Absolutely. As already stated, what has been proposed is to make these risky insurance policies be traded through some kind of clearinghouse. But perhaps not all of the policies, only the most simple of them, would have to contend with that clearinghouse. The more exotic of these "swaps' (where I make an agreement with you to buy or sell something, some stream of income), those might not have to be done via a clearinghouse. So, you're still going to have an enormous amount of this stuff trading behind the curtain, without the knowledge of any regulatory agency.
What about the proposed legislation for a Consumer Financial Protection Agency that would monitor the banks and the lenders to see that the ordinary person or consumer is protected?
More regulations weren't what we needed. What we needed were regulators with an appetite to regulate. We had plenty of regulations on the books regarding mortgages and the associated products and practices, but no one was enforcing them.
What you need to have in the DNA of this new regulatory agency is a certain attitude. The people running it, from the very top on down, have to be a pro-consumer to the core, with a complete unwillingness to be captured by the industry they're overseeing, in the way that actually happened so completely at the Fed, at the Office of Thrift Supervision and with the Comptroller of the Currency. Both of these entities, which were supposed to be monitoring the banking system to spot these kinds of problems, had essentially been captured by the banking system. So, if we are going to institute a new Consumer Financial Protection Agency, it would have to be staffed with pro-consumer people who actually want to carefully monitor and scrutinize the all-powerful banking system they are supposed to regulate. But we have such a dismal, woeful regulatory record in this regard that it's hard to imagine that this will be allowed to actually happen.
What about the proposal that some people are making to install the new regulatory agency within the Federal Reserve? Isn't that a contradiction? The Fed is concerned with the interests of banks, not with the interests of consumers, right?
Exactly. The Fed hasn't had any pro-consumer DNA in its system since the early 1990s. It's really not in that realm at all. And so, to house such an agency inside the Fed, which was pushing for relaxing capital requirements at the banks, would be absurd. The Fed did nothing to prevent many billions of dollars worth of these toxic mortgages from being made and dispensed -- too much money was being made from them by the banks to whom the Fed was loyal. So in light of that, it would be quite foolish to expect the Fed to suddenly develop some overarching concern for consumer financial protection or to be very sympathetic to, or tolerant of, any agency within its ranks that did have such a concern.
Next Page 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
2
1
1
