Posted on 09/17/2008 11:18:05 PM PDT by TigerLikesRooster
Ex-SEC Official Blames Agency for Blow-Up of Broker-Dealers
'They constructed a mechanism that simply didn't work'
By JULIE SATOW, Staff Reporter of the Sun | September 18, 2008
http://www.nysun.com/business/ex-sec-official-blames-agency-for-blow-up/86130/
The Securities and Exchange Commission can blame itself for the current crisis. That is the allegation being made by a former SEC official, Lee Pickard, who says a rule change in 2004 led to the failure of Lehman Brothers, Bear Stearns, and Merrill Lynch.
The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults.
Making matters worse, according to Mr. Pickard, who helped write the original rule in 1975 as director of the SEC's trading and markets division, is a move by the SEC this month to further erode the restraints on surviving broker-dealers by withdrawing requirements that they maintain a certain level of rating from the ratings agencies.
"They constructed a mechanism that simply didn't work," Mr. Pickard said. "The proof is in the pudding — three of the five broker-dealers have blown up."
(Excerpt) Read more at nysun.com ...
Ping!
Well ... guess it doesn't matter anymore ... soon all the major investment banks will be dead or consumed.
What the Dickens is going on? Clearly some evil disease, intent on destroying America's economy and freedom, has infiltrated many of its institutions, including in this instance the SEC.
Hmmm... I wonder who was running the show in 2004? let’s see.
President George W. Bush, Republican
Senate Majority Leader Bill Fristh, Republican
Speaker of the House Dennis Hastert, Republican.
CLINTON AND THOSE DAMN DEMOCRATS ARE TO BLAME FOR THIS!!!!!!!!!!!!!!!!!!!!!
Frist, not “Fristh”. Unforthunately it is justh my typing impethimenth.
Evil disease? Yes, I would call unbridled avarice an evil disease. Get yours while you can, mate. Cheat, lie, and steal and carry away as much as you can. To hell with all the honest people you destroy. This is the age when being rich and famous is all that is important to the sheeple, the masses and the Paparazzi and how you came by your ill-gotten gains is irrelevant.
As long as you are rich and famous, you are respected. It doesn’t matter that you are a rapist like Billy Jeff “Rapist” Clinton. It doesn’t matter if you buy up and dismantle prestigious old companies and layoff all their workers, as long as you go out the door with your $90 million golden parachute. It doesn’t matter if you made your millions bilking little old ladies of their life savings selling junk bonds. Six weeks in Club Fed and a fine of $100 million and the other $500 million is yours to squander as you see fit, and the young honeys will still be laying wreaths at your feet.
It’s all good! Cheat, lie and steal and be a rich pigman. That’s the American way! God doesn’t exist so tomorrow doesn’t matter. Take all you can carry and leave a wake of destruction in your path. Sipping wine on the French Riviera still tastes the same. That’s the game, mate.
Poison disease. Yep, and it is older than Syphilis. Of course, the masses used to temper that disease as parents, teachers and clergy taught the values of hard work, honesty, generosity, and personal responsibility to yourself and to your society and your fellow man.
Greed is good, man! Greed is good!
This is not new, and it’s not greed. This is the boom-bust cycle, and it has been with us since the Great Depression. It is caused by easy money, and it will never go away so long as monetary policy interferes with the free market.
On the simple end...
Many people were paid too much for slow work in administering projects, so the buildings were overly costly. Buyers with the long term expectations of new graduates then borrowed too much money to pay for the buildings. Many buyers only work short term projects themselves—not “permanent” jobs as expected. Defaults followed. Administrative salaries have been too high for too long. Most real men in the USA were put out of their trades long ago to make way for the vanities in business and politics today (various family-breaking social pathologies being among those vanities).
Yet we still pay much to NEA union members and hordes of other government employees. It has been a redistribution of wealth toward feminization—to those who don’t produce wealth.
The only way to real, lasting wealth is to produce the physical objects of wealth (that is, to directly and in person supervise employees in manufacturing). We are also seeing a house of cards beginning to fall due to rising freight fuel costs and rising standards of living for the employees of trading partners.
Greed can be productive, if it is not combined with dishonesty, disloyalty, laziness and thievery.
“Greed can be productive, if it is not combined with dishonesty, disloyalty, laziness and thievery.”
One need not worry about greed, nor dishonesty, etc. so long as it’s possessor can fail. That’s why we have a proft-and-loss system. Without recourse to the state, unless you serve a productive purpose, you’ll go out of business.
Which has nothing to do with today’s environment, as the State will bail you out.
Yes, I’ve noticed that sort of reasoning from “our” radio hosts.
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