Jim Stillman
NevarCongratulations, you’re now in the banking, investment and mortgage business.
September 20th 2008 12:49
You and I are now in the mortgage business with a rather limited contract of employment. We pay the bills but do not reap any potential profits. Heck of a deal!
But that’s exactly what has happened with the government’s (i.e. the taxpayers, you and I) taking over Fannie and Freddie. We are also going into the banking business as we take over, outright, or guarantee the bad debts and decisions of leading banks and investment houses. Out of the goodness of our hearts, as each private business fails, workers’ pensions go down the tubes, loyal rank-and-file employees lose jobs and homes, we reward the most senior executives who made the bad decisions to take tens of millions of dollars and live very well indeed. One of the worrisome trends in corporate governance is the income and bonuses paid to corporate executives and this will be the subject of a future post.
John McCain says the one of the primary reasons is the monumental greed of the executives in charge of the biggest banks and investment houses in America; there is much evidence to be found that supports that accusation and Barack Obama would likely agree. Neither candidate has offered a specific program to reestablish corporate fiscal sanity to our economy. However the guiding principles of each political party present a likely scenario.
Senator McCain said this past week that the United States economy was fundamentally strong but was being threatened "because of the greed by some based in Wall Street and we have got to fix it." However, the Arizona Senator, and his closest advisors, has never departed in any major way from his party's embrace of deregulation and relying more on market forces than on the government to exert discipline.
While Mr. McCain has cited the need for additional oversight when it comes to specific situations, like the mortgage problems behind the current shocks on Wall Street, he has consistently characterized himself as fundamentally a deregulator and he has no history prior to the presidential campaign of advocating steps to tighten standards on investment firms. On the contrary, he has followed the views of the two most outspoken advocates of free market approaches, former Senator Phil Gramm and Alan Greenspan, the former Federal Reserve chairman.
Senator Obama attributed the financial upheaval to lax regulation during the Bush years, and in turn to link Mr. McCain to that approach.
Following the general philosophy of his party the Illinois Senator called for more financial regulation , calling for regulating investment banks, mortgage brokers and hedge funds much as commercial banks are and streamline the overlapping regulatory agencies and create a commission to monitor threats to the financial system and report to the White House and Congress.
The primary mission of the GOP has, in the past 25 years at least, has been the dismantling of regulatory power of the federal government that had been established over the preceding century and greatly expanded by the New Deal of Franklin Roosevelt; their mindset makes it impossible to operate a bureaucratic system. The overwhelming majority of the American public now sees the Bush administration and the far right agenda as a failure. They failed in Afghanistan and Iraq, they failed after Hurricane Katrina, they failed on health care, they failed to deliver rising wages, they failed on the deficit, they failed, they failed, and they failed. Why? As Alan Wolfe explained in a recent Washington Monthly article,
Ronald Reagan's assertion that government was not the solution, but was the problem is more than a facile slogan; it explains the inability of conservatives to govern. The current crop of conservatives hates government and are terribly bad, as a result, at governing.
Senator McCain is now calling for federal regulation and more oversight, suggesting how the pendulum has swung to cast government regulation in a more favorable political light as the economy has suffered additional blows and how he is scrambling to adjust. While he has few footprints on economic issues in more than a quarter century in Congress, Mr. McCain has always been in his party's mainstream on the issue.
In early 1995, after Republicans had taken control of Congress, Mr. McCain promoted a moratorium on federal regulations of all kinds. He was quoted as saying that excessive regulations were "destroying the American family, the American dream" and voters "want these regulations stopped." The moratorium measure was unsuccessful.
"I'm always for less regulation," he told The Wall Street Journal last March, "but I am aware of the view that there is a need for government oversight" in situations like the subprime lending crisis, the problem that has cascaded through Wall Street this year. He concluded, "But I am fundamentally a deregulator."
Later that month, he gave a speech on the housing crisis in which he called for less regulation,
"Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital."
In fairness, Senator Obama also does not have much of a record on financial regulation. As a first-term senator, he has not been around for the major debates of recent years, and his eight years in the Illinois Senate afforded little opportunity to weigh in on the issues. However the Democrats have, over the years, been consistently in favor of more and closer regulation.
Our new personal responsibilities as guarantors of massive debt make that regulation vital.
