How Deregulation Spawned the U.S. Financial Crisis

By Shah Gilani

No one person is responsible for the credit crisis, the failure of investment banks, the insolvency of commercial banks world-wide, the implosion of the world’s stock markets, or for leading us to the precipice of another great depression.

The truth is there were many.

Fundamental and pragmatic banking regulations, which arose from the devastating financial collapses of the Great Depression, for decades strengthened U.S. banks and capital markets, making them the twin engines of American growth and the envy of the world.

The systematic dismantling of those same regulations by greedy bankers began in earnest in 1980, peaked in 1999, and finally climaxed with an insane Securities and Exchange Commission ruling in April 2004, a final decision that paved the way for the implosion of everything regulation was designed to protect.

Just how did we get here?

Wall Street bankers, their exorbitantly well-paid lobbying army of former congressmen and former regulators, their greatly contributed-to sitting legislators and, most egregiously, the self-righteous and still mega-rich “former” Street executives have systematically eviscerated the muscle and bones from the regulatory bodies charged with protecting us from banks’ self-destructive greed. An inordinately powerful group of executive insiders from the once-deeply respected House of Goldman Sachs (GS) have served as U.S. Treasury secretaries and in innumerable other administrative capacities.

A Reflection on Reform

The Depository Institutions Deregulation and Monetary Control Act of 1980, signed into law by President Jimmy Carter, was the first major reform of the U.S. banking system since the Great Depression.

While touted as a boon to consumers, the law was actually a gold mine for bankers. Among other requirements and banker “gifts” the 1980 Act’s provisions:

• Lowered the mandatory reserve requirements banks keep in non-interest bearing accounts at U.S. Federal Reserve banks.
• Established a five-member committee, the Depository Institutions Deregulation Committee, to phase out federal interest rate ceilings on deposit accounts over a six-year period.
• Increased Federal Deposit Insurance Corp. (FDIC) coverage from $40,000 to $100,000.
• Allowed depository institutions, including savings and loans and other thrift institutions, access to the Federal Reserve Discount Window for credit advances.
• And pre-empted state usury laws that limited the rates lenders could charge on residential mortgage loans.

In 1980, in a virtual landslide, Ronald Reagan was elected and grabbed the conservative mantle. A year later, the shock troops of the heralded Reagan Revolution launched their attack and embarked on a massive, systematic de-regulatory campaign. President Reagan’s first treasury secretary, former Merrill Lynch & Co. Chief Executive Officer Donald T. Regan, became chairman of the Depository Institutions Deregulation Committee.

In a burst of deregulatory bravado in 1982, Treasury Secretary Regan ushered through the Garn-St. Germain Depository Institutions Act. Key provisions of the Act ultimately coalesced with Treasury Secretary Regan’s protection of the lucrative “brokered deposits” business, in which Merrill was a major player, and paved the way for the future collapse of the savings and loan industry.

Some of the provisions in that 1982 Act would later be blamed for thousands of bank failures. The provisions permitted the following:

• Allowed savings and loans to make commercial, corporate, business or agricultural loans of up to 10% of their assets.
• Authorized a capital assistance program - the “Net Worth Certificate Program” - for dangerously undercapitalized banks, under which the Federal Savings and Loan Insurance Corp. (FSLIC) and the FDIC would purchase capital instruments called “Net Worth Certificates” from savings institutions with net worth/asset ratios of less than 3.0%, and would theoretically later redeem the certificates as these shaky banks regained financial health.
• And, most frighteningly, raised the allowable ceiling on direct investments by savings institutions in nonresidential real estate from 20% to 40% of assets.

The history of S&L greed and fraud - which resulted from brokered deposits and deregulation - wasn’t forgotten by legislators. But it was steamrolled by bankers pursuing an even greater unshackling of the regulations that constrained their ambitions.

Shattered Glass

The ultimate prize was to be the undoing of the Glass-Steagall Act of 1933. Glass-Steagall, officially known as the Banking Act of 1933, mandated the separation of banks according to the types of business they conducted. Investment banks, whose securities-related activities resulted in relatively large risks, were to be separate from commercial banks, whose depositors needed greater protection. The Act created deposit insurance and the government wasn’t about to allow taxpayer-backed insurance of commercial bank deposits to be exposed to securities-related risks. It was a prudent and sensible separation. Bankers tried for years to undermine and overturn Glass-Steagall, but it took time.

In 1987, Alan Greenspan replaced Paul A. Volcker - the stalwart Federal Reserve Board chairman, national inflation-fighting hero and active proponent of Glass-Steagall (and now economic confidant of President-elect Obama).

In its twilight days, the Reagan administration was determined to further fertilize the seeds of deregulation and Greenspan’s Ayn Rand-inspired “objectivist,” free-market philosophies would be the perfect embodiment of the deregulatory movement.

Securitization Enters the Scene

A year later - in 1988 - two very quiet revolutions sprouted that would ultimately hand bankers twin throttles to rain terror on us all.

That year, the Basel Accord established international risk-based capital requirements for deposit-taking commercial banks. In a byproduct of the calculations of what constituted mortgage-related risk (by nature of the loans’ long maturities and illiquidity) lenders should be expected to set aside substantial reserves; however, marketable securities that could theoretically be sold easily would not require significant reserves.

To obviate the need for such reserves, and to free up the money for more-productive pursuits, banks made a wholesale shift from originating and holding mortgages to packaging them and holding mortgage assets in a now-securitized form. Not inconsequentially, this would lead to a disconnect between asset-quality considerations and asset-liquidity considerations.

Meanwhile, over at the U.S. Commodities Futures Trading Commission (CFTC), the appointment of free-market disciple Wendy Gramm, wife of U.S. Sen. Phil Gramm, R-Tex., as chairperson, would result in her successful 1989 and 1993 exemption of swaps and derivatives from all regulation.

These actions would not be inconsequential in the aforementioned reign of terror that was still to come.

In 1993, with her agenda accomplished, Wendy Gramm resigned from her CFTC post to take a seat on the Enron Corp. board as a member of its audit committee. We all know what happened there. Enron’s fraud and implosion became the poster child for deregulation run amok and ultimately helped spawn Sarbanes-Oxley legislation, which has its own issues.

The constant flow of money to lobbyists and into legislators’ campaign coffers was paying off for the banking interests. The Fed, under Chairman Greenspan, was methodically deconstructing the foundation of Glass-Steagall. The final breaching of the wall occurred in 1998, when Citibank was bought by Travelers. The deal married Citibank, a commercial bank, with Travelers’ Solomon, Smith Barney investment bank and the Travelers insurance business.

