Barney Frank: Name Names

U.S. Rep. Barney Frank wants to publish a list of shame. According to Alison Vekshin at Bloomberg.com (here), Frank wants to make public the name of any firm that is required to address capital requirements under the proposed new law. This is a change from Frank's original position which would have kept the names of challenged firms secret.

This is akin to the kiss of death. Immediately upon public exposure, the ability to raise capital will be compromised, just at the time when the firm is being required to do just that. Of course, keeping the names secret is withholding relevant information from investors. This is the "damned if you do and damned if you don't" scenario.

The difficult question is regarding the process of unwinding and restructuring failing firms. This can only be done, in most cases, with added capital, combined with losses for equity and bond holders. There is no public will (in my opinion) for this to be continually underwritten by the U.S. Treasury. According to Alison:

Frank plans to require advance payment from firms with more than $10 billion in assets for a fund used to unwind failing companies. He dropped a proposal sought by the administration to charge the financial industry to recoup costs for dissolving a failing firm.

So the question still remains: What happens when the fund is exhausted? It sounds like the process could not be completed without the government stepping in.

Why can't we have a financial system that has no one too big to be unable to go through a conventional bankruptcy? Are we just trying to masquerade with civilized masks hiding primal beasts? What does it take to re-establish a financial system based on free market principles?

I think it takes restructuring more than regulation.

Comments

[User 16123:]

What does it take, you ask?
A MOB. I say this because the powers that be do NOT want a system based on free market principles. Imho, there are two (2) screws left in the coffin. Gov. run healthcare and Cap-n-Trade.

Nov 04 08:19 AM

[notsosmart:]

all the fools that talked" free market" are waking up to the fact that there was never ,nor ever will be a free market.. less or more regs is mandated by the weakest & most dangerous link in this chain-the human(lately more greedy than ever).its all ponzi/casino/smoke & mirrors.the average investor is a patsy.thats capitalism today.

Nov 04 08:32 AM

[Old Trader:]

"I think it takes restructuring more than regulation"

John,

I agree but restructuring requires more than a degree of knowledge, which I think is beyond the morons on the Hill. Its SO much easier to grandstand and pass laws and regulations.

Nov 04 09:11 AM

[robert.b.fe...:]

Barney should just keep his mouth shut and his hands at home. Reinstate Glass/Steagal and break up any firms that are to big to fail. Then let them fail or succeed on their own. We used to have something called moral hazard and it worked great. Then Uncle sugar started getting their dirty little fingers in every ones pie. This led to bailouts which led to more risky behavior eventually creating a culture of risk because hey Uncle sugar will bail me out. Socialize losses while privatizing gains wall street venture capitalists love it. The one thing that kept them in check was the possibility of loosing the shirt off their back. With that removed there are no limits.

Nov 04 09:15 AM

[Fueled By R...:]

The line between good and evil is not the same as the line between government and private interest. There are saints and sinners on each side of the latter line. Good intentions matter only in court. If a neighborhood is blown up by a gas leak, regardless of whether it was due to a greedy contractor cutting corners or an incompetent group of amateurs trying to renovate a homeless shelter, the result is the same. Barney Frank and the rest of the Congressclowns can bellow all they want about how the mess is the fault of other people, but when they go home and look in the mirror the person they see there is a big part of the problem.

Nov 04 09:18 AM

[Moon Kil Woong:]

The biggest point is, even without this requirement, don't you think it's up to publically traded financial institutions to disclose their risks coherently and fairly to their shareholders. Throughout this crisis I have come to know how ungrateful and how unaccountable financial executives are to their stockholders.

And by the way, what is the SEC for? They do absolutely nothing as far as I can tell.

Nov 04 09:22 AM

[doubleguns:]

Obviously GS would never make Barneys list.

Nov 04 09:22 AM

[OldSusanna:]

I agree with Moon Kil Woong; enough hiding and masking. Conditions are what they are--and weaknesses (whatever they may be), become more likely to be remedied when exposed, do they not? And although I agree with reinstating Glass-Steagal; won't Investors find more protection, ultimately, in their own due-diligence than in Gov't regulation (and, as always happens--Gov't shenanigans)?

Nov 04 10:22 AM

[celts43:]

sholleyforcongress.us
Barney Franks opponent

Nov 04 10:46 AM

[celts43:]

sholleyforcongress.us
Barney's opponent in 2010

Nov 04 10:46 AM

[rm:]

[We used to have something called moral hazard and it worked great.]

Yeah, and that rule still applies.

To homeowners.

Nov 04 12:43 PM

[The Geoffster:]

There's a lot of boyz on Barney's list.

Nov 04 04:10 PM

[Steven Hansen:]

what triggered franks change of heart???

follow the money. who will profit???

Nov 04 09:45 PM

[Steve in Gr...:]

The irony of Barney Frank publishing a list of shame is pretty thick, since at the top of any such list would have to be his name.

Nov 05 08:58 AM

[Old Rick:]

I think you can be sure that Barney will profit somehow.


On Nov 04 09:45 PM Steven Hansen wrote:

> what triggered franks change of heart???
>
> follow the money. who will profit???

Nov 05 03:50 PM

[bindlepete:]

Kiss of Death ?

Well if you are trying to raise capital you should be open to those interested in your true position re: assets and liabilities and not hide behind the fraudualnt asset valuation the NASB has given you.

The SEC should enforce this declaration of weakness so you have to sell shares at a lower price. NO? Other than this is deception.

Nov 16 10:03 AM

[Northern Da...:]

Does anybody know if there is a software on the internet that I could download that can decode or translate Barney Frank's mumbling?

.

Nov 16 04:29 PM