Wall Street is scared to death of reform. After all, it had a free for all these many years. Wall Streeters speculated and gambled recklessly and have brought the world to ruin.
Now President Obama and world leaders are not going to take it any more. It is time to change the "rules of the road," as Mr. Obama said.
Mr. Obama convened a high level White House meeting of Democratic and Republican lawmakers, who said they would work with the administration to craft new legislation in a few weeks.
The legislators really don't need to make this complicated. Here are a few points for the committee to discuss:
- Absolutely forbid the use of CDOs and CLOs. More than any other transactions, these trades are what caused, I would say, 90% of the chaos in the world. The days of palming off assets to a third party are ended. Period.
- As far as CDSs are concerned, let this be a two party transaction between the bank, or originator, and the insuring company.
- End the wild speculation in CDSs
- Mandate that the bank issuing a mortgage bond hold "on their books" until maturity.
- Mandate that ALL transactions made by banks or financial institutions stay "on the books."
- End forever the practice of banks and financial institutions of keeping transactions "off the books."
These are just a few starting points, but they would go a long way toward putting banks and financial institutions back on a sound footing.
Closing Bell: When We All Love the PIIGS (NBG, SQNM, PG, ERTS, KO)
Serious Money: Cheapest Stocks List Shrinks from 26 to 21
Chasing Value: Hasbro Earnings Makes My Point
Reader Comments (Page 1 of 1)
2-26-2009 @ 11:42AM
Iridium said...
What reforms? Obama just gave Wall Street a billion dollar gift in the cap and trade program.
The new commodity of carbon credits will make oil look like penny candy.
Wall Street traders will force the cost of electrity up to $5 a kilowatt hour. The price of gasoline will be $20 a gallon because refineries won't be able to produce gas without buying carbon credits.
Obama is setting us up for a depression that will make the 1930's look like the go go '90s.
2-26-2009 @ 12:56PM
Dixc said...
For an Auto solution; charge an extra $2,000 Tax to any foreign auto car sales, and maybe end any tax on an American car sold.
2-27-2009 @ 9:41AM
Tim said...
And while they are changing the rules to "End forever the practice of banks and financial institutions of keeping transactions 'off the books'"...how about making the SAME RULES for the US Government!...All money to be spent, all future obligations and commitments, all war expenditures, all war rebuilding obligations, etc...ON THE BOOKS! P.S. How about a few less lawyers and "lifetime politicians", and a few more CPAs and Quantitative Analysts in the Congress...someone who can actually understand and explain the short and long-term implications of all our pork projects, long-term commitments, and "off-the-book" federal government shenanigans". Futhermore, how about: 1) Getting rid of special retirement plans for Congress...they would get 401(k)/403(b)'s that they have to manage themselves and Social Security (like the rest of us); and 2) Eliminating special health insurance for Congress...they would get the same HMOs or managed health care plans (like the rest of us)!!