There was only one problem: The deal was clearly illegal in light of Glass-Steagall and the Bank Holding Company Act of 1956. However, a legal loophole in the 1956 BHC Act gave the new Citicorp a five-year window to change the landscape, or the deal would have to be unwound. If aggressively flouting existing laws to pursue a personal agenda isn’t a perfect example of bankers’ hubris and greed, then maybe I’ve just got it all wrong.

Phil Gramm - the fire breathing free-marketer, Texas senator, and chairman of the U.S. Senate Committee on Banking, Housing and Urban Affairs - rode to the rescue, propelled by a sea of more than $300 million in lobbying and campaign contributions. In 1999, in the ultimate proof that money is power, U.S. President Bill Clinton signed into law the Gramm-Leach-Bliley Financial Services Modernization Act, at once doing away with Glass-Steagall and the 1956 BHC Act, and crowning Citigroup Inc. (C) as the new “King of the Hill.”

From his position of power, Sen. Gramm consistently leveraged his Ph.D in economics and free-market ideology to espouse the virtues of subprime lending, where he famously once stated: “I look at subprime lending and I see the American Dream in action.”

If helping struggling borrowers pursue their homeownership dreams was such a noble cause, it might have been incumbent upon the senator to not block legislation advocating the curtailment of predatory lending practices. From 1989 through 2002, federal records show that Sen. Gramm was the top recipient of contributions from commercial banks and among the top five recipients of campaign contributions from Wall Street. [Click here to read "How Subprime Borrowing Fueled the Credit Crisis."]

Since moving on from the Senate in 2002 to mega-universal Swiss banking giant UBS AG (UBS), where he serves as an investment banker and lobbyist, Gramm makes no apologies. “The markets have worked better than you might have thought,” he has been quoted as saying. “There is this idea afloat that if you had more regulation you would have fewer mistakes. I don’t see any evidence in our history or anybody else’s to substantiate that.”

The “New” Math

On April 28, 2004, in a fitting and perhaps flagrant final act of eviscerating prudent regulation, the SEC ruled that investment banks may essentially determine their own net capital. The insanity of that allowance is only surpassed by the fact that the SEC allowed the change because it was simultaneously demanding greater scrutiny of the books and records of what were the holding companies of investment banks and all their affiliates.

The tragedy is that the SEC never used its new powers to examine the banks. The idea was that Consolidated Supervised Entities (CSEs) could use internal models to determine risk and compliance with net capital requirements. In reality, what the investment banks did was essentially re-cast hybrid capital instruments, subordinated debt, deferred tax returns and securities with no ready market into “healthy” capital assets against which they reduced reserve requirements for net capital calculations and increased their leverage to as much as 30:1. [Click here to read "How Wall Street Manufactures Financial Services Products," an insider's look at how greed on Wall Street results in unscrupulous investment instruments.]

When the meltdown came the leverage and concentration of bad assets quickly resulted in the shotgun marriage of insolvent Bear Stearns Cos. to JP Morgan Chase & Co. (JPM), the bankruptcy of Lehman Brothers Holding (LEHMQ.PK), the sale of Merrill Lynch to Bank of America Corp. (BAC), and the rushed acceptance of applications by Goldman and Morgan Stanley (MS) to convert to Bank Holding Companies so they could feed at the taxpayer bailout trough and feast on the Fed’s new Smörgåsbord of liquidity handouts. There are no more CSEs (the SEC announced an end to that program in September). The old investment bank model is dead.

The motivation for bankers to undermine and inhibit prudent regulation is inherent in banker compensation incentives. The September 1993 Journal of Financial Research sums up the problem on compensation by concluding: “Firm characteristics that influence managerial compensation include leverage (as a measure of observable risk) market-to-book ratio of assets, size and shareholder return. Evidence suggests that Bank Holding Companies may be exploiting the deposit insurance mechanism because leverage is a significant factor in our results for incentive-based components of compensation. Our results strongly support the view that fundamental shifts in business activities of Bank Holding Companies have influenced their compensation strategies."

No one would tempt an alcoholic by putting one in charge of a liquor store and neither would anyone put a fox in charge of a henhouse. So why are greedy bankers being allowed to rewrite banking regulations to enrich themselves while leveraging taxpayers, destroying trillions of dollars of hard-earned savings and sinking us into a potential depression?

Until transparency sheds light on the backroom dealers and influence peddlers that aligned with Wall Street against Main Street, we will continue to be held hostage to the same greed and avarice that manifests itself in too many human beings who actually have the power to execute their personal agendas.

This is the story of how we got here. Where we are is actually even scarier than authorities are willing to admit. In the second article in this three-part series later this week, I will be the unfortunate bearer of the news of where “here” actually is.

Original post

Comments

[bosun.j:]

No, he did it, no she did it! No, they did it...NO! HE did it!......Anybody but the Banksters! Who's your buddy, who's your pal!

Window. Find window. Open window. JUMP!!!!!!!!!!!!!!!!!!...

Jan 14 07:24 AM

[Michael Fit...:]

the biggest single mechanism which enabled the financial meltdown existing today was the fraud by the three rating's agencies (S&P, Fitch, Moodys) to slap AAA ratings on toxic sub-prime repackaged debt. Without the AAA ratings, the debt would not have been transferable (sold in the market place) from the loan originator to others. This removed the liability from the loan originator, allow the originator to make yet another bad loan. On top of that, leverage was then used on the toxic paper making the entire mess a cat 5 storm. All that said, the ratings agencies are still going strong, and as SA editor Rachael reported this morning...recently put an AAA rating on the US government. I find this both ironic and quite amusing.

Jan 14 08:16 AM

[Jeff B.:]

You forgot one key player in this American Tragedy -- Barney Frank, the head of the house Financial Services Comm. Congressman Frank has recieved millions of dollars from financial services companies over the last few years (see for yourself @ opensecrets.org) in campaign finance dollars, while allegedly "regulating" the industry (wink wink). Instead he fought to stop every regulatory bill to come across his desk, and make it easier for Fannie Mae & Freddie Mac to operate like casinos instead of mortgage institutions. Now he's gonna "negotiate" & oversee the bailout money & how it's spent?? You're kidding, right?

Jan 14 09:06 AM

[john s. gordon:]

nice explanation of who shot the u.s citizens.
> jack

Jan 14 09:09 AM

[Gtarras:]

A must read!

Jan 14 09:18 AM

[huangjin:]

There was plenty of regulation. What Wall Street and everyone from farmers to automakers to retirees and home buyers want is regulation in their favor. What Wall Street wanted wasn't deregulation, they wanted protection from the market forces that naturally check their greed. The only way to stop the market is to have an outside force more powerful intervene on the behalf of special interests: the government.

Eliminate regulation (which is different from laws) and the market will deal swiftly and justly with the fraudsters.

