Posted on 03/26/2009 3:03:31 PM PDT by metmom
WASHINGTON -- Confidence in the overall financial system has failed and a major overhaul of regulations is needed, Treasury Sec. Tim Geithner told a House panel Thurday.
Calling the U.S. financial system the most stable in the world, Geithner said dangerous levels of risk were taken for short-term gain.
"Over the past 18 months, we have faced the most severe global financial crisis in generations," Geithner said in testimony to the House Financial Services Committee. "To address this will require comprehensive reform. Not modest repairs at the margin, but new rules of the game."
(Excerpt) Read more at foxnews.com ...
“new rules of the game”
see the communist manifesto to read the rules.
That’s what this stimulus is about - government control. Welcome to Husseinland.
This administration is intentionally trying to destroy this country. No doubt.
I listened to Geithner this morning, and I could not believe that Wall Street still rallied, considering what he was saying. Of course, financials didn’t, and all along we’ve been hearing w/out the financials we go nowhere. ‘Tis a puzzlement, for sure.
Why, among the several conclusions possible, is this never even considered as a possibility? Why is it that the Fed is simply assumed to be a perfectly benevolent hand, always with the correct solution, always with just the right touch of correction, always prescient as to how "just right" their corrective moves will be, never to be questioned as to their actions? And, to what authority would a Fed decision be appealed should there be a widespread consensus from a creditable group of critics?
Discuss among yourselves. I already know the answers; It's a thought exercise.
Wall St. is a weird Otherland. Some of the financial “robber-barons” of a century ago said such. Senator McCotter is right. Stalin and Mao killed people to get this kind of power. And here we are just handing it to them.
Hmmm... giving expanded powers over the whole financial system to a guy who, by his own admission, is too stoopid to run TurboTax.
just doesn’t seem like a good idea to me for some reason
We are so screwed....
Last night I attended a lecture by Robert Bruner, dean of UVA Darden school of business, and author of ‘The Panic of 1907’. Afterwards I was able to ask him if the 40:1 leverage used by the investment banks and others in the run up to this crisis was unprecedented. He said that it was and that ‘we really let it go to an extreme’.
This is an area that needs some serious examination. Who made these decisions and why? Was there government oversight and/or government acquiesence for policy reasons?
Unwise use of leverage is dangerous because a very small market move in the wrong direction can wipe a firm out; as we saw with Lehman, Bear Stearns and others.
Failure to learn from history dooms us to repeat it.
“I listened to Geithner this morning, and I could not believe that Wall Street still rallied, considering what he was saying.”
Manufacturing is happy big finance will, supposedly, be “regulated.” Everyone else is. Why not the people who invent money?
“Of course, financials didn’t, and all along we’ve been hearing w/out the financials we go nowhere. ‘Tis a puzzlement, for sure.”
If the bubble scams are curtailed, the shareholders cannot enjoy them too.
I’m not hearing the deregulation/acorn’s fault crowd going, “let’s loosen the reserve regulations on commercial banks. It’s unfair they have to follow rules. And why should insurance cos. be regulated with reserve regulations, when Wall Street Wonks can create CDOs on a whim?”
Naturally we have to have rules, especially when these guys’ products are money. We regulate counterfeiters with criminal laws.
I think Geithner is stalling. Lots what he said takes no new powers.
if it’s so OBVIOUSLY unwise and puts the firm at so much risk, then why would the company do it?
...if it’s so OBVIOUSLY unwise and puts the firm at so much risk, then why would the company do it?...
Precisely...given that the 40:1 leverage decision was unprecedented and the result was so disastrous it might make sense for us to know more about the whole thing.
My point was that the company knows their leverage. Its a statistic that’s virtually calculated every day. Generally speaking people who run the companies generally want the company to succeed and not go bankrupt. So they are aware of the risk they are in and decided for some reason to pursue and continue what they were doing.
I am a little hesitant with the contention that the government knows what’s best in terms of managing a company’s risk. If something was so obviously wrong, then the company wouldn’t have done it.
Furthermore, Banks in Europe — Deutsche, Barclays, Credit Suisse and UBS have much higher leverage than US Banks yet they didn’t seem as badly affected.
...My point was that the company knows their leverage...
I don’t think I said that the government needs to investigate the 40:1 leverage used by the investment banks; indeed there is the possibility that the government deliberately ignored it for its’ own reasons. The situation does seem to deserve further scrutiny from the financial press. Perhaps the pressure to show results over the short term played a role...the outcome is clear.
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