I don’t see how individual investors have a chance in the securities market so long as they are not privy to the inside information the big boys have.

It’s so much easier to fix things when you don’t upset your big donors. Not.

This is just going along with the GOP version of reality: regulation is bad, free market is good, therefore don’t regulate and let everyone take their chances in the market. Never mind the examples from recent (and not-so-recent) history, that show how bad an idea this really is.

The core problem, so far as I am concerned, is that the new regulation and regulatory board will preempt state regulation of federally chartered institutions. You can be quite sure that there will be two immediate results – there will be no more state-chartered institutions, and the federal regulation will descend to the level of the weakest-regulated state’s or, even lower. Speaking as a lawyer, if the government was really serious about fixing things, they could just give us private rights of action. With a private right of action against malefactors, you would see an instant decrease in chicanery. But, so long as the 1995 Act remains in place, the situation will not improve. Period.

They sell and sell, and make a fortune, and it’s up to the regulators to fight their way through the minefield of regulation to stop or control them.

It is also a problem that the regulators see their positions as a stepping stone to those green pastures that are the domain of the wizards.

Thanks for this. As you say, it’s more evidence that the Obama administration is as tentative in enacting badly needed financial reform as it is health care reform. It is Obama’s fear of conflict writ large. He’s comfortable with change for him, not for us. Our largest corporations now, and Obama and his retinue after they leave government, will profit, as will his political opponents. The rest of America? Not so much.

Is Obama a pussy, or has he just sold out?

Obama seems about as inclined as George Bush in matching his rhetoric to his deeds. If he were serious about financial reform, he would hire a score of Elizabeth Warrens to write the legislation, rules and to run the agencies to enforce them. Based on the arms lengthy they’ve kept her – and Dawn Johnsen in another sphere – I wouldn’t place odds on him doing that. It might offend a lobbyist.

The proposal is that the CFPA standards are minimums, states are free to enact stronger rules. Point 7 on page 14 of my second link:

The CFPA’s strong rules would serve as a floor, not a ceiling. The states should have the ability to adopt and enforce stricter laws for institutions of all types, regardless of charter, and to enforce federal law concurrently with respect to institutions of all types, also regardless of charter.

We certainly agree on the necessity of a strong private right of action, which may well require repeal of the Private Securites Litigation Act. It’s important to remember that the courts created the private right of action, an act of liberal interpretation that drove big money nuts, and became the focal point of all subsequent efforts to regulate corporations.

“The law doth punish man or woman / Who steals the goose from off the common, / But lets the greater felon loose, / Who steals the common from off the goose.”

It’s all BS meant to create appearances while fixing nothing.

This system at the moment does not need regulators as much as it needs prosecutors. Regulations without enforcement mechanisms are mere trinkets and baubles intended to dazzle and deflect from real reforms and meaningful enforcement of existing regulations.

Start insisting on payback and clawback, or nothing will matter at all.

The wizards pay people to come up with reasons why they should be allowed to do whatever they want to do

people like New Democrat Coaliton Exec Director Adam Pase

In 2009 the industry and it’s regulators had a epiphany of stunning insight and Obi Wan wisdom, “fiduciaries for their customers”.One has to wonder how many Billions have been spent to distract others from this line of thinking in the past ?
Any word on short selling or have I missed that too ?

I don’t think it helps to phrase the question this way, since we don’t know what motivates the President and his advisers. I don’t think he is a sell-out, because they seem to think that this is a pretty good package. Goolsbee defended it aggressively, and the bankers are really crying and carrying on about how awful it all is, reported in the NYT yesterday and today. Yesterday’s column by Joe Nocera is titled: Have Banks No Shame, to which the answer is NO.

Remember that things that help consumers will reduce bank income, so they face conflicting pressures.

I do think the evidence supports the hypothesis that the Administration isn’t willing to take on big money. I think that we really need to do that.

It’s like kids. Whenever you set the bedtime, the kid resists. So, you might as well set it at a time that suits you, so at least you get something out of the fight.

Another fear that I have is that if there ever is another rethug in the White House what happens to such an agency. The GWB cabal successfully neutered every agency designed to protect the citizenry.

The goal is to put regulations into place. Repealing them is really hard. But you are right, the repubs hate law, and put bad people in to regulate.

We have to be in these things for the really long haul, and be vigilant to protect any new rules and laws we can get. It was only after the defenders of regulation lost interest in government that the thugs were able to dismantle the regulatory structures.

I can’t find the quote from Yes, Prime Minister, but a truism touched on there is that the purpose of a department is to ensure that its task never gets done. And a department is only established when decision takers are forced to admit there is a monumental problem that needs to be addressed in a society organized around a central government.

So long as default swap-ish derivatives, which are insurance, are not regulated like insurance and are valued at 30 times the GDP, the system will continue to be unstable and prone to collapse.