"we will continue to be held hostage to the same greed and avarice that manifests itself in too many human beings who actually have the power to execute their personal agendas."

Yes. And that power comes from government.

Jan 14 09:44 AM

[Kris B.:]

Yes, government regulation has such a great history of spurring on economic growth...

Regulation is a drag on economic growth. This is a fact.

The problem is an overbearing government with too much power to regulate constantly interfering.

Jan 14 09:58 AM

[misolarman:]

Thats right blame it all on deregulation. Of course it had nothing to do with banks being forced into giving millions of Americans, that were not credit worthy, mortgages that they did not have the ability to repay. Of course the fact that both the senate banking committee chairman and the house banking committee chairman both would have been fired from the private sector for clear conflict of interest. Everyone must see the upcoming movie 'Media Malpractice'. Lets make it a block buster and try to recreate a true non biased media in our country.

Jan 14 10:13 AM

[MGA_1:]

I think it was collaboration on all fronts. Investment banks should have been kept separate from normal deposit banks. The community reinvestment act should not have passed. Greenspan kept interest rates far too low for far too long. Americans shouldn't have purchased junk mortgage package to finance their houses. Fannie & Freddie should not have been allowed to lower mortgage standards.

I can't believe the govt is bailing out investment banks - let 'em fail - they made huge mistakes.

Unfortunately, the reconciliation for all of this is just started and I think will be quite painful.

Jan 14 10:14 AM

[derryl:]

Thanks for this excellent historical recap. I look forward to the rest of your series.

It is a sad but true fact of political life that some people 'have the power to implement their personal agendas' contrary to the interests of the nation as a whole. This is simply animal social behavior; intelligent altruistic service is a rare height of human evolution that we seldom see at work in political economy. Democratic checks and balances are pretty much the only tools we have to counter the ever present desires toward aristocracy and oligarchy among those who would be our 'masters'.

America became great by resisting and to a large extent forestalling the designs of these selfish and powerful people. But widespread wealth has a lulling effect on people, in a world where 'the price of freedom is eternal vigilance'.

To be vigilant you first have to see what is being done in high places. To do that you have to go up there and refuse to be corrupted by the extreme wealth and privilege that is offered to anyone who goes along with the agenda. For every Ron Paul trying to resist the agenda there are dozens of Phil and Wendy Gramms pushing it forward at great personal profit.

Few people are strong and secure enough to resist the temptations. The temptations are not just material but psychological, the desire to feel 'superior', to be part of 'the elite' who are running the world for the benefit of us peons. Ego is as powerful a motivator as greed.

Down here on the ground we are mushrooms, as Steven Hansen has been saying. We are fed warm comforting crap and as long as our real estate and portfolio values are rising we are content with 'getting richer'. Now that the wealth effect has plunged into reverse we are opening our eyes, wiping off the crap, and having a clear look at reality.

Reality is scary, insecure and uncertain. Nobody has the power to overcome reality and 'guarantee' us security of any kind whatsoever. Freedom is risky. Life is risky. A thin covering of bullshit does not make mushrooms 'safe'. It just makes us blind. Maybe we have to spend more of our effort staying free and less of it staying rich.

Jan 14 10:27 AM

[hwood007:]

The banks took AAA rated loans, mixed in some lessor rated loans, put all in a package and the package was sold as AAA rated. The thought was that a few bad apples would not really rot the whole package. Wonder how that worked out when the banks were no longer holding the loans they made? All voters should read this article and another article from the AIER on social security, which tells us there is no money in the Social Security trust fund now, much less in 2041. Taxes will need to be raised to replace the worthless IOUs in the fund in order to pay out beginning in 2017. This is another thing needing repair. we R N deep DoDo.

Jan 14 10:28 AM

[TripleG:]

Yeah Yeah......it's all Reagan's fault. Blah blah blah.

What about Clinton who forced the banks to give loans to people who couldn't afford them?

The true Free Market, played out, allows for lousy bank management to lose their businesses when they are inept management, too greedy, or just plain criminal. What happened to allowing companies like Citi (Chuck Prince) and Merrill Lynch (Stan O'Neil) to go out of business? Any Board of Directors that would pay those people millions of dollars to tank a good company should be out of business.

Jan 14 10:32 AM

[John Lounsbury:]

This a great article. I read it on Money Morning previously and thought about (but didn't do it) sending you an e-mail urging you to submit it to SA. I'm glad you did it because this is a reference that many will want to refer to in the future.

Jan 14 11:17 AM

[john s. gordon:]

derryl - 'to be vigilant' you have to have transparency. we have not had any transparency in government for the last 8 yrs.
> jack

Jan 14 11:27 AM

[John Lounsbury:]

TripleG - - -

The author has presented a thorough chronology of what has happened with respect to deregulation, starting with Jimmy Carter. You are disingenuous to disregard that portion of the history which doesn't agree with (what appears to be) your political agenda.

I believe all presidents in recent history (since 1960) have supported the idea of enabling mortgage loans to lower income individuals, especially first time home owners. Your comment again indicates a political agenda.

Political action has continually complicated economic activity. Anyone with a political ax to grind can give examples to support his (her) viewpoint and ignore examples that contradict the viewpoint.

You are not alone in this behavior. I am really addressing a broad spectrum of commentators who engage in this. I am sorry you are the one addressed specifically; the targets of my comment are many. You just happened to write the comment that prompted this reply.

Jan 14 11:38 AM

[Chris B:]

"The constant flow of money to lobbyists and into legislators’ campaign coffers was paying off for the banking interests."

"Phil Gramm - the fire breathing free-marketer, Texas senator, and chairman of the U.S. Senate Committee on Banking, Housing and Urban Affairs - rode to the rescue, propelled by a sea of more than $300 million in lobbying and campaign contributions. In 1999, in the ultimate proof that money is power, U.S. President Bill Clinton signed into law the Gramm-Leach-Bliley Financial Services Modernization Act, at once doing away with Glass-Steagall and the 1956 BHC Act, and crowning Citigroup Inc. (C) as the new “King of the Hill.”

----------------------...

OK people. If we needed more evidence that lobbying leads to corruption and acts against the interest of the nation and citizens, this is conclusively it. Why do we allow cash "contributions" to politicans? What is the difference between that and a bribe? Is it freedom of speech when corporations spend millions of dollars to write the laws? That's not speaking, it's bribing! A few suggestions:

1) Ban all bribery / "contributions". Audit the wealth of all members of Congress and the executive branch and their families to make sure they are only getting their salaries and make the results public. Send violators to actual prison with no perks, even if they receive bribes years after leaving office.

2) Publicly fund campaigns. $2 million for congressional seats and perhaps $30 million for presidential campaigns is a small price to pay for a non-corrupt government.

