The coming liberal thugocracy

[lookout123]

tw, which regulations did the republican congress eliminate that caused the current mess?

[tw]

Originally Posted by lookout123

tw, which regulations did the republican congress eliminate that caused the current mess?

Some of the so many posted previously in other threads.

Others not mentioned. Basel 1 that defines equity required to be held. Investment banks were exempted from this international standard by the George Jr administration. Where did the liquidity crisis hit hardest? Where the exemptions were was most aggressively flaunted.

Basel 2 which addressed these stability threats to include the latest investment vehicles. Basel 2 is standard throughout the world. Large American (international) banks that also had to meet Basel 2 remained stable. But George Jr refused to implement Basel 2. After all, with higher debt to equity ratios, then profits can be higher. Basel 2 would only harm profits - and those campaign contributions.

Previously noted: the 1990s Republican Congress threatened to eliminate all SEC funding if Clinton tried to increase SEC enforcement. We liked spread sheets myths in Waste Management, Tyco, and later in Enron. We liked letting them create a mythical CA energy crisis - and no one gets investigated. Clinton administration was forced to have an SEC without any funding increases - a compromise with the Republicans who threatened to eliminate the SEC. Oklahoma had to prosecute before George Jr would consider prosecuting Enron.

Suddenly mortgages are issued with virtually no underwriting? This all happened because no regulations were changed? No. This happened with S&L style changes combined with diminished regulation enforcement. No wonder Harvey Pitts, doing the party agenda, refused to accept more money for the SEC even after Enron.

These stories are long, numerous, AND explain why, during the current meltdown, nobody can trust the fiscal stability of their counter parties - the freezing of credit markets.

Not that I expect loyal Republican extremist to admit to any of this. In fact, Republican extremists will even deny that investment banks were permitted by George Jr's administration to increase debt to equity ratios from 12:1 to 30:1. Or that AIG's ratio may be $1trillion to $67billion. Clearly the meltdown is only the usual cyclic market activity.

One would expect the Congress and administration to crack down on equity rating agencies after Long Term Capital Management. Nope. Another precursor to what has now happened – ignored because we did not want to regulate our financial firms. After LTCM, little was done. Finance corporations that most need more regulation and have a long history of deserving such regulation. Finance industry does not create American wealth – too often leaches on what creates American wealth.

What do we do? Predicted long ago by this poster - the government will put out something under $2trillion in corporate welfare. Instead of eliminating the biggest reason for our meltdown - top management - instead we are rewarding this nation's least productive companies.

Well GM will get another $10billion for being one of the most anti-American companies in this country. How do they qualify? First they must become more of a finance company. Why do we not reward productive companies with $2trillion? Instead we reward the companies who get the most regulation? Instead we protect the management most responsible for this meltdown? Yes, that is what the Republicans did for over a decade and now what some Democrats are doing in a desperate (and somewhat misguided) attempt to fix the damage.

What created the S&L crisis? Deregulation. What created this current economic meltdown? Insufficient regulation and so little enforcement that everyone rewrote contract to be 'regulated' by the Feds - not by the states where regulations were not diminished or eliminated.

[Undertoad]

Originally Posted by tw

Some of the so many posted previously in other threads.

Point to ONE. Just ONE.

http://online.wsj.com/article/SB122403045717834693.html

While there has been significant deregulation in the U.S. economy during the last 30 years, none of it has occurred in the financial sector. Indeed, the only significant legislation with any effect on financial risk-taking was the Federal Deposit Insurance Corporation Improvement Act of 1991, adopted during the first Bush administration in the wake of the collapse of the savings and loans (S&Ls). FDICIA, however, substantially tightened commercial bank and S&L regulations, including prompt corrective action when a bank's capital declines below adequate levels and severe personal fines if management violates laws or regulations.

. . .

Originally Posted by tw

Basel 1 that defines equity required to be held. Investment banks were exempted from this international standard by the George Jr administration. ... But George Jr refused to implement Basel 2.

[citation needed]

[tw]

Originally Posted by Undertoad

Point to ONE. Just ONE.

Where does the FDIC legislation make Enron accounting illegal? It does not. The 1991 legislation addresses principles from Basel 1 - an international standard for how much equity a bank must hold. Equity in banking – not public corporation accounting standards.

BTW, the US is the only nation that does not comply to the International standards for accounting? The US standards are different from the rest of the world.

Only American banks required to meet Basel 2 are those who operate internationally. And those are the banks that have been so stable during this meltdown. Where did George Jr implement Basel 2? He did not even do that.

Enron style accounting remains so common as to even be evident in AIG just before its collapse. The detail cited in numerous other posts. Yes, the auditor had doubts. But today's deregulated accounting and near zero SEC enforcement made it difficult even for the internal auditor or PriceWaterhouse to see that AIG was collapsing.

Fortunately we have the accounting that a business school graduate - George Jr - wants. So what happened to all that cash in the Highway Trust Fund that the spread sheets say is still there? Sabanes-Oxley does not even require the president to sign off on the accounting.

UT tells us that the new American deregulated accounting standards are good? UT - show me where Enron style accounting practices were made illegal. You cannot. AIG was fully involved in hiding losses even just before the collapse. So what are these 'surprise' AIG losses that have already consumed $120billion? UT tells us everyone knew about these losses? Hardly. Due to today's deregulated accounting, nobody knows how much more AIG will lose.