What is probably needed is a 100% tax on Wall Street salaries over a certain point so that the federal regulators can attract the kind of talent that can go toe to toe with the Wall Street brains on whatever complicated contrivance they cook up next.

Summers, Geithner and Biden – if that doesn’t spell SCREWED, americans don’t know how to spell.

The main thing that unleashed this assault on demand deposits was the elimination of the regulation that kept commercial banks out of reach of investment banks, and the like. That happened under Clinton’s watch, alas.

Of course, a Democratic congress might repeal the awful securities litigation “reform” act, aka, the No Securities Seller Left Behind Act. It’s of a piece with both parties immunizing their actual, potential or imaginary corporate supporters from consequences of the harm they inflict on others.

Their version of “risk taking” is that the public gets the risk, they get the take.

The main thing that unleashed this assault on demand deposits was the elimination of the regulation that kept commercial banks out of reach of investment banks, and the like. That happened under Clinton’s watch, alas.

Agreed, repealing Glass-Steagal led to the problem, but is the solution putting the depression era G-S back into place or is there a more contemporary progressive approach to separating those conflicts? What I think we need are FIREwalls that mediate the inherent conflicts in the Finance, Insurance and Real Estate sector, as it is too symbiotic and at the root of so many of our economic problems, such as health care and debt.

Our taxes are paying their lobbyists to make sure the taxpayer will always get screwed. Campaign Finance Reform, taking legalized bribery out of politics is step one for any kind of democratic reform. Until that happens 95% of americans will see their quality of life drastically diminish.

Public financing of elections is all that we’ll have left after Citizens United.

i’m slower than usual this morning, – what do you mean?

The bankers will carry on and cry about anything that restricts them in any way but “reform” that does not address “too big to fail” and interlocked risk directly is just setting up the next meltdown. Addressing compensation structure is really a minor issue and is best done through the tax code in any case. What we really should really care about the most is fact that most of us have more fingers than the number of banks that actually control the financial sector.

Is removing a right (private action to tort) a taking without compensation?

“The Department’s task is never done” is a good description for a regulatory agency, becise there is an endless supply of malefactors to investigate.

An example of a department with a mandate that could end is the Drug Enforcement Agency, who have no interest is “finishing” their work. Or a military who “win” wars.

Could you expand on this with an example or two…?

And masaccio@8, sorry, but I don’t fully understand the significance of your point here. Do you have links…?

masaccio, thanks once again.

A couple reactions: at this point, whenever I read the words ‘Chicago’ (Univ of) and ‘economics’, I brace myself.

Second, Robert Reich’s ‘Supercapitalism’ does a better job than Goolsbee in analyzing the dynamics at work, IMHO. What Goolsbee is doing (apparently without realizing it) is acting precisely as someone who has been ‘captured’ by corporate interests would behave. He is not questioning ‘too big to fail’; he’s putting lipstick on the heinous pig of greed.

Third, those derivatives should simply be outlawed. Period.
As another commenter pointed out, they’re destabilising and as near as I can see they have already destabilised pension funds nationwide, a problem that probably won’t hit public consciousness until 2010, which ought to be one hell of a bumpy ride. (Perhaps if the turbulence gets rocky enough, Obama will even wake up and replace Geithner with Robert Reich — but then, I’m a dreamer…)

Fourth, as the intro to Nomi Prins superbly written ‘It Takes A Pillage’ points out, we’re paying for the lost gambles. We’re paying about 100x the amount of the costs of simply paying off all the mortgages that went under. The fact that Goolsbee is not honest about that fact, that he is still willing to honor what are basically fraudulent ‘contracts’ is to my mind a disaster in the offing.

Fifth, FWIW, I don’t miss a single day of MSNBC’s “Morning Meeting” these days – and I’d bet that I’m not the only one. When the host, Dylan Ratigan, explained his use of the term ‘Corporate Communism’ last week, I felt as if the sense that many of us clearly have of being screwed by a corrupt system is now so clear to millions that it is now ‘permissible’ to say it publicly. And the scorn that I see on the few econ blogs and columns that I read (even including the Financial Times, go figure…!) seems to share the same sensibility that the level of corruption — and I have to include the government for its failure to regulate, investigate, and prosecute absolutely egregious, flagrant sociopathic conduct — has gone beyond some kind of ‘tipping point’.

If I’m reading those ‘tea leaves’ correctly, then Goolsbee’s proposal will be met by some kind of drama-club wailing and keening among the banking and finance sectors, while people with sharper, more pragmatic, tougher minds will view these limp-wristed, feckless proposals with ridicule and scorn.

Where in Goolsbee’s proposals does he implement what George Soros — who ought to know! — recommends: regulating credit, as well as ‘monetary policy’? I just don’t see it.

This really looks like Goolsbee his putting machiolations on a vampire’s castle and trying to convince us all that things will be better now.

I don’t buy any of it for an instant.
It still allows flagrantly destabilizing instruments, and it still leaves in place very dangerous incentives.