3) Ban advertising by 529-type groups and other influence on elections by monied and corrupt special interests. These have proven to be just another tool for special interests. Most of their ads are deceptive lies anyway. The public can find out everything about the candidates' positions through the media, internet, and appearances. Propaganda produced by corrupt lobbyists is not needed in a democracy.

I know these are radical (radically honest) ideas that fly in the face of the assumptions that enable our currently corrupt political culture, but give it some thought.

Jan 14 11:46 AM

[John Lounsbury:]

MGA_1 - - -

The problem with following your suggestion that all insolvent investment banks should be allowed to fail has one problem: The web of CDS contracts that these banks are involved in have permeated all financial markets, including commercial banks and insurance companies. Allowing some more (formerly) investment banks to fail would destroy most financial structure - nearly everything related to finance and insurance would go into default.

The shock of Lehman going under was produced by what many analysts believe was a net CDS exposure of only a few billion. The nominal value of all CDSs has been estimated to be $50T to $60T, with a netted exposure of $5T to $10T. If a couple of more (bigger) investment banks were to go under, the direct shock could be 10 times to 100 times the magnitude of what happened with Lehman. And then there would be no financial system to rescue. We would be starting from a community bank base, with no capability to finance extra-community economic activity.

If you think this recession is bad, it is nothing compared to collapse of finance for the industrial sector.

The objective being pursued is to keep some form of structure in finacial markets until the CDS web can be untangled, interrelated contract cancelation swaps can be executed and some sort of orderly market for CDSs established.

Jan 14 12:00 PM

[petyaczar:]

You lose credibility when you ignore the 3 main root causes of the current problems That would be Sarbanes Oaxley and Mark to Market Accounting along with the credt reform Act of 2004 and elimination of the uptick rule on short sales.

Mark to Market destabilized ALL balance sheets, lenders would hopard cash because the future state of the borrowers balance sheet became unknown, Lenders would hoard cash because the future state of their own balance sheet became unknown.

All the while short seller raids on stocks of financial companies were enabled by elimination of the uptick rule on short sales.

The politicians caused the current financial mess, and these same politicians are using the financial panic they caused as the means to implement a "Coup DeTat" om the free enterprize system moving the U.S. economy unexorably into Socialism and all that portends and entails.

These very same politicians think nothing of sending $20 Billion in foreign aid by fiat to Africa without any conditions -other than it be spent.
While at the same time these politicians make the Big 3 auotmakers bend over and spread em, to get the same &20 billion in LOANS to protect U.S. workers and U.S. jobs.

A pox on them all - the Republicans and the DIMocRATS.

IMO

IMO

Jan 14 12:10 PM

[John Lounsbury:]

Chris B - - -

You've hit on one of my favorite subjects. I have offered another suggestion for discussion. It is based on the idea that some lobbying actually provides useful information and not all is corruption.

The idea: All communication from lobbyists should be published with a 30-day lead time before any related congressional vote. With the modern internet, this allows for all lobbying input to be open for review and reaction by counter interests (other lobbies), affected parties and interested citizens. Violations of this requirement should be a felony for the lobbyist and any complicit legislature subject to severe sanction, maybe disqualification from standing for re-election.

I agree with you that something needs to be done.

Jan 14 12:12 PM

[Robert Wein...:]

As long as we allow congress to control so much of our lives and money we will never be rid of the problems that DC causes. Applying patch after patch to solve the endless unintended consequences of each previous action is the mark of insanity. One serious look at the US tax code and its not hard to see that insanity is what we have going on in DC.

Getting rid of the income tax would go a long way towards lowering the amount of lobbying and campaign funding.

Lobbying and and funding are not the problem but rather the symptoms of the greater problem of allowing big government to dictate everything we do.

Jan 14 01:02 PM

[SeekingTruth:]

As fine an historical rendition of the series of salient affairs leading to our current chaos and insanity that I have yet read.
It would take a tall pile of expertly authored related books to provide the info that was presented in the article.
Many of us lived thru these events and watched them unfold to our horror and dismay , but could not come close to deflecting the immense power and greed that gave birth and impetus to these monsters spawned by the most successfully active power and greed practicioners in our nations history.
This period produced a series of Phil Gramm, Tom DeLay, and Newt Gingrich type characters that made --
"Money Talk" so long and so loudly and so successfully that it was officially designated " "Freedom of Expression".
Well, if this is true, and it is , what chance do the rest of us have?
I am afraid "the future is now" folks, and we will be paying for this chicanery, malfeasance, and debauchery for the rest of our lives.

As always, John Lounbury has good thoughts and insights and are well worth considering (I have), , but even if such punitive laws establishing accountability were successfully achieved, what would keep the money power with the help of Phil Gramm type characters from coming right behind them and undoing them with money and power provided horse trading and stealth legislation?
Legislative history is replete with such activity.
Still, we MUST try, even if we fail. The worst thing is to give up and stop fighting for justice as best we can to our dying breath.
Since 1980, the money and power game has clearly won the day in America. If we do nothing and fail to fight back it is guaranteed to win the future as well. Which way will it be?

Jan 14 01:08 PM

[ArtfulDodger:]

Here is a well done video that seems to refute a lot of the author's claims:

How The Democrats Caused The Financial Crisis: Starring Bill Clinton's HUD Secretary Andrew Cuomo And Barack Obama; With Special Guest Appearances By Bill Clinton And Jimmy Carter
www.youtube.com/watch?...

Jan 14 01:09 PM

[petyaczar:]

Chris,

Consider the following as it relates to yor comments.

1)Bribery is already illegal and has been for many many years.
2)You falsely assume that providing "free money" from the public trough
will eliminate the con men who want tu run for political office - why should it do so? IMO it will merely increase the number of con-men running for political office

3)Last count there were over 70 convicted felons in both houses of the U.S. Congress. Some of them have since resigned or lost re-election.
This is a much higher percentage than the percentage of felons within the national population.

BTW are you aware that Statutory rape laws do not apply within Washington D.C.? ever wonder why?

4)Finally, the U.S. Constitution provides that people, as individuals and interest groups have a right to "petition their government" and so the right of lobbysits to exist, the right of affinity groups to exist is Constitutionally proectd AND their right to speak out i ALSO Constituionally protected - 1st Amendment.

I would agree that public disclosure via the internet for ALL individual political contributions - over say $100 - , and lobbyist contributions would have to be published BEFORE the check was cashed by the politician. Make monitoring and implementing this disclosure the personal responsiblilty of the politician recipient. Make failure to dsclose - for whatever reason - a felony, punishable by 10 years imprisonment OF THE POLITICIAN responsible for administering the disclosure.

