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They all knew, we all know, that self-policing and self-regulation NEVER work, esp not where 1000s of $Bs are in play.
Interesting dates.
http://www.nytimes.com/2008/09/27/business/27sec.html
S.E.C. Concedes Oversight Flaws Fueled Collapse
By STEPHEN LABATON
Published: September 26, 2008
WASHINGTON — The chairman of the Securities and Exchange Commission, a longtime proponent of deregulation, acknowledged on Friday that failures in a voluntary supervision program for Wall Street’s largest investment banks had contributed to the global financial crisis, and he abruptly shut the program down.
...
The program Mr. Cox abolished was unanimously approved in 2004 by the commission under his predecessor, William H. Donaldson. Known by the clumsy le of “consolidated supervised en ies,” the program allowed the S.E.C. to monitor the parent companies of major Wall Street firms, even though technically the agency had authority over only the firms’ brokerage firm components.
...
The S.E.C. approved the consolidated supervised en ies program in 2004 after several important developments in Congress and in Europe.
In 1999, the lawmakers adopted the Gramm-Leach-Bliley Act, which broke down the Depression-era restrictions between investment banks and commercial banks. As part of a political compromise, the law gave the commission the authority to regulate the securities and brokerage operations of the investment banks, but not their holding companies.
In 2002, the European Union threatened to impose its own rules on the foreign subsidiaries of the American investment banks. But there was a loophole: if the American companies were subject to the same kind of oversight as their European counterparts, then they would not be subject to the European rules. The loophole would require the commission to figure out a way to supervise the holding companies of the investment banks.
In 2004, at the urging of the investment banks, the commission adopted a voluntary program. In exchange for the relaxation of capital requirements by the commission, the banks agreed to submit to supervision of their holding companies by the agency.
They all knew, we all know, that self-policing and self-regulation NEVER work, esp not where 1000s of $Bs are in play.
I'm bumping this to see how AGH can blame Democrats for this one, too.
Christopher Cox
Chris Dodd
Barney Frank
Paulson
Bernanke
Current and previous CEOs of Lehman, GS, Fannie, Freddie, Wachovia, WaMU...
All should be in prison
Greenspan pushed the interest to 0% (including inflation), directly causing the r/e bubble, then resisted all advice, even from his Fed governors, to raise it. Now he's pointing fingers and covering his ass.
Of course, all he cares about is his legacy.
I cannot recall what it was called, but I was listening to Bob Brinker the other day. He mentioned the reason the stock markets are tumbling has more to do with a SEC rule change last summer. Not Naked Short Selling, but because of where you can trigger the selling at. I don't recall the term. He said it has allowed investers to force the Bear Market we currently have. This has probably contributed to the current crisis.
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