Obama Caves on Finance Reform

[DisturbedPervert]

If Obama is going to go along with that, and indications are that he is doing so not just begrudgingly but enthusiastically, this could be pretty bad in the long run.

But, at least Palin can't force textbooks with dinosaur cowboy Jesus in to school.

[Neil]

If Obama is going to go along with that, and indications are that he is doing so not just begrudgingly but enthusiastically, this could be pretty bad in the long run.

But, at least Palin can't force textbooks with dinosaur cowboy Jesus in to school.

McCain's not dead yet.

[Queequeg]

For some reason maybe he thinks this isn't the time?  Perhaps when immedeately out of the recovery, but all of this is still in mind?

[Barrister]

For some reason maybe he thinks this isn't the time?  Perhaps when immedeately out of the recovery, but all of this is still in mind?

You're so naive, it's kind of cute.

When the urgency is gone there's no chance of getting major reform done.

[Neil]

For some reason maybe he thinks this isn't the time?  Perhaps when immedeately out of the recovery, but all of this is still in mind?

You're so naive, it's kind of cute.

When the urgency is gone there's no chance of getting major reform done.

He makes Tim look all worldly and wise.

[Queequeg]

You're so naive, it's kind of cute.

When the urgency is gone there's no chance of getting major reform done.

I don't know what he is thinking.  Timing could very seriously be an issue; he'll never have as much clout as now, so he goes straight for the stuff that would be difficult to deal with during the recovery, while presumably the memory of this financial fuckup will be fresh in the memory for a whole generation?

[Barrister]

I don't know what he is thinking.  Timing could very seriously be an issue; he'll never have as much clout as now, so he goes straight for the stuff that would be difficult to deal with during the recovery, while presumably the memory of this financial fuckup will be fresh in the memory for a whole generation?

Nobody really does.  There have been a few issues now where it appears he's been absolutely terrified to use his political capital, at least against the congressional democrats.

[Admiral Yi]

Who or what has oversight seems like a secondary issue in my opinion compared to what the actual regulations should be.  Cut back the leverage ratio seems like a no-brainer, but what should we do about derivatives? 

[alfred russel]

Who or what has oversight seems like a secondary issue in my opinion compared to what the actual regulations should be.  Cut back the leverage ratio seems like a no-brainer, but what should we do about derivatives?

With the exception of CDS and some window dressing like say on pay votes, I'd lay better than 50-50 odds nothing happens. Regulating leverage may seem like a good idea, but the devil is in the details. If I opened a bank with no capital and put all my deposits in a shoebox, I'd have an infinite debt to equity ratio but no risk. If I opened a bank with little leverage but put all the assets in risky illiquid assets, there may still be a lot of risk.

[Admiral Yi]

With the exception of CDS and some window dressing like say on pay votes, I'd lay better than 50-50 odds nothing happens. Regulating leverage may seem like a good idea, but the devil is in the details. If I opened a bank with no capital and put all my deposits in a shoebox, I'd have an infinite debt to equity ratio but no risk. If I opened a bank with little leverage but put all the assets in risky illiquid assets, there may still be a lot of risk.

My question was what should happen, not what will happen.

[Sheilbh]

When the urgency is gone there's no chance of getting major reform done.

I think this is true.  And I think this is the time to push through major reform.  The situation has stabilised sufficiently for there to be a new system put in place.

Having said that no-one seems to be doing it.  That makes more me worried because it seems like we're storing up future problems.  Obama is the one global leader who can do this right now.  At the minute I think Germany's coming up to election, Brown's spent and the government here is focused solely on his survival, in France Sarko's probably not strong enough to try any other big reforms any time soon and is hugely unpopular despite the PS's remarkably inability to succeed at anything.

[alfred russel]

With the exception of CDS and some window dressing like say on pay votes, I'd lay better than 50-50 odds nothing happens. Regulating leverage may seem like a good idea, but the devil is in the details. If I opened a bank with no capital and put all my deposits in a shoebox, I'd have an infinite debt to equity ratio but no risk. If I opened a bank with little leverage but put all the assets in risky illiquid assets, there may still be a lot of risk.

My question was what should happen, not what will happen.

Oh. In that case I don't have the answer.

[The Minsky Moment]

Who or what has oversight seems like a secondary issue in my opinion compared to what the actual regulations should be.

Don't totally agree.  The experience with the alphabet soup is that it maximizes the potential for regulatory arbitrage and agency capture.  Who regulates and how is just as important as the substance of the regulation itself.  I also think that the last crisis demonstrated a fatal weakeness in the Fed as a macroprudential regulator becuase its institutional role in setting and defending monetary policy may be at odds with the regulatory function.

[Fate]

Joan, did we make a horrible mistake in picking the one? 

[derspiess]

Joan, did we make a horrible mistake in picking the one? 

You should have let Al Gore run.  He would have kept all our money safe-- in a lockbox.