Then perhaps, some self cleansing of the decadent rotten corrupt U.S. politial system would occur.

Finally, make it illegal - a felony with jail time - for any politician who has held national office to accept $$$$ from any and all sources for speeches and to their so called foundations and libraries . They could give speeches, butthey would have to be free speeches with no reimbursement of any kind for any reason - including travel.

Good luck with it.

Jan 14 01:10 PM

[John Lounsbury:]

ArtfulDodger - - -

1. Please read my comment addressed to TripleG, above.

2. There are many pieces of the current mess and you should not focus on the one small part at a time. There is no one part, they are all related.

3. You are incorrect: The video you reference refutes not one statement in the article.

4. The video is very partisan because it does not include any reference to the publicly stated support of mortgage access for low and moderate income home buyers by Republican presidents, most recently Gearge W. Bush.

Don't make the mistake of starting from your political point of view and then selecting just the facts that agree with your perspective. That type of thinking among our elected officials has contributed greatly to our current sorry mess. As citizens we have to start doing better in this regard and then hold public officials to the same high standards we establish.

Jan 14 01:48 PM

[Chris B:]

petyaczar,

I'll address these concerns one-by-one:

1) Cash lobbying IS bribery and there is no difference besides that transfers of money for favors is considered OK when it is called lobbying and a crime when it is called bribery. Of course they expect something in return for their money. As they banks demonstrated with deregulation, they usually get it.

2) Um... the con men are already there. A con man is more likely to run for public office in a system where he can get rich from bribes... ahem, lobbying... and where he is protected by law from going to jail for this treasonous dishonesty. Our current primary system, publicly funded at a lower level, could still work to pick candidates. The conmen would flee if their finances had to be made public, as I suggest.

3) We have a perpetually dishonest Congress because incentives encourage dishonesty. Bribes... ahem, lobbying.. is the primary incentive for corruption.

4) My proposal would actually increase the influence of grass-roots groups of citizens at the expense of corporations and special interest groups because winning votes would become more important than obtaining enough bribe money to run competing TV commercials.

Giving cash to politicians does not in any way resemble speech, assembly, or petition as described in the Bill of Rights. There is nothing in the Bill of Rights granting a right to buy an election or politician if you can afford it - this is an assumption of our corrupt political culture. It is an even further stretch to assume that the constitution grants corporations and interest groups this right.

In my proposal, people could still speak, assemble, endorse, and petition, but campaign money would be removed from the equation. For the average person, this would mean an increase in influence because the outcome of elections would be determined by citizens exercising speech, assembly, and petition rather than by who raises the most money. You can bet that policies would then start being made to benefit the people instead of the donors.



On Jan 14 01:10 PM petyaczar wrote:

> Chris,
>
> Consider the following as it relates to yor comments.
>
> 1)Bribery is already illegal and has been for many many years. <br/>2)You
> falsely assume that providing "free money" from the public trough
>
> will eliminate the con men who want tu run for political office -
> why should it do so? IMO it will merely increase the number of con-men
> running for political office
>
> 3)Last count there were over 70 convicted felons in both houses of
> the U.S. Congress. Some of them have since resigned or lost re-election.
>
> This is a much higher percentage than the percentage of felons within
> the national population.
>
> BTW are you aware that Statutory rape laws do not apply within Washington
> D.C.? ever wonder why?
>
> 4)Finally, the U.S. Constitution provides that people, as individuals
> and interest groups have a right to "petition their government" and
> so the right of lobbysits to exist, the right of affinity groups
> to exist is Constitutionally proectd AND their right to speak out
> i ALSO Constituionally protected - 1st Amendment.
>
> I would agree that public disclosure via the internet for ALL individual
> political contributions - over say $100 - , and lobbyist contributions
> would have to be published BEFORE the check was cashed by the politician.
> Make monitoring and implementing this disclosure the personal responsiblilty
> of the politician recipient. Make failure to dsclose - for whatever
> reason - a felony, punishable by 10 years imprisonment OF THE POLITICIAN
> responsible for administering the disclosure.
>
> Then perhaps, some self cleansing of the decadent rotten corrupt
> U.S. politial system would occur.
>
> Finally, make it illegal - a felony with jail time - for any politician
> who has held national office to accept $$$$ from any and all sources
> for speeches and to their so called foundations and libraries . They
> could give speeches, butthey would have to be free speeches with
> no reimbursement of any kind for any reason - including travel.
>
>
> Good luck with it.

Jan 14 02:49 PM

[chuckles8888:]

This article is pretty good, but the best explaination as to what went on is on You Tube. Do a search there for "Burning Down the House". It names names, gives dates and shows the perps. It basicaly boils down to you can't give a minority a loan they can't pay back and not give the same to everybody. Even Obama sued Citi to stop "redlining" in the ghetto. When you require bankers to give bad loans, and then give them a way to profit from it, they will do what they are rewarded to do. Most of the critical mistakes came to try to keep Frank Raines out of jail and on Obama's advisory team. I especially like it when congressman Meeks used the "lynching" line to save him. You can always tell when we need a lynching cause they start to say it is one.

I remember the hubub when BAC was braging they would give credit to illegals and the capitalists roared that what's the difference if they give credit to people with no SS #. Now look at the repo's in California, Texas, Arizona, etc. A freind of mine tried to sell his house and an illegal made an offer. Everything went to the wire until they discoverd his SS# didn't fit. The finance company just told him to give them another number that fits instead of killing the deal. All of you may want to do a credit check because you may own a house in Dallas you aren't paying for because you are back in Mexico.

With finance companies in on the scam, how can we wonder why we have this mess. Now, the taxpayer is probably negotiating the loan down so 15 people can afford a house with dishwashing jobs.

It all started with trying to give minorities houses they couldn't afford and MANDATING loan companies to back it up. Is that lack of regulation or regulating bad loans?

Another funny tidbit, The DAY CITI got their first bailout, they wrote a check to La Raza for $1million for housing help.

Jan 14 03:14 PM

[Jason Rines...:]

I would add term limits to your insightful suggestions. However, the real question Chris B is what is the responsible business community going to do to educate and assist the citizenship to make these changes?

The probable outcome is the previous historic trend - Citizens conduct there own research aided by the upper middle class (financial pain being the catalyst) into individual corrupt politicians and vote them out. Historically a four year process from start of the deep crisis.

Remember, America has been here before, notably 1870's and 1930's. Human nature is reactive then proactive. I loved this article, because it properly states historic facts. We can also look at the other decades mentioned because same root causes meaning the same root solutions can be applied.


