shellyinseattle (![[info]](http://l-stat.livejournal.com/img/userinfo.gif){kind=small} shellyinseattle) wrote,@ 2009-06-15 08:58:00 |
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Finally wrote about financial regulation
Here's a copy of what I'm sending to my U.S. senators &reps today as well as President Obamam about the proposed financial regulations:
Dear XXX:
I am very disappointed that the proposed financial regulations will not reintroduce an updated version of the Glass-Steagall Act of 1933.
I think the repeal of this act is a primary cause of the current financial mess, because it joined the higher risks of stocks, etc. to what should be a very safe, conservative path of regular banking, such as Canada kept.
No regulations will ever be enough.
Firstly, because the companies have an economic incentive to find ways around these new regulations. Furthermore, we will never be able to hire enough regulators within our government to look after all of them. (And having a revolving door between our government regulators and Wall Street doesn't help.)
Really, if the SEC couldn't get Madoff when the evidence was handed to them on a silver platter, they're not going to catch more exotic problems.
Secondly, because there will always be the possibility of rogue traders and divisions. These could be company-sactioned, such as AIG's obvious approval of their London Financial Products Group's risky moves. It seems that the high profits from this division were allowed by the corporate bosses despite the top executives not really understanding or worrying about the full risk.
Or, it could be a rogue trader such Nicholas Leeson who brought down Britian's Barings bank a few years ago.
The example of AIG and Barings alone should be enough to prove that now matter how many regulations out there, that problems will happen, and companies will go under because of them.
Thus, we absolutely need to decoupling the riskier investments from the banking institutions to reduce the risk to the overall system, so a bankruptcy like Lehman Brothers will not cause a heart attack.
So, reintroducing a modern version of the Glass-Steagall Act is one of the best ways to protect the U.S. from a future financial meltdown. I realize that there are many financial interests aligned against this and it may take some doing politically. But it is absolutely necessary for the long-run.
Sincerely,
Shelly
Here's a copy of what I'm sending to my U.S. senators &reps today as well as President Obamam about the proposed financial regulations:
Dear XXX:
I am very disappointed that the proposed financial regulations will not reintroduce an updated version of the Glass-Steagall Act of 1933.
I think the repeal of this act is a primary cause of the current financial mess, because it joined the higher risks of stocks, etc. to what should be a very safe, conservative path of regular banking, such as Canada kept.
No regulations will ever be enough.
Firstly, because the companies have an economic incentive to find ways around these new regulations. Furthermore, we will never be able to hire enough regulators within our government to look after all of them. (And having a revolving door between our government regulators and Wall Street doesn't help.)
Really, if the SEC couldn't get Madoff when the evidence was handed to them on a silver platter, they're not going to catch more exotic problems.
Secondly, because there will always be the possibility of rogue traders and divisions. These could be company-sactioned, such as AIG's obvious approval of their London Financial Products Group's risky moves. It seems that the high profits from this division were allowed by the corporate bosses despite the top executives not really understanding or worrying about the full risk.
Or, it could be a rogue trader such Nicholas Leeson who brought down Britian's Barings bank a few years ago.
The example of AIG and Barings alone should be enough to prove that now matter how many regulations out there, that problems will happen, and companies will go under because of them.
Thus, we absolutely need to decoupling the riskier investments from the banking institutions to reduce the risk to the overall system, so a bankruptcy like Lehman Brothers will not cause a heart attack.
So, reintroducing a modern version of the Glass-Steagall Act is one of the best ways to protect the U.S. from a future financial meltdown. I realize that there are many financial interests aligned against this and it may take some doing politically. But it is absolutely necessary for the long-run.
Sincerely,
Shelly