At some point, the complexity has overwhelmed the ability of regulations and regulatory bodies to keep up with monitoring everything.

Given that fact, the structure needs to be completely rethought.

Sorry, but this is akin to Goolsbee serving up some version of XPExtreme, with customizations for each state. That’s madness.
What we need is to clear the decks and build some kind of Open Source, transparent banking system.

That will have to be far more public, and utility-oriented, than our present system. Too bad neither Congress nor the President has the guts to take that on. The existing system fit the period from 1930-1995. It no longer works, but like any system it has much more invested in trying to remain in place than in any kind of fundamental reshifting.

I predict system failure.
How fast, I dunno.
But this is simply not going to work.

Because it fails to model itself upon what we know of human behavior, and it incentivizes concentrating wealth. Stupid, stupid, stupid.

“Neither tries to get at the roots of the problems the giant corporations have inflicted on the nation.” ; you got that right !!!”Appreciate you’re efforts to keep on top of the issue and inform others Masaccio.please keep it up.

AFAIC, the ‘consumer Protection Agency’ is just cover for the unwillingness to truly address the issues and I’m not alone in this perpsective:
“MARCY KAPTUR: Congress has really shut down. I’m disappointed in both chambers, because wouldn’t you think, with the largest financial crisis in American history, in the largest transfer of wealth from the American people to the biggest banks in this country, that every committee of Congress would be involved in hearings, that this would be on the news, that people would be engaged in this. What we’re seeing is– tangential hearings on very arcane aspects of financial reform. For example, now we’re going to have a consumer protection agency to help the poor consumer, who doesn’t understand all of this, rather than hearings on the fundamental new architecture of reforming the American financial system, so that we have prudent lending, capital accumulation at the local level again; that we encourage savings and limit debt by the American people. Our country needs this. Those aren’t the hearings that are happening.

If you want a marker at the Federal level of how serious we are to get justice out of this financial crisis, look at the F.B.I. Look at the number of people who are really prosecuting and investigation mortgage fraud and securities fraud. It is so small

I’ve been one of the Members of Congress trying to increase by ten times the agents to get at the justice issues for the American people. For companies that have been hurt. For shareholders that have been hurt. Our government isn’t doing it. That it’s very easy to look at the budget of the F.B.I. in mortgage fraud and securities fraud and say, ‘How serious is the government?’ And until those numbers increase, we will not begin to get justice.”

And when you have 80 million people who either can’t read or read at a 4th grade level, what good does such an agency really provide?

These days nobody seems to know what ‘victory’ looks like on the battlefield or in the ‘war on drugs’. I suppose that leaves the way open for someone to declare ‘victory’ or ‘all is lost’ and simply change course.

The public can only bear so much b.s. and they know a lot of the truth when it comes to domestic issues.

California dreamin’ should be the song of the night…Suzanne!

This lays our very clearly what the banksters “invested” in getting those TARP funds, the amount of TARP funds they received and the percent return on those investments. Sickening.

Just stepped out to see Michael Moore’s “Capitalism.” The film set ambitious goals and met some of them very well.

Citizens United is a SCOTUS case involving a challenge to provisions of McCain Feingold which would govern advertising concerning a candidate standing for election within 60 days of the election. SCOTUS asked for supplemental argument last spring, and heard it last month, not on the substance of the challenge to M-F, rather on the 100+ year old notion that corporations are not entitled to contrubute to political campaigns. It is all too possible that the SCOTUS will enshrine the notion of corporate personhood in a direct ruling, eliminate bans on corporate contributions and possibly strike down contribution limits all together.

Under this likely scenario, most campaign finance reform, both arising from the progressive era as well as post-Watergate, will be thrown out. Absent contribution limits, the only way to check corporate power over elections is for government to fund election campaigns of candidates with a minimum baseline of support. Arizona has that statewide, San Francisco has had it for Supervisors and expanded it to Mayor and that version includes “unlimited” matching funds after one candidate breaks the designated, non-binding spending limit. Here in SF, we have more than a 50% record of beating downtown San Francisco’s corporate candidates with community candidates for the equivalent of city council.

Unless we do Public Financing, the SCOTUS will shut the door on any chance average folks have of participating in politics and it will become impossible to open again. Truly a corporate coup d’etat by the remants of the Bush regime just as they are losing power, like white people did here in CA with Prop 13 as they saw the multicultural demographic writing on the wall.

The Administration’s reform proposals are a farce, and not even a very good one at that. The CFPA is the centerpiece and even there they have been backing off it. Let’s see a systemic risk committee made up of the same dopes who didn’t see the last bubble coming or the other ones we currently have. That’s going to work out real well.

And Goolsbee. Gee, a Chicago School nutcase on regulatory reform? What could go wrong?

The CFPA will be a minor improvement but most of what it looks to do will be advisory.

There is simply no there there in Obama’s reform proposals. There is next to nothing to like about them. They rate an F, a really, really low F.