On Jan 14 11:46 AM Chris B wrote:

> "The constant flow of money to lobbyists and into legislators’ campaign
> coffers was paying off for the banking interests."
>
> "Phil Gramm - the fire breathing free-marketer, Texas senator, and
> chairman of the U.S. Senate Committee on Banking, Housing and Urban
> Affairs - rode to the rescue, propelled by a sea of more than $300
> million in lobbying and campaign contributions. In 1999, in the ultimate
> proof that money is power, U.S. President Bill Clinton signed into
> law the Gramm-Leach-Bliley Financial Services Modernization Act,
> at once doing away with Glass-Steagall and the 1956 BHC Act, and
> crowning Citigroup Inc. (seekingalpha.com/symbo...) as the
> new “King of the Hill.”
>
> ----------------------...
>
> OK people. If we needed more evidence that lobbying leads to corruption
> and acts against the interest of the nation and citizens, this is
> conclusively it. Why do we allow cash "contributions&amp... to
> politicans? What is the difference between that and a bribe? Is it
> freedom of speech when corporations spend millions of dollars to
> write the laws? That's not speaking, it's bribing! A few suggestions:
>
>
> 1) Ban all bribery / "contributions&amp... Audit the wealth of
> all members of Congress and the executive branch and their families
> to make sure they are only getting their salaries and make the results
> public. Send violators to actual prison with no perks, even if they
> receive bribes years after leaving office.
>
> 2) Publicly fund campaigns. $2 million for congressional seats and
> perhaps $30 million for presidential campaigns is a small price to
> pay for a non-corrupt government.
>
> 3) Ban advertising by 529-type groups and other influence on elections
> by monied and corrupt special interests. These have proven to be
> just another tool for special interests. Most of their ads are deceptive
> lies anyway. The public can find out everything about the candidates'
> positions through the media, internet, and appearances. Propaganda
> produced by corrupt lobbyists is not needed in a democracy.
>
> I know these are radical (radically honest) ideas that fly in the
> face of the assumptions that enable our currently corrupt political
> culture, but give it some thought.

Jan 14 03:50 PM

[Jason Rines...:]

Here's the plan: ragingdebate.com/about . A loose think tank of some of the people here on SA and other accurate financial blog sites/individuals was started a couple of months ago. To educate the public, the think tank figured out best way is the Internet and the best mechanism is create open source software that allows a citizen to start there own political blog from fundraising functionality to political filings and includes the steps mentioned in the link.

Another important finding of the think thank - businessmen are territorial. Some of the more brighter economic thinkers that own there own blog are more interested in ego and creating profit from such an endeavor. Such an endeavor should not fall under a 'Raging Debate', 'Seeking Alpha', etc. but a collective group that starts a non-profit software company is the best approach for numerous reasons. That said, the company should be able to self-fund with some of us in the business community contributing sweat equity or direct funding (at least until break-even)

Jan 14 04:10 PM

[rrbatch:]

The original post reminded me of a lot of the chicanery that led to our current crisis, albeit with a leftward slant - nice job. But the facts remain that money and politics are a bum cocktail for most of us taxpayers. There's no monopoly of virtue or avarice among either our politicians or the lobbyists for corporations or left-wing "special interests". The problem isn't that lobbyists transmit information - which is protected speech - but that the cost of "access" has become exhorbitant.

Chris B (11:48 this morning) gave some interesting ideas for beginning to resolve the problem by substituting government cash for bribes... er.. contributions. I can't stomach the idea of giving taxpayer dollars to finance the campaign of anyone who asks to represent me, and there will be no end to the amount of campaign support that the politicians will vote for themselves. We also don't need to limit candidacies to oligarchs who can fund their own campaigns.

Better to my mind is a stringent term limit. Here in Virginia, the governor is limited to one 4-year term, and this has worked well - although there is a move afoot to change the law, and it doesn't stop the corruption of fund raising - it tends to limit it, since the incumbent during his/her term has no incentive to raise funds.

More to the point, why do campaigns need to be so bloody expensive in the era of low-cost cable TV and the free internet? Why do candidates need large paid staffs of consultants and advance personnel, chartered jets, and uninformative or misleading TV spots? Can't a viable candidate think for himself (without a consultant over his shoulder or a ghost writing his speeches)? Why can't the media provide more debates as a public service?

Let's put a hard (and low) limit on campaign expenditures (related to the size of the constituency) and divert public contributions ($200 maximum individual amount) to charity or the treasury over that limit. And by all means have full public disclosure of ALL contributions on-line (not just those over $200, not multiple smaller contributions from one individual, and none by gift card).

Of course this has a snowball's chance in hell of passing any legislature, until we all get sick enough of the situation to kick the incumbent bums out and pass change by referendum!

Jan 14 04:48 PM

[petyaczar:]

Chris,

One man's "grass roots organization" is another man's lobby group.
There is no difference between the 2.

That is why we have a Constitution, and that Cnstitution specifically provides for the right of the people to peition their government. The content of their petition doe not have to agree with your own personal views of the matter.

If you do not like the U.S, Constitution, then there is a process within said Constitution for its Amendment.

Thanks to the Constitution, we do not have to agree, we merely have to abide by its provisions.

Ditto on term limits, they too require Constitutional Amendment.

Lobbying - petitioning the government - is not the same as paying a bribe.

Get over it, IMO your opinion is way off base at its core. Remember when the end justifies any means, and that "end" is the personal objective of any man, or sepcific group of men. then we no longer have a Constitutional Republic, instead we have facism.

I doubt that you are endorsing facism. Suggest you read the U.S. Constitution, - pls do so with an open mind.

Jan 14 06:12 PM

[MGA_1:]

John,

You make a good point and there also is a lot of fear regarding the derivatives market. I would imagine we would see more insurance companies (like AIG) going under - or at least the companies supplying the CDS contracts. I just can't believe these guys have kept their bonuses, are still paying dividends to shareholders in some instances, and kept their jobs. The situation has to either unwind itself in an unpleasant manner, or the govt can inflate the currency to support these poor business practices. The fed seems to be doing the latter.

On Jan 14 12:00 PM John Lounsbury wrote:

> MGA_1 - - -
>
> The problem with following your suggestion that all insolvent investment
> banks should be allowed to fail has one problem: The web of CDS...

Jan 14 06:22 PM

[nukldrager:]

"Let them eat cake"... today's version;

Gramm makes no apologies. “The markets have worked better than you might have thought,” he has been quoted as saying. “There is this idea afloat that if you had more regulation you would have fewer mistakes. I don’t see any evidence in our history or anybody else’s to substantiate that.”

Jan 14 07:36 PM

[Hmm?!:]

Everyone wants to add there 2 cents, which is good and the whole point of this site.
But as the author states, this is only part 1 of 3.

