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Wednesday, October 26, 2016

Encouraging The Right Kind Of Greed Among Banks

(This is an excerpt from Dylan Ratigan’s forthcoming book, “Greedy Bastards: How We Can Stop Corporate Communists, Banksters, and Other Vampires From Sucking America Dry.”)

Jan. 9 (Bloomberg) — The financial markets need regulation the way a nuclear-power plant needs a cooling agent for its radioactive fuel rods. If safety rules are enforced and the heat of the rods is properly controlled, the result can be clean, abundant energy. But if that cooling process is neglected, there could be a meltdown.

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  • Common Sense Patriot

    Despite all the political rhetoric of late, and all the finger pointing and defending bad practices by all those who got us into the mess we’re in today as a result of the 2008 (technically 2007) Great Recession, that despite what economist say, is still with us, I have yet to hear some solid solutions to the practices that caused the problems and the ones that are still with us. These suggestions, however, make imminent sense. Forget the crazy ideas of financial morons like Ron Paul, and equally ignore the solutions of ultra-right wing conservatives who call for getting government out of the way of business. Those “answers” are a formula for an even bigger disaster. The problem wasn’t a lack of adequate regulation so much as a lack of enforcement by regulators. And regulation isn’t holding back business from investment and creating jobs. They are on a mission to make the pain so great that voters will turn against Barack Obama and and moderate (Democrat or Republican) that we’ll elect a nut case like Ron Paul or extreme right winger like Rick Santorum. Even better, they would like to see a crook like Newt Gingrich who was censored by the House for ethics violations and has spent his time since leaving the House as a lobbyist for one of the very institutions (Freddie Mac) that contributed greatly to the crisis we’re now in. Moderates like Romney are forced to cater to the right wingers to try to get the Republican nomination, and they keep floundering around looking for an alternative that suits their extreme tastes. We need more moderates, not less. John Huntsman would be a good choice, but he can’t seem to get any traction with the ultra-conservative Republican base. Aside from who we elect as President, and what changes we may make as voters to the U. S. Congress, we need to kick rhe regulators in the behind, fire some at the top, and get them to do their job. How did we get to the point of “too big to fail” when we’re the country that took down monopolies and huge corporations that we’re acting against the public interest in the early 1900s? But along with getting the regulators to actually do their job, without political interference, these suggested changes in the law/regulation would help a lot. We need some fundamental changes like these or we’re just going to be back in the same problem all over again. No matter who is President or who controls Congress. The only thing I would add is that we need to reinstate the provisions of the Glass-Steagall Act that was repealed, which set the state for the problems we have endured. Glass Steagall, originally passed following the beginning of the Great Depression, put a firewall between and prohibited corporations from simultaneously owning investment banking firms, retail banking firms, and insurance companies. Without the repeal of that bill, we would never have had the business of selling bad risks and than insuring against losses all by the same investment bankers.

  • kurt.lorentzen

    If someone told me I’d written this article myself, I could believe it. Regulations that require those entrusted with public wealth, or the hard-earned rewards of private investors absolutely need regulations that insure that any investment requires a substantial risk on their part. Disclosure of transactions involving swaps and all forms of derivatives should be a no-brainer, and an exchange would seem the way to accomplish this. Oversight should ensure that derivatives are not allowed to balloon to unsustainable levels, and risk should always be shared by investors and investment banks (and bankers). I just finished a post on another article’s thread about capitalism and regulation, and the virtues of each. The approach outlined here is sensible and workable. No more bailouts.