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• Tuesday, August 26, 2008 09:18 AM

  @falhaar

  You lost me at "Ron Paul" (well, actually before, but no matter). You style yourself as someone who is not afraid to look reality in the eye unlike we starry-eyed optimists who support Obama. Please. You do not get anymore pie-in-the-sky than Paul and his supporters. Ron Paul is a fringe character who simply re-hashes the libertarian/Any-Randian/Miltonian (as in Friedman) nonsense that so appeals to adolescents (yes, I am embarrassed to say I was one). (Love the moronic bumper sticker you see in a picture of him at his desk on his website: "Don't steal - the government doesn't like competition.") The vast majority of Americans do not accept his views. I consider myself a moderate (slight left of center) liberal democrat (small "l", small "d") who believe that there is a role for government and for free markets. The failures of free markets are to numerous to count.

  In the late-80s (when everything was about de-regulation) I was a lawyer at the SEC, in the office that "regulated" mutual funds and other investment companies. My office granted exemptions from the Investment Company Act of 1940. An application for exemption came in - requested to be able to sell "Collateralized Mortgage Obligations" (bundled mortgages sold off in pieces to investors). Sure, we said. They started with a bundle of good mortgages, than asked to add less good mortgages and, finally, total junk mortgages. No problem, we said. Well, the rest is history: bundled mortgages made it easier for mortgage lenders to write risky mortgages because the bundles contained good and bad mortages; riskier mortgages allowed consumers to buy homes they couldn't afford; demand for housing boomed; investment companies started adding more bad into the mix; then these investment vehicles got more and more complicated - to the point where no one knew WTF they were selling or buying! This bit of de-regulation was a disaster. The SEC granted these exemptions but provided for zero oversight. At the time we were working on this matter remember thinking that I must be dumb because I never completely understood what they were trying to do - now I realize that it was all smoke and mirrors - no one understood. Some people became very rich, some people lost a lot.

  —cecilbeanie Read cecilbeanie's other letters
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