Letters to the Editor
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and the same is true of NAFTA
"none other than Woodrow Wilson, the president who signed the Federal Reserve Bank into law, (an act that he did not regret!) knew that incremental progress was our best hope."
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Frank is also talking about normalizing the differences between investment banks and retail banks
In areas like leverage and reserve requirements.
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Meet the New Federal Reserve, same as the old Federal Reserve
As long as the financial sector is controlled by a select group of money-grabbing greedheads nothing will change. Sure, new regulations can be put in place, but they will be subverted just like the old regulations. Then, when the next inevitable collapse comes, the titans of Wall Street will come to the Feds hats in hand begging for money to save the economy "for the good of all". Funny how the same people who rail against "socialized" medicine and welfare are more than happy to accept a handout when their own huge profits disappear down a whirlpool crafted from deceit and shady banking practices.
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Governmental Intervention is the Flaw of Capitalism
Capitalism works just fine thank you. All of the "problems with capitalism" stem from overeager governmental intervention that bends the outcome away from the pareto optimal outcome that a pure market provides. The "Creative Destruction" of capitalism cannot work if the government props up failing banks, and gives multi-billion dollar no-bid contracts to uncompetitive companies. Bear Stearns, for example, needs to fail in order to free up market share for new more competitive banks. Mortgage holders who bet heavily on continually rising home values need to lose, and lose big. This is how we can learn the necessary lessons to avoid this sort of disaster from happening again.
It is precisely the federal reserve's interventions that have created this problem to begin with. The solution is not more intervention, but less.
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Actually, you'd be wrong
The Federal Reserve was created to control the money supply and ensure the money's value. Prior to the creation of the Fed, money was issued by individual banks and a dollar from bank A might not be as valuable as a dollar from bank B (hence the reliance on specie). As a consequence of being the only issuer of money, the Fed had vast powers over the liquidity of the economy, a power they clearly didn't understand at first. It wasn't until the Roosevelt administration that the regulatory power of the Fed came into play because if a bank wanted to offer FDIC protection to their depositors, they had to join the Federal banking system which imposed, among other regulatory rules, reserve requirements. It should be noted that (a) a bank was/is not required to join the Federal system as long as they were willing to forgo the benefits of membership, and (b) up until a few years ago, there were still banks that were not a part of the Federal system.
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What an asinine subhead
Barney Frank is way smarter than Andrew Leonard and also knows a hell of a lot more about financial systems and regulation.
We don't get a better country via circle jerk contest on how to make an argument out of clinches. The brief article has nothing of the apocalypse now tone of the subhead.
Amazingly sloppy and juvenile "news" production here at Salon.
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Mr. Spock vs. Doc McCoy
It always fascinates me to hear folks like LisaMc talk about the free market as if it were inherently logical and completely rational. Of course it is so on paper. But any system of logic and rationale on paper remains so in the real world only if the people involved in that system from top to bottom have personality types akin to Mr. Spock (if you're too young for the original Star Trek, do a little homework: look it up). In the real world, which includes Wall Street, these systems are filled with people who exhibit all the calm logic of Doc. McCoy. The fact is, in every human system, we humans are the monkey wrench in the works. By our nature, we are the saboteurs who cause the breakdown of every theoretical construct ever applied to the real world, no matter how beautiful that construct may seem on paper. There must always be regulations to protect us from the damage we will do each other by our own human nature (and if you're finding yourself growing angry at that assertion, you're very likely one of those from whom we most need to be protected - "Take the log out of your own eye" and all that). Those regulations must constantly be retuned to adjust to the new and creative ways some of us will devise to subvert them (i.e. new forms of completely opaque investment vehicles).
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Lets hope they get it right
I can't think of a better indication that the financial activities of a portion of the market require regulation, than when the government is compelled to step in to prevent market forces from bringing the roof down on all of our heads. Lets hope they get it right.
This is a good thing. Corporations derive their mandate from the government, and the government derives it mandate from the citizens. On behalf of the citizens, and ideally for their best interests, the government defines rules to regulate what actions are permitted in the economy. The notion that you can have an orderly and fair system without the imposition of external constraints is as ludicrous as trying to have a football game without rules or referees - it quickly becomes a brawl.
Citizens all want to profit from a vibrant economy. While regulation is fundamentally good, you can certainly have too much of a good thing. The current situation seems to show that we previously had too little of a good thing, and knowing human nature, I hope that decisions aren't made in the heat of the moment, even while it is clear that something must be done.
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311 days---Way to go Barney and Chris Dodd
The sooner Barney Frank's ideas and Chris Dodd's on the senate side become law, the better. 311 days and we can really begin to sweep the house clean and bring in some people who care that our institutions work for all of us and not simply those
predators who bloat on the working and middleclass via unchecked shadow banking.
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@calcareous
Fascist much?
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@LisaMC
"The "Creative Destruction" of capitalism cannot work if the government props up failing banks, and gives multi-billion dollar no-bid contracts to uncompetitive companies. "
That suggests that capitalism cannot work if the big players have too much influence over their government.
So how we clean up our government to create an environment in which capitalism can work? Failing that, what would be suitable substitute for capitalism?