Thursday, September 22, 2011

Economic Re-regulation!

The RTC (Resolution Trust Corporation) picked up the pieces of the real estate debacle of the 1980s without any legal or regulatory consequences.

The current real estate and “mortgage backed” securities debacle is not yet causing any legal or regulatory consequences.

Do you believe that privatizing success (huge paychecks and bonuses to the people who caused the last recession from their casino on Wall Street) and socialized (taxpayer funded bail-out) failure is something Wall Street should be able to expect?

A few simple regulations (some reinstituted; all difficult to pass in the current quagmire that is the US Congress) could prevent a recurrence of the causes of both economic crises.

First, make mortgages, the only type of secured loan not currently, accessible to a bankruptcy court. Bring back the Glass-Steagall Act that was part of the legal remedy to the Great Depression; picked apart since 1980, the last remnants eliminated in 1999.

Without a director, the Consumer Financial Protection Bureau cannot fulfill its mission to police Wall Street. Politics stand in the way of confirming Richard Cordray to direct the CFPB just as it attempted to fluster Elizabeth Warren while she assembled the new regulatory agency. The flack comes to the US Congress, via lobbyists, from Wall Street.

The Street, financial casino of the USA and the world, is still finding new ways to avoid: regulation, review and responsibility. At some point we, the taxpayers, might tire of picking up the gamblers’ tab when the paper products created in the casino (the casinos’ operators claim said papers have value and reward themselves with great salaries and bonuses for shifting those papers around) are found to be worth only the paper they’re printed upon.

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