But that’s exactly what has happened with the government’s (i.e. the taxpayers, you and I) taking over Fannie and Freddie. We are also going into the banking business as we take over, outright, or guarantee the bad debts and decisions of leading banks and investment houses. Out of the goodness of our hearts, as each private business fails, workers’ pensions go down the tubes, loyal rank-and-file employees lose jobs and homes, we reward the most senior executives who made the bad decisions to take tens of millions of dollars and live very well indeed. One of the worrisome trends in corporate governance is the income and bonuses paid to corporate executives and this will be the subject of a future post.
John McCain says the one of the primary reasons is the monumental greed of the executives in charge of the biggest banks and investment houses in America; there is much evidence to be found that supports that accusation and Barack Obama would likely agree. Neither candidate has offered a specific program to reestablish corporate fiscal sanity to our economy. However the guiding principles of each political party present a likely scenario.
Senator McCain said this past week that the United States economy was fundamentally strong but was being threatened "because of the greed by some based in Wall Street and we have got to fix it." However, the Arizona Senator, and his closest advisors, has never departed in any major way from his party's embrace of deregulation and relying more on market forces than on the government to exert discipline.
While Mr. McCain has cited the need for additional oversight when it comes to specific situations, like the mortgage problems behind the current shocks on Wall Street, he has consistently characterized himself as fundamentally a deregulator and he has no history prior to the presidential campaign of advocating steps to tighten standards on investment firms. On the contrary, he has followed the views of the two most outspoken advocates of free market approaches, former Senator Phil Gramm and Alan Greenspan, the former Federal Reserve chairman.
Senator Obama attributed the financial upheaval to lax regulation during the Bush years, and in turn to link Mr. McCain to that approach.
"I certainly don't fault Senator McCain for these problems, but I do fault the economic philosophy he subscribes to."
Following the general philosophy of his party the Illinois Senator called for more financial regulation , calling for regulating investment banks, mortgage brokers and hedge funds much as commercial banks are and streamline the overlapping regulatory agencies and create a commission to monitor threats to the financial system and report to the White House and Congress.
The primary mission of the GOP has, in the past 25 years at least, has been the dismantling of regulatory power of the federal government that had been established over the preceding century and greatly expanded by the New Deal of Franklin Roosevelt; their mindset makes it impossible to operate a bureaucratic system. The overwhelming majority of the American public now sees the Bush administration and the far right agenda as a failure. They failed in Afghanistan and Iraq, they failed after Hurricane Katrina, they failed on health care, they failed to deliver rising wages, they failed on the deficit, they failed, they failed, and they failed. Why? As Alan Wolfe explained in a recent Washington Monthly article,
"Conservatives cannot govern well for the same reason that vegetarians cannot prepare a world-class boeuf bourguignon: If you believe that what you are called upon to do is wrong, you are not likely to do it very well."
Ronald Reagan's assertion that government was not the solution, but was the problem is more than a facile slogan; it explains the inability of conservatives to govern. The current crop of conservatives hates government and are terribly bad, as a result, at governing.
Senator McCain is now calling for federal regulation and more oversight, suggesting how the pendulum has swung to cast government regulation in a more favorable political light as the economy has suffered additional blows and how he is scrambling to adjust. While he has few footprints on economic issues in more than a quarter century in Congress, Mr. McCain has always been in his party's mainstream on the issue.
In early 1995, after Republicans had taken control of Congress, Mr. McCain promoted a moratorium on federal regulations of all kinds. He was quoted as saying that excessive regulations were "destroying the American family, the American dream" and voters "want these regulations stopped." The moratorium measure was unsuccessful.
"I'm always for less regulation," he told The Wall Street Journal last March, "but I am aware of the view that there is a need for government oversight" in situations like the subprime lending crisis, the problem that has cascaded through Wall Street this year. He concluded, "But I am fundamentally a deregulator."
Later that month, he gave a speech on the housing crisis in which he called for less regulation,
"Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital."
In fairness, Senator Obama also does not have much of a record on financial regulation. As a first-term senator, he has not been around for the major debates of recent years, and his eight years in the Illinois Senate afforded little opportunity to weigh in on the issues. However the Democrats have, over the years, been consistently in favor of more and closer regulation.
Our new personal responsibilities as guarantors of massive debt make that regulation vital.
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Comment by katyzzz
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I'm not at all convinced that the "essential" plans are going to be, in any way, effective, long term, it strikes me that the US is in big trouble ( as if it wasn't already that before the recent financial debacle)
Who are they kidding?
Comment by Jeff Musall
Comment by Randy Inman
Waxing Political
Football Dogz
Comment by Randy Inman
Waxing Political
Football Dogz
Comment by Jeff Musall
Comment by Randy Inman
Waxing Political
Football Dogz