PS. My two cents is....... it is still no oversight of Fannie and Freddie... that triggered a massive CDS redemption......that triggered the financial collapse and the Fannie and Freddie puppets are still in congress. Where is the media on this one ?????

Jan 15 01:02 AM

[Chris B:]

I think lobbyists could serve a useful and non-corrupting function: petitioning the government and communicating the views of citizens who have formed groups. They could also be a useful source of information, research, counterargument, and media fodder. This would be the type of "grass-roots" representation for special interests and industry that I am talking about.

However, the primary function of lobbyists today is to transfer millionaires' money to political campaign funds, or in the case of Jack Abramoff, to the politicians themselves. The purpose of these transfers of cash and perks is to buy votes - and there is no way to argue around that. In a system where money determines whether you get elected or defeated, any leader who bravely ignores the bribe-peddlers and votes in the interest of the nation as a whole will be defeated.

Hopefully this distinction is clear. If we forcefully removed the corrupting influence of money from politics, we would have more of the former and less of the latter.

This conflict of interest is at the core of the current economic crisis. We have a money-votes system instead of a people-vote system, which means that monied interests in any area of society can purchase advantages for themselves at the expense of society in general. This is how the bank executives purchased advantages for themselves at the expense of the rest of us - that is, the need for trillion-dollar taxpayer-funded bailouts. It is also interesting that these bailouts were opposed by most Americans, but overwhelmingly won in Congress anyway. I can guarantee that the supposedly broke banks were able to scrape together enough money to make their "donations" this year as a reward.

That is not a manifestation of democracy or individual freedom. It is the methodical destruction of both. It is sanctioned bribery, and the Constitution offers no protection for it. The notion that bribes are a form of free speech is our own creation.


On Jan 14 06:12 PM petyaczar wrote:

> Chris,
>
> One man's "grass roots organization" is another man's lobby group.
>
> There is no difference between the 2.
>
> That is why we have a Constitution, and that Cnstitution specifically
> provides for the right of the people to peition their government.
> The content of their petition doe not have to agree with your own
> personal views of the matter.
>
> If you do not like the U.S, Constitution, then there is a process
> within said Constitution for its Amendment.
>
> Thanks to the Constitution, we do not have to agree, we merely have
> to abide by its provisions.
>
> Ditto on term limits, they too require Constitutional Amendment.
>
>
> Lobbying - petitioning the government - is not the same as paying
> a bribe.
>
> Get over it, IMO your opinion is way off base at its core. Remember
> when the end justifies any means, and that "end" is the personal
> objective of any man, or sepcific group of men. then we no longer
> have a Constitutional Republic, instead we have facism.
>
> I doubt that you are endorsing facism. Suggest you read the U.S.
> Constitution, - pls do so with an open mind.

Jan 15 09:50 AM

[petyaczar:]

Chris,

Yiou believe whatever yuo want, everyon is entitled to their own opnion, but no one - including you - is entitled to their own facts.

The Courts have repeatedly ruled that lobbying is protected under the 1st Amendment AND that it is also prtoected under the Constitutional provision "citizens have the right to petition their government"

Further, political donations do not constitute bribery - per se. Else ALL political donations would be illegal already.

We do not need to protect Speech that we agree with, instead we must protect Speech we disagree with.

And finally we do not run the country by plebiscite or on the basis of Chris's opinions - that would be facsim, and I'm sure you do not endorse that.

Meantime, there is nothing more to be said on this topic. You are either someone who defers to and supports the U.S. Constitution - that makes you an American with opinions. OR you are someone who does not defer to and support the U.S. Constitution - and that would make you an enemy.

In your world, who would decide when an organization is a "Grass roots organization" worthy of free speech including the right to lobby , and would decide which organization is not comprised of "citizens who have formed groups" (sic) and so not worthy of freedom of petition and speech - you? me? I don't think so.

BTW the right to petition the government is guaranteed to all forms of legitimate organization including 529's Corporations,churches. unions, etal - as it should be

There is no right of bribery, bribery has been and continues to be illegal. Lobbying is not bribery and donations do not per se constitute a bribe.

Meantime we agree on several other material aspects of your comments, but that does not mean we should deny others who disagree with us the right to speak out, or petition the government in their own perceived best interest.

Finally, this country and its political system was built on a foundation of SELF INTEREST, and conflict of interest working under law in an ongoing competition of survival of the fittest. Its worked pretty well so far don't you think?

I do not agree at all with George Soros politics, BUT if he has the right to use his money to buy $500 designer socks, then don't you think he also has the right to use his money to express his opinions in the plitical domain? - I do!

Jan 15 10:11 AM

[Chris B:]

"The Courts have repeatedly ruled that lobbying is protected under the 1st Amendment AND that it is also prtoected under the Constitutional provision "citizens have the right to petition their government"

The courts also upheld slavery and segregation for years. American history is full of examples where past court rulings are nullified by subsequent rulings. Those are facts too. It's how progress occurs. At some point however, the law itself must be improved with the goal of expanding and protecting the freedom of the individual. The notion that a suitcase full of cash given in exhange for favors is the same thing as a petition signed by a thousand citizens is hogwash, even if a judge once claimed it was so. A judge also once condemned Dred Scott to slavery.

"Further, political donations do not constitute bribery - per se. Else ALL political donations would be illegal already."

This is circular logic. If political donations are the same thing as bribes, a legal loophole does not change that fact. It only means that some bribes are currently legal and others are not. Whether this category of bribes SHOULD be legal is what I question.

"You are either someone who defers to and supports the U.S. Constitution - that makes you an American with opinions. OR you are someone who does not defer to and support the U.S. Constitution - and that would make you an enemy. "

Easy on the "enemy of the state" accusations please. That kind of talk sounds ironically "fascist." My argument is that there exists no protection in the Constitution that I support for political donations/bribes. Speech, assembly, association, religion, due process and petition yes, but not bribery. Rob Blagojevich will not be defending himself by saying that he was soliciting free speech comments in the form of dollars. Would someone who proposes a balanced budget amendment to the Constitution be an enemy of the state for not liking the Constituion in its current form?

"who would decide when an organization is a "Grass roots organization" worthy of free speech including the right to lobby , and would decide which organization is not comprised of "citizens who have formed groups" (sic) and so not worthy of freedom of petition and speech - you? me? I don't think so."

Nobody. I never suggested that someone or the government authorize organizations to have free speech rights. I just suggested taking money out of the equation and talked about the consequences of doing that. Rich people have the same rights as everyone else, but in an environment where cash donations/bribes determine who gets elected and what they vote for, rich people get an additional "right" to control the government through bribes and to take influence away from the voters. How is a for-sale government not more "fascist" than a democracy that elects its leaders based on their appeal to voters?

