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John B. Lounsbury Ph.D., CFP is a financial planner and investment advisor in Clayton, NC.
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  • Robert Johnson Hushed Up 3 comments
    Nov 8, 2009 08:49 PM
    Robert Johnson is an experienced student of financial markets and Director of Financial Reform for the Roosevelt Institute.  He has at times supported positions I would debate, but on needed financial reform he is more right than wrong.  At any rate, it appears that his congressional testimony last month was cut off at the five minute mark and his written testimony has not been posted at the Congressional web site.  My source for this is a post at Phil's Stock World (here).  Sources mentioned include Edward Harrison at http://www.creditwritedowns.com/ and Lynne Parramore at http://www.newdeal20.org/?author=6.  Edward is an SA contributor and you may find something posted by him on this topic tomorrow (or thereafter).

    A complete copy of Johnson's testimony can be found here.  A paragraph from early in the testimony is excerpted below:

    I believe that the most important dimension of all of the needed financial reforms is the precise intersection between Too Big to Fail financial institutions and OTC unregulated derivatives. This intersection is the equivalent of the San Andreas Fault of our financial system. We are in a new era where the size of the capital markets, and their derivative instruments are a dominant dimension of the intermediation of credit. Derivatives transparency is essential to the safety and soundness of our financial system as a whole and it is essential to the protection of the public treasury. Without OTC derivatives reform enhanced resolution powers for dealing with insolvent institutions could well be rendered impotent and future crises in the credit allocation system will likely be longer and deeper than is necessary.

     
    Themes: financial reform, derivatives
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This post has 3 comments:

  •  
    The disappointing disillusioning part of this kind of report is that it makes it SO clear that not only is a corrupt vampire state in power on Wall Street, but the same vampire state also exists in Washington...that they are dependent upon one another, they don't want change, they want to preserve the system that has made them rich kings and has made most Americans debt slaves. Changing the power structure would be hard enough if Washington stood opposed to Wall Street excesses. But Washington is in bed with Wall Street. Wall Street is the source of Washington's post-career affluence. Serve a few terms in Washington; then hop on up to New York and make the BIG MONEY as a consultant.

    How do you reform a system when the reformers are fearful that reform might 'disturb' their future cornucopia?

    Washington can't reform Wall Street because Washington doesn't want to reform Wall Street. Americans can reform Wall Street by selling stocks and bonds and refusing to play until Wall Street fixes its problems, and becomes transparent. Let the market go down. Deflation will cure most of our moral problems. That's why deflation is built in to the system: to reform a society's moral corruption.
    Nov 09 01:34 AM | Link | Reply
  •  
    Perhaps SA contributors should arrange their own Congressional forum. (I can think of a few in Congress who might find this useful). More constructive than a Tea Party. Heck, we could probably get close to a Million Man march.
    Nov 09 02:31 AM | Link | Reply
  •  
    Maybe we should also arrange our own stock exchange. Cut New York out of the picture entirely.


    On Nov 09 02:31 AM lower98th wrote:

    > Perhaps SA contributors should arrange their own Congressional forum.
    > (I can think of a few in Congress who might find this useful). More
    > constructive than a Tea Party. Heck, we could probably get close
    > to a Million Man march.
    Nov 09 02:50 AM | Link | Reply
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