Bring back Eliot: "If Bush is serious about straightening out Wall Street, then bring in Eliot Spitzer."
McSweegan is INSANE
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Subject: Bring back Eliot: "If Bush is serious about straightening out
Wall Street, then bring in Eliot Spitzer."
Date: Apr 1, 2008 7:26 AM
Agree.
We need Eliot.
=================
http://www.counterpunch.org/whitney03312008.html
March 31, 2008
If It's Not Dead on Arrival, Someone Should Shoot It Quick
Paulson's Fixit Plan for Wall Street
By MIKE WHITNEY
It is being billed as a "massive shakeup of US financial market
regulation",
but don't be deceived. Treasury Secretary Henry Paulson's proposals
for
broad market reform are neither "timely" nor "thoughtful" (Reuters)
In fact, its all just more of the same free market "we can police
ourselves"
mumbo jumbo that got us into this mess in the first place. The real
objective of
Paulson's so called reforms is to decapitate the SEC and increase the
powers
of the Federal Reserve. Same wine, different bottle. Paulson's motive
is to
preempt any regulatory sledgehammer that might descend on the entire
financial industry
following the 2008 election. There's growing fear that an incoming
Democrat
may tote a firehose down to Wall Street.
If Paulson's plan is approved in its present form, Congress will have
even less
control over the financial system than it does now and the same group
of self-serving
banking mandarins who created the biggest equity bubble in history
will be able
to administer the markets however they choose without the
inconvenience of government
supervision. That's exactly what Wall Street, the Treasury Secretary
and the
folk at the Fed want; unlimited power with no accountability.
Paulson is expected to lay out guidelines and principles that are
intended to help
regulators supervise the financial markets. According to AFP:
"The President's Working Group on Financial Markets said the
current
regulatory structure is working well despite calls by some US
lawmakers."
In other words, the failing banking system, the housing meltdown, and
the frozen
corporate bond market are all signs of a robust financial system? This
may be the
most ludicrous statement since "Mission accomplished". The system is
imploding
and people are being hurt by the fallout. Thirty years of industry-led
lobbying
has dismantled the (admittedly frail ad porous) regulatory regime
which made US
financial markets the envy of the world. Whatever credibility and
transparency once
existed were washed out in the Clinton era, as with Glass-Steagall and
government
oversight of the explosive growth of over-the counter derivatives
instruments. Now
the system is prey to all types of dodgy debt instruments, suspicious
"dark
pool" trading and off-balance sheets operations which further
reinforce the
belief that cautious investment is no better than casino gambling.
"The regulatory line of sight today is by the counterparties," the
official
said, adding that the guidelines should be "beneficial to
industry." (AFP)
How is that different than saying, "Caveat emptor"? That's not a motto
that inspires confidence. Many people still naively believe that
planning their
retirement should not have to be a Darwinian tussle with a crafty junk-
bond salesman.
Under Paulson's plan, the Federal Reserve will be granted new
regulatory powers,
but whatever for? The Fed doesn't use the powers it has now. No one
stopped
the Fed from intervening in the mortgage lending fiasco, or the
ratings agency abuses
or the off-balance sheets shenanigans. They had the authority and they
should have
used it. The folks at the Fed knew everything that was going on---
including the
mushrooming sales of derivatives contracts which soared from under $1
trillion in
2000 to over $500 trillion in 2006---but they decided to cheerlead
from the sidelines
rather than do their jobs. The fact is, they were worried that if they
got involved
they might upset the gravy-train of profits that was enriching their
bankster friends.
Former Fed chief Greenspan used to croon like a smitten teenager every
time he was
asked about subprime loans or adjustable rate mortgages. And, as New
York Times
columnist Floyd Norris points out, (Greenspan) "praised the growth in
the derivatives
market as a boon for market stability, and resisted calls to use the
Fed's power
to increase regulation." Of course, he did. It was all part of
Maestro's
"New Economy"; trickle-down Elysium, where the endless flow of low
interest
credit merged with financial innovation to create a Reaganesque El
Dorado. There
are no regulations in this version of Eden, not even "Don't bite the
apple".
Anything goes and to heck with the public, they can fend for
themselves.
Now its Paulson's job to keep the neoliberal flame lit long enough to
make sure
that government busybodies and bureaucratic do-goodies don't upset the
cart.
That means concocting a wacky public relations campaign to convince
the public that
Wall Street is not just a pirate's cove of land-sharks and bunko
artists, but
a trusted ally in maintaining a strong economy through vital and
efficient markets.
The Times' Norris summed up Paulson's sham reforms like this:
"The plan has its genesis in a yearlong effort to limiting
Washington's
role in the market. And that DNA is unmistakably evident in the fine
print. Although
the proposal would impose the first regulation of hedge funds and
private equity
funds, that oversight would have a light touch, enabling the
government to do little
beyond collecting information - except in times of crisis. The
regulatory umbrella
created in the 1930s would grow wider, with power concentrated in
fewer agencies.
But that authority would be limited, doing virtually nothing to
regulate the many
new financial products whose unwise use has been a culprit in the
current financial
crisis. ("In Treasury Plan, a Reluctant Eye over Wall Street", Floyd
Norris,
New York Times)
What nonsense. The house is on fire and hyperventilating Hank is still
wasting our
time with this rubbish. The real problem is that Paulson and his
buddies at the
Federal Reserve think of the financial system as their personal
fiefdom so they
refuse to loosen their \ grip even though the economy is listing
starboard and the
water is flooding into the lower decks.
Once again, the New York Times:
"All the checks and balances in the plan reflect the mindset of
its architect,
Treasury Secretary Henry Paulson, who came to Washington after a long
career on
Wall Street. He has worried that any effort to substantially tighten
regulation
could hamper the ability of American markets to compete with foreign
rivals."
No one elected Paulson to do anything. He has no mandate. He is an
industry rep.
who has worked exclusively for a small group of wealthy investors who
have put the
entire country at risk with their toxic mortgage-backed bonds, their
reckless Ponzi-type
speculation, and their off-book chicanery. Paulson should be removed
immediately
and returned to his wolf's lair at G-Sax. If Bush is serious about
straightening
out Wall Street, then bring in Eliot Spitzer. He's probably available,
at least
in daytime hours. And he'll do what it takes to clean house, that is,
put a
truncheon-wielding robo-cop in every trading-pit at the NYSE, and
dispatch government
accountants to every office of every CFO making sure they have a Big
Red Pen in
one hand and a taser in the other. That's the only way to get the
attention
of the bandit-class.
"I do not believe it is fair or accurate to blame our regulatory
structure
for the current turmoil," says Paulson.
Paulson is wrong. The current turmoil is all about the lack of
regulation and he'd
better prepare himself for some big changes. The pendulum is already
in motion and
tighter regulations will soon follow. There needs to be an accounting
process for
all transactions and capital requirements for every financial
institution that creates
credit. No exceptions. All of these businesses pose a real danger to
the overall
system and, therefore, must conform to clearly articulated and
strictly enforced
rules; no off-balance sheets operations, no dark pool trading, no
unregulated derivatives
contracts, no level 3 assets, no "mark to model" garbage bonds where
CFOs
unilaterally decide what they are worth by picking a number out of a
hat. Its time
to restore order to the markets so retirees and working class families
can feel
safe investing in their futures. They are the ones who are most hurt
by Wall Street's
endless trickery.
Paulson's plan is a non starter. The era of sandbagging, supply-side
banditry
is over. Good riddance.
Mike Whitney lives in Washington state. He can be reached at:
fergie...@msn.com