Jan 15 11:46 AM

[ts2:]

So. US deregulation caused a banking crisis in US, England, Germany, Switzerland, Spain, Iceland, China, Russia, Japan, Argentina etc......

Give me a break.

This is a global financial meltdown that was caused by over leveraging by financial institutions on assets that were over inflated. It's happened many times before and will happen many times again.

Jan 15 12:22 PM

[Hiqutipie:]

Great Article...Its about time...Typical though of Journalist these days... Now you tell us what happened...Hello...Whe... were all the reporters after the first great fraud...The S & L blowup that was the first billion dollar failure that Americans paid for...Oh how about the dot com implosion... No...How about Enron...

The very purpose of the Media is to be a Government Watchdog...To catch these problems before they have the chance to create these problems...People have known these problems existed all along but 90 percent of the media never reported them... You guys know the politicians on the take but you are more concerned about slamming the Sarah Palins or Caroline Kennedys then going after the guys creating the problems...The Media is just as Guilty as the Politicians for this crisis and past failures....

Capitalism was the rebirth of Rome & the Roman Senators in all their glory...Now " Rome is Burning " and the media wants to tell the story... Thanks, but no thanks...I can watch Rome burn myself & I know why its burning so I can write the story just like everyone else...

Jan 15 02:17 PM

[SeekingTruth:]

To Chris B.
Thank you for your thoughts and analysis on this subject, and "if" I interpret your remarks accurately, you are saying to retain all the freedoms to petition the government , but eliminate doing it with coincident suitcases full of money in order to sweeten the effort and help assure the success of the petition.
If so, we need to start a process to make this happen and become a reality. Any suggestions out there on how to go to go about this will be greatly appreciated.
As I live in one of the reddest of the red states, there is no hope of any individual success here in my state (none!), and therefore I must join with others on a national basis, should those others exist. If you're out there , please SPEAK OUT! as Chris B and only a few others have done.

Jan 16 11:48 AM

[Chris B:]

The first problem to overcome is the cultural belief that handing a suitcase full of money to a politician in exchange for a favor is a form of speech or petition. In many third-world countries, people just accept that they have to pay a bribe to do anything, and that notion is hard to eradicate. Here we just accept that bribery is the same as a petition.

Secondly, after a critical mass in the public finally becomes disgusted by the fact that because of cash lobbying they have been deprived of the right to influence their democracy, we run into a chicken-or-the-egg problem. How do you elect a reformer who refuses to take the lobbyist money and therefore has no significant campaign funds? How can we expect a politician who got to where they are to double-cross the people who paid to get them there?

Obama raised tons of money online from middle-class individuals, and this is an inspiring example of how a reformer could win. However he also took the lobbyist "campaign contributions" and we cannot know if he would have won without them.

Another option would be an old fashioned petition drive for a Constitutional amendment banning donations/bribery and for setting up strictly public campaign financing. However, there'd be no guarantee that Congress would not just ignore the petition, even if it had millions of signatures.

Nobody ever said freedom came easy.


On Jan 16 11:48 AM SeekingTruth wrote:

> To Chris B.
> Thank you for your thoughts and analysis on this subject, and "if"
> I interpret your remarks accurately, you are saying to retain all
> the freedoms to petition the government , but eliminate doing it
> with coincident suitcases full of money in order to sweeten the effort
> and help assure the success of the petition.
> If so, we need to start a process to make this happen and become
> a reality. Any suggestions out there on how to go to go about this
> will be greatly appreciated.
> As I live in one of the reddest of the red states, there is no hope
> of any individual success here in my state (none!), and therefore
> I must join with others on a national basis, should those others
> exist. If you're out there , please SPEAK OUT! as Chris B and only
> a few others have done.

Jan 16 01:02 PM

[SeekingTruth:]

Where are you William Proxmire , when we need you so desperately!
He continually got re-elected with virtually no campaign funds at all.
I believe strongly in Capitalism when it is fair and honest, but am opposed to it when it is corrupt and controlling.
Bad leadership makes Victims of Us All !!, and bad and wrong leadership guarantees that capitalism will lean and tip in favor of the corrupt and controlling.
If a national initiative and referendum is the only way to approach this, we best be getting on with it.
Yes, Freedom is never easy, but it must be rewarding, uplifting , nuturing and fulfilling , or it will NOT have the support to survive.
We must work to assure those worthwhile attributes survive , and not the reverse, which are also allowed under "Freedom".

Jan 16 02:37 PM

[consumerons...:]

Hello, mark-to-market accounting. So long, desire to ever finish the B.A. in accounting I was three-quarters of the way towards when divorce and child support forced me to have to drop out of college in 1995. The rest of you are far more informed on the other matters than I am. This is the only thing I have an opinion on. Cost- basis accounting made all the sense in the world to me. Who are the idiots who did away with it?

Jan 16 09:16 PM

[petyaczar:]

Chris,

The courts have repeatedly ruled that lobbying is in fact legal and political contributions are not bribery per se. There is a clear distinction in the law between the 2 activities. The former is Constitutionally protected while the latter is already outlawed. Apparently - in your arrogance- this is of no relevance to you.

Further your comment in this regard "Nobody ever said freedom came easy" would make George Orwell swell with pride. It truly must have Franz Kafka spinning in his grave.

May I suggest that one does not promote freedom by limiting speech one happens to disagree with. One does not promote freedom by not allowing people to freely form their own affinity groups and organize to petition their government.

We promote freedom by providing more/not less freedom of speech, not subsidizing or forcing limited viewpoints onto the public political forum to the exclusion of other view points.

IF unions can make political contributions, then so can corporations.
If tree huggers can make political contributions then so can the Lumber Association.

We do agree that visibility, the light of day, is part of the solution in the public forum of competing ideas and yes conflicts of interest. BUT do not put yourself in the position of wanting to be able to yell your own opinions from the pubic square while simultaneously telling everyone else -who disagrees with you - to shut up.

That is logically inconsistent, and some may say smacks of hypocrisy.

You have a nice day,

Jan 17 09:27 AM

[Obscure Mid...:]

This is one of the best I have read on the current state of affairs. It lays out the key points in clear chronological order. I have been searching for someone to bring DIDMCA of 1980 into the picture. Not to mention the antics of one Phil Gramm among others. I stood alone last may at the Bank Structure and Competition Conference in Chicago and asked whether or not, at least in part, the dismantling of Glass Steagall might have contributed to this crisis. The panel, a so-called distinguished group of pundits and economists, were dead silent. The panel members gaped at one another as if to say: "Get this guy out of here fast." After what seemed like hours, one of them, with voice crackling said: "Uh...no." Not another word was uttered. I looked at the gentelman and I said: 'Nice answer, but I do not agree."

Jan 20 08:03 PM