Monday, January 25, 2010

This Battle Is Far From Over

In order to have a fight, you have to have someone to fight with. We welcome Paul Volcker and Elizabeth Warren to the battle. Now, let us get behind them and push for a win. It is your money.

What happened on Wall Street just a short time ago was the culmination of years of work to destroy the world of banking and investment securities regulations. This world did not happen over night. The laws that were put in place almost 80 years ago was the target of men, of a philosophy of deregulation, that started before the ink was dry on that legislation before many of us were even born. This philosophy of deregulation was an attack on the philosophy of government that came out of the New Deal. From the election of President Reagan until the close of President Bush #44, the conservative philosophy of deregulation or the idea of self regulating markets had its way in Washington, in both the Congress and The White House. President Clinton was no better than any of the Republicans that came before or after him when it came to standing up to this error filled political-economic philosophy. Whether he knew better and did not care, I will leave to the historians to decide, the results is what matters.

I, personally, saw what crap was sold by Wall Street brokerage houses in the late 1980s and was appalled by what I saw. The New York Stock Exchange, that once required substance before a listing was granted, had decided that making money was more important than protecting the investor from ill conceived money making ideas. These products made money, but only for the brokerage firms that sold the crap and their brokers that pedaled the stuff to unsuspecting clients. Many of the brokers themselves did not understand that the stuff they were being given to sell was pure shit.

With deregulation becoming the tune of the day, investment houses became more bolder and more greedy as structured finance came into its own. It did not take long for the big investment houses to realize that the growth for the credit rating agencies was coming from the growth of the mortgage-backed bonds. From there, it was a short distance to the reality of "shopping" a rating. With the triple-A rating in hand, the investment firms and their teams of sales people could sell these bonds to professional money managers around the world. It was just a matter of time before the last shoe would drop and the game would be over and the mortgage-backed bond market meltdown will have covered the globe.

The two warriors that have entered the battle on the side on common sense and regulation is an 80 year old man by the name of Paul Volcker and a woman Harvard Law professor by the name of Elizabeth Warren. These two individuals need our support because they are trying to enlighten President Obama's administration to the need for regulation of banking and investment securities and their markets. On the other side of this fight are two men from the other side of the political-economic philosophy, that of deregulation. Larry Summers and Treasury Secretary Geithner need to go. It is just that simple. President Obama needs to tell these two men he has had enough of their advise, and that it is no longer needed, period.

This fight is far from over. We need people to write The White House and support the people that speak for the people on Main Street. Wall Street has their lobbyists and they are paid well. The rest of us need Paul Volcker and Elizabeth Warren to speak for us. Get behind them and write or call. This battle is far from over.

Stay tuned.

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