Ponderable
- Thread starter Bruddah IZ
- Start date
Wez
DA
The SEC suffers horribly from Regulatory Capture and the Revolving Door. They also are very underfunded, which is normal in Gov. People squawk about needing regulations and then under fund the ability to enforce regulations.
Wez
DA
I disagree, Espola and I agree more then disagree, but on this we've got some friction.
Bruddah IZ
DA
Wez
DA
It's usually the common folk who get hurt by free market failures (not that I'm saying we shouldn't have them). Rich folk can afford the losses. A few fortunes will crumble, but "savers" have their money in the stock markets, just like rich folk do.
Bruddah IZ
DA
Bailouts intensify the hurt beyond what it should be. But I think we more agree here. I still choose GF over Hillary or DT because I think he acknowledges the revolving door and regulatory capture.
Typical espola wants to see FACTS, not garbage grabbed off the net.
Wez
DA
I disagree, although it's an interesting thought. It allows for more firms to be scrutinized each year and alleviates the pay disparity between public and private, which is the main driver of Revolving Door problems.
Bruddah IZ
DA
I disagree, the main driver of revolving door problem$ (incentives) are corporate Bailout$ that exacerbate and perpetuate pay disparity by artificially inflating assets as described below by Special Inspector General for the Troubled Asset Relief Program (SIGTARP) Neil Barofsky:
I'll read the quote from p. 181, paragraph, it says: "In that respect, Geithner's opening of the spigot of taxpayer cash for AIG was more of a bailout of the banks than it was for AIG itself. The government thereby sent Wall Street a very dangerous message. Counterparties who do business with financial institutions, whose collapse could have devastating consequences for the entire financial system, needn't do due diligence or worry about their counterparty risk. Instead, they can rely on the government to bail them out"
Increasing the budget and size of the SEC will do nothing to keep the Geithner's of the world from perpetuating pay disparity.
Wez
DA
You are confusing two different things.
1. The bailouts - leads to many ailments, such as the one(s) you describe above.
2. Annual funding for Regulatory Agencies - This is the budget needed to carry out the enforcement of laws designed to prevent crisis in the first place.
The inability to properly enforce regulations on the books, is one of the factors that led to the financial crisis.
So when you say: "Increasing the budget and size of the SEC will do nothing to keep the Geithner's of the world from perpetuating pay disparity." You are conflating two different things, the adequate funding and enforcement ability of Regulators is one way we avoid problems in the future. You are partially right in that Geithner's of the world creating pay disparities, but linking that problem with adequate Regulatory funding is where you go off the rails a bit.
Bruddah IZ
DA
1. Bailouts undo the laws designed to prevent crisis. For example, the order of contracts.
2. Annual funding for Regulatory Agencies is a waste of money given that Bailouts undo the laws designed to prevent crisis. Regulatory agencies tend to enforce laws post crisis, post bailout.
3. Financial crisis, as you know, are systemic. Funding a law enforcement agency, like the SEC, to enforce securities laws post-crisis is not avoidance.
17SquirrelsDad
BRONZE
GJ smokes too much pot to be my candidate, sorry. I've always liked the Libertarian platform, but they still need a 'celebrity' candidate to help pull it off.
Bruddah IZ
DA
That's freakin' funny. He also climbed Mt. Everest. I guess he likes gettin' high.
Wez
DA
Saying: "Annual funding for Regulatory Agencies is a waste of money given that Bailouts undo the laws designed to prevent crisis.", is a bit loony, even from you. Your "if / then" statement is off.
Look, BIZ, I understand you are a "free market" kind of guy, who probably likes to think that free market solutions are always best, but history tells us otherwise. With that logic, we may as well get rid of the Police departments because they tend to deal with criminals, "after crimes have been committed".
Regulators like the SEC, examine firms to insure compliance with laws. If they are adequately funded, that reduces the chances of another crisis, it doesn't remove the chance though.
Wez
DA
That actually raises his score in my book.
Bruddah IZ
DA
Not an "if/then" statement is it? You provided a long list of crimes despite Annual funding. Additional funding does not equal better enforcement. The opposite is often true as history clearly proves.
Government intervention/bailouts in markets abrogate financial regulations making market solutions impossible.
Wez
DA
And how long would that list of crimes be if we had no funding for regulators? I guess we wouldn't know because none of them would be caught. How does adequately funding a "police department", as opposed to underfunding it, lead to more crime? More police = more crime?
No BIZ, they don't "abrogate" regulations, it just creates different and additional problems.
Bruddah IZ
DA
When banks are bailed out, you pass the losses of the bank on to the taxpayer....long term. Essentially, what you've done is made the tax payer an investor in those banks against their will. The taxpayer has no claims against the bank, while strengthening the claims of the bond holders via tax payer leveraged bailouts.
Wez
DA
Yes, BIZ, we agree bailouts are bad. Drop that notion for a moment and describe exactly what a bailout has to do with adequately funding a regulator, because so far, you just keep mixing tow different topics, bailouts vs. adequately funding the agency meant to prevent the need for a bailout.