,(naked shorts)(selling stock that does not exist)(and not paying for it if things go bad) allowed the sale of financial insurance without assets or money to cover. They ripped up the only sensible law protecting conservative savers and investers,(1933 Glass Stegal act) THEN and only then did they make their move on the grand scale. They sold the market short, and then shorter, into the ground allowing the placement of a president without credentials.

    Now in just a few months, they have ruined our currency, betrayed long lasting policy and plan to totally wreck the country with more doubt and confusion (so they can step in) and I believe it will be before we have a chance to vote them out.

    Please remember that very few have gone to jail with trillions of dollars missing, Remember that their great supporters made millions in bonuses at the fannie's. Remember that very few laws have been changed and they have the where with all to do it again. Well I said a little bout what is going on, Just my humble opinion backed up with facts.

    Pray for tiny Honduras as they try to keep their democratic republic from being a dictatorship.

    Invest wisely Fools, you will need it

  • Report this Comment On October 24, 2009, at 9:49 AM, jacksprat1 wrote:

    What one is not hearing so much about is how to deal with the problems created by the securitization of mortgages, etc., and the disconnect it creates between borrowers and investors--and, ultimately, how to know what the real risk is of a pooled investment.

    As for centralizing financial regulations, that makes perfect sense. It's time to put an end to the divide and conquer tactics of financial corporations.

  • Report this Comment On October 24, 2009, at 2:47 PM, mnjones wrote:

    None of this matters. Regulations are designed to allow those with the power and money to avoid enforcement. We already have MORE than we need. As long as money can buy politicians, and therefore protection from enforcement, the problems will remain. WE NEED LAW, NOT REGULATION! And, we need an end to the process of election as we currently know it in this country. We need to stop soft-money, special interest access, and lobbyists--wouldn't hurt to get rid of lawyers while we were at it and give the law back to the people.

  • Report this Comment On October 24, 2009, at 3:28 PM, fool425 wrote:

    Many of the comments on this board show an ignorance to the underlying cause of our recent financial meltdown. The only reason that the most egregious behavior in the financial industry did not rise to the level of illegality was the fact that regulations were removed in 1999 with the Graham-Leach-Bliley Act. It removed the safeguards that were installed in 1933 following the Great Depression that were enacted precisely to prevent the risky behavior that took the World's financial markets to the precipice of another depression. It wasn't the lack of regulation or enforcement that got us here. The misuse of loan creation and securitization from those who either didn't understand the risks they were taking or chose to simply pocket large salaries and bonuses because they could was spawned by the bad actors de-regulation brought to the system. Despite what some have tried to push onto Fannie and Freddie, I can assure you that it was not the GSEs that invented these toxic assets, it was Wall Street and JPM in particular as it pertains to derivatives. Do your homework and stop listening to those who simply want to maintain the status quo. That won't work.

  • Report this Comment On October 25, 2009, at 1:50 AM, scepticalone wrote:

    The administration is fighting the last war everybody knew that Morgan Stanley (for example) had a bigger balance sheet than the USA, but nothing was done about it, Greenspan and a Democratic Congress were asleep because it suited them.The heart of the problem was that Long Term Credit (an ill named hedge fund was 'saved', when it should have failed) sending the wrong message to Lehman, Citi,the worst managed of the lot, Bear Sterns, Merrill Lynch et alia. Now that most of this lot have happily failed, the same thing will not happen again for ,say, 25 years. Yes by all means have clearer capital ratios, and do not use the hopeless Black & Scholes model for your valuations, employ a few more practical people and a few less lawyers at the SEC, and other regulators,but do not crush lenders with a barrage of red tape which will crush credit, and hurt the really serious generator of growth and wealth, small and medium sized business. Unfortunately that is precisely what the Browns, Sarkozys, Obamas, of the political world are doing rhetorically lashing the banks while asking them to lend , lend ,lend. You will probably never completely separate credit from politics, but that is what is wanted at the moment, a level head for credit and risk, and there are no doubt a few medium sized banks in the USA, which could be held up as examples of this policy over time.

  • Report this Comment On October 25, 2009, at 10:04 AM, Rasby wrote:

    Two things stand out here. Number one, how can the White House complain of transparency when they, themselves, are not willing to give us the same. Where are all of these bills that are supposed to be posted on the internet for the public to read before congress votes on them? Why do these committees go behind closed doors and exclude members from the opposition party from working with them (with the exception of a few hand-picked people that the Republican party would argue are really democrats in disguise).

    The second point is this: we have plenty of regulation that hasn't been enforced. Why create more when we haven't even made an attempt to enforce what we have. We either need to clear the books and start over or stop pretending that this is anything other than a government takeover of the capitalist system.

  • Report this Comment On October 27, 2009, at 10:03 PM, wxczbgn wrote:

    the banks, wallstreet operated under the rules of washinton. risk was encouraged, cheap money added to the bubble. fannie and freddie could not buy subprime loans until dood schummer and frank pushed the issue so all americans could own a house. I haven't heard them take any respnsibility for their actions. the american system is failing because congress has realized they can buy the public with there own money. they only care about themselves and winning the next election.

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