It will be interesting to see what this new legislation aimed at improving the financial services industry is like. Everyone has their own idea as to what is needed in order for this legislation to do the job.
I believe that the Credit Rating Agencies (CRAs) need to be watched. For me, they are the key. Eliminate phony ratings and you eliminate the bubble in housing, reduce the popularity of credit default swaps, eliminate one of the causes of a liquidity crisis and ultimately prevent another mortgage-backed bond market meltdown which can lead to a financial crisis and an economic recession.
Counterfeiting, whether by engraving or misapplied bond ratings, will eventually undermine a currency or the investment services industry. The need for accountability, transparency and enforcement will still be needed, Bernie Madoff was not the only thief on Wall Street.
Stay tuned.
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