All Your Biz Are Belong To Us

Well, actually, not “us” but “him”

Reporting from Washington — The Obama administration this week will propose the most significant new regulation of the financial industry since the Great Depression, including a new watchdog agency to look out for consumers’ interests.
Under the plan, expected to be released Wednesday, the government would have new powers to seize key companies — such as insurance giant American International Group Inc. — whose failure jeopardizes the financial system. Currently, the government’s authority to seize companies is mostly limited to banks.

Look, I think there needs to be clear regulation of a lot of the financial industry, and I think that limits need to be in place so that no one company’s demise could wreck the entire economy. But there’s no way in hell the government should have the power to go around seizing companies.

On Monday, Obama administration officials sketched the outlines of the plan the president is to unveil Wednesday. They said it would seek to reduce gaps in regulatory oversight, rein in the use of mortgage-backed securities and other complex derivatives, reduce incentives for companies to take excessive risk and give the government new power to quickly intervene during any future crises.

The government should regulate the derivatives market in a simple way: amend the rules of incorporation so that the traders who initiate these trades, and the executives who sign off on them, are personally liable for any losses that occur. These huge losses occurred in part because the people who came up with and approved these trades didn’t understand them, and no one had the stones to say :you know, I don’t think we’ve thought this through all the way” and put the kibosh on the trades. If, however, these folks faced the threat of personal financial ruin if these things tanked then maybe they’d take a closer look at the risks involved.

One Response to “All Your Biz Are Belong To Us”

1. nightfly says:

   June 17, 2009 at 9:40 am

   There’s already a watchdog agency for consumer’s interests – consumers. And if you want to get technical, the SEC and the Banking and Finance Committees of both houses are also oversight. Of cousre, the House and Senate types were basically only overseeing the payoffs from Fannie Mae and etc. into their personal accounts – but you know, even that shows what an educated consumer can do when he’s looking out for number one.