Posted by
HvySlpr on Thursday, September 18, 2008 1:41:08 AM
Anyone who doesn’t know about the turmoil in the financial markets is dead. That’s what I came up with. To not know that something is going on in the market must mean that you can no longer receive outside stimulus.
Now, since I know you are alive: while you have heard that the financial markets are experiencing quite a shock, what you might not have heard is that much of the blame can be placed on the government, and it’s constant tampering with the market, per usual. It seems that many will have you believe that deregulation, greed, and George W. Bush are entirely culpable.
There is plenty of blame to go around. I will say, unequivocally, that people who took out loans they knew they couldn’t afford are partly to blame, as are the banks and lending institutions that actually loaned out the money, as are the institutions that subsequently purchased those mortgages. However, the lowering of interest rates to unsustainable levels, leading to a fall in the dollar and a housing bubble, the constant push from the government to lower lending standards in order to grant loans to sub-prime markets(The Community Reinvestment Act of 1977), and the implicit bail-out for those institutions that fail, had an undeniably larger effect.
To say, as Barack Obama has, that deregulation is the culprit in the financial market meltdown speaks to his ignorance of economics. In other words, Obama thinks that the federal government isn’t involved enough in the financial markets.
If you start with the Department of the Treasury website you will find a litany of organizations, governing bodies, and statutes that currently regulate all aspects of the financial markets, such as:
Department of the Treasury
Commodities Futures Trading Commission (CFTC)
Federal Reserve Board
Security and Exchange Commission (SEC)
Bureau of Public Debt
Community Development Financial Institution Fund (CDFI)
Financial Management Service (FMS)
The Federal Financial Institutions Examination Council (FFIEC)
-Board of Governors of the Federal Reserve System
-Federal Deposit Insurance Corporation (FDIC)
-National Credit Union Administration (NCUA)
-The Office of the Comptroller of the Currency (OCC)
-Office of Thrift Supervision
Statues and Regulations including:
-Sale of Treasury Securities
-Auction Regulations
-Collateral Eligibility and Valuation Regulations
-Government Securities Act Regulations
-Redemption Operations Regulations
-Treasury Direct Regulations
-Savings Bond Regulations
-And a long list of self-regulating organizations (many commissioned by the government).
During a speech made on financial-market overhaul “Obama [called] for extending commercial banking regulations to investment banks, hedge funds, and mortgage brokers. He called for a commission that would monitor threats to the financial system.” All this according to the September 16th edition of the Wall Street Journal,
It seems glaringly obvious to me that the government should step away from private business, including financial institutions, and let the market decide a host of things that are currently under heavy regulations. When you let the market decide who should receive a loan, and at what rate, you can take the government’s responsibility out of the equation, let failures fail and winners win, and take the taxpayer off the hook…like it or not.