Could America Be Too Big To Fail?
Published in Les Echos
(France) on 18 June 2009
by Francois Vidal (link to original)
If the Obama administration has found a good mix of successful reforms of financial oversight in the United States, that would be the best solution for everyone!
That said, the plans presented yesterday by the U.S. President certainly doesn’do not constitute the regulatory big bang that was hoped for. Far from it in fact. Rather than revamping the general structure of a Swiss-cheese oversight system, Barack Obama has decided to plug the holes. Thus, the financial capitalistic revolution and its plethora of symbolic measures are gone; now comes the creation of a single overseer for the banks, a blend of current market authorities.
The ambition seems modest, far too modest when looking over the damage that American finance has inflicted on the world economy and in light of the widely held conviction that Wall Street must pay for its sins. Finally, there is a longevity issue, because the rules of the game after this crisis will be defined by legislation put in place today. These rules have a global weight; they will eventually have to meet local economic standards not only across the United States but also in places like London and Brussels.
Firstly, the president repeated yesterday that he remains convinced that financial innovation is an essential motor of the economy. Thus, there is no need to curb the financial market too strongly, especially not with a complete revision of regulatory standards, measures that, in any case, would not have passed through the Congress. One can openly regret what appears to be a lack of political courage. But the principal of reality applies to everyone. The Sarbanes-Oxley Act, passed after the bankruptcy of Enron, has shown well that the fullest laws are far from being the most efficient.
In so far as the outline presented yesterday marks a clear break from the years of deregulation that have led to the current catastrophe, it does tackle the principle causes of such crises. CDSs and other derivative products will be controlled; securitization will be better supervised, and consumer protection will be improved.
In addition, the role of the Fed will be strengthened. The Federal Reserve, the rock of the system will, with the support of the Treasury, now bear the burden of controlling the banks and funds previously thought to be “too big to fail.” If the project isn’t distorted, Bernanke will even have the right to decide the fates of these systemic institutions so as to avoid clearly putting the whole system in danger. It will be the Fed's capacity to make these banking monsters, born of crisis and chaos, submit that will reveal if the choice made by the Obama administration is indeed the best one.
That said, the plans presented yesterday by the U.S. President certainly doesn’do not constitute the regulatory big bang that was hoped for. Far from it in fact. Rather than revamping the general structure of a Swiss-cheese oversight system, Barack Obama has decided to plug the holes. Thus, the financial capitalistic revolution and its plethora of symbolic measures are gone; now comes the creation of a single overseer for the banks, a blend of current market authorities.
The ambition seems modest, far too modest when looking over the damage that American finance has inflicted on the world economy and in light of the widely held conviction that Wall Street must pay for its sins. Finally, there is a longevity issue, because the rules of the game after this crisis will be defined by legislation put in place today. These rules have a global weight; they will eventually have to meet local economic standards not only across the United States but also in places like London and Brussels.
Firstly, the president repeated yesterday that he remains convinced that financial innovation is an essential motor of the economy. Thus, there is no need to curb the financial market too strongly, especially not with a complete revision of regulatory standards, measures that, in any case, would not have passed through the Congress. One can openly regret what appears to be a lack of political courage. But the principal of reality applies to everyone. The Sarbanes-Oxley Act, passed after the bankruptcy of Enron, has shown well that the fullest laws are far from being the most efficient.
In so far as the outline presented yesterday marks a clear break from the years of deregulation that have led to the current catastrophe, it does tackle the principle causes of such crises. CDSs and other derivative products will be controlled; securitization will be better supervised, and consumer protection will be improved.
In addition, the role of the Fed will be strengthened. The Federal Reserve, the rock of the system will, with the support of the Treasury, now bear the burden of controlling the banks and funds previously thought to be “too big to fail.” If the project isn’t distorted, Bernanke will even have the right to decide the fates of these systemic institutions so as to avoid clearly putting the whole system in danger. It will be the Fed's capacity to make these banking monsters, born of crisis and chaos, submit that will reveal if the choice made by the Obama administration is indeed the best one.
too big to fail
america is a failed economy and until the folks in europe figure that one out they will also fail.
imperialism has it price ask england or russia that one.
the folks in europe know so little about the american mentality.
they believe what they read in the mass news media which is controlled by the industrial military complex and mega corps.
look close who is getting the money for bailouts and bonuses.
obama knows who butters his bread.
it takes mega money to win a federal election in america. corp money.
hey the titanic was too big to sink and look how that turned out.
in america profits and materialism outweigh the needs of the sick and needy.
when we americans get bored and lonely with our materialism we shop till we drop.
materialism is running its course in america.
there is this trickle down theory with capitalism that if corporations make big money it will trickle down to the working folks.
well trickle down trickled up. big time.
the human ego is way to selfish at this stage of our evolution of consciousness process for the trickle down to work.
communism in its ignorance never understood this.
god I love america the rich get richer and poor get poorer. capitalism is of god ask and you shall receive. this is christian thinking in america.
how few in the world understand the american mentality.
the prisons are overflowing, the trade deficit is mega large, the national debt can never be paid back, and assult rifles are sold at gun shows to anyone that wants one, the drug war is lost, the war on terror is a gold mine for the industrial military complex, and 60% of all families going bankrupt are due to health care costs, our major auto makers have been driven to socialism to survive, and our unions are no more, and our politicans are bought and paid for by the rich corps with their multitude of lobbyists.
and we still believe we are the greatest country on earth and want to share our economic and political idealogies with the rest of the world.
some times even at gun point and the world does nothing. sits and watches our imperialism even when we torture others. how is that for fear of a super power.
we americans worship at he altar of this super power status. even during a recession we do not cut this military spending. this industrial militry complex even has control of the major universities in the grants of billions for research into how to kill more people in a war.
and who says wealth is not a harsh teacher?
sad very sad to watch your country self destruct.
the good news: spiritual laws apply even to nations. in this self destruction we americans will learn this very important lesson.
few will understand my words very few.