Deregulation Damned Again

The Madoff scandal is yet another manifestation of the deregulationist foolishness which reached it's peak in the Bush administration, but has been ongoing since Reagan.

The SEC is the case study in this, as it's complete failure - in fact, refusal - to regulate is behind some of the most egregious problems we face. This piece summarizes the longer piece here, describing how the Bush appointees undermined the Agency.

SEC chief Cox is seen here lamenting SEC failure to catch Bernie Madoff with multiple warnings.

Cox was previous seen here and here lamenting that "voluntary self regulation" of large investment banks doesn't work. Oh, quelle surprise!

The guy Bush appointed before Cox presided over SEC approval of the insane idea that, instead of being limited to 12:1 leverage, Investment Banks should be allowed up to 40:1 leverage. Goldman Sachs, then led by the theiving Hank Paulson, now Secretary of Treasury and Kleptocracy, headed the charge requesting that rules change.

We also have the CDS mess - once upon a time, it was possible to let a company fail but now, Credit Default Swaps intertwine everything in a gigantic booby-trap. The totally unregulated nature of CDS was enshrined in law written by worthless fuck Phil Gramm and signed by Clinton, a man so bought and paid for by the financil indistry that he lobbied for and signed Gramm-Leach-Bliley as well, giving us the (recently bailed) Citigroup.

So wat do the deregulationist do, now that they are surrounded by the smouldering ruins of the financial world that they caused?

Some of them act like a 2-year old, standing in a puddle of of his own urine, but pointing at the family dog: "The CRA did it." No amount of facts differentiating between CRA and subprime will dissuade them.

Some use the brilliantly circular logic that the SEC, after being systematically gutted, couldn't catch Madoff, therefore regulation doesn't work; or they blame the GSE for lowering loan standards, ignoring suggestions that to google the phrases "yield spread premium" and "conforming loans" would actually provide factual information about what really went on during the run-up of the bubble.

None of them ever sit back and say, "Oh, we got what we wished for and it turned to shit, so maybe we were wrong". Nope, can't have that. Big business must be allowed to carry on as usual - with the occasional $7 Trillion loan/gift from Treasury and FRB, as needed.