We agree with President Obama that it is ludicrous that, a year after a financial crisis almost destroyed the US economy, regulators haven't changed a thing.
Tim Geithner's "Too Big To Fail" policy is firmly in place, and our financial institutions can do whatever they want again.
So we were relieved to hear that Obama is finally deciding to do something about this.
But here's the problem: His new proposal won't fix a thing.
Under Obama's proposal, "banks" will no longer be able to trade for their own accounts or own, sponsor, or invest in hedge funds. So if you want to trade for your own account or own, sponsor, or invest in hedge funds, then... just don't be a bank!
In the fall of 2008, Lehman Brothers wasn't a bank. Neither was Bear Stearns. Or Goldman, Morgan, or Merrill Lynch. Or Fannie or Freddie. Or AIG--remember AIG?
None of these firms were banks.
Under Obama's new proposal, all of these firms would have been able to trade for their own accounts and own, sponsor, or invest in hedge funds.
And excuse us if our memory's faulty, but weren't these non-bank firms, along with with other non-bank firms like the idiot mortgage lenders, the ones that got us into trouble in the first place?
In other words, Obama's wildly popular new plan still hasn't addressed the real problem, which is not "banks." It's Tim Geithner's "Too Big To Fail." Until we address that one--preferably by making it possible for ALL firms to fail without taking the system down with them--we won't have done a thing.
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Thank you Goldman Sachs for proving you can cut banker pay and not lose all your best employees!
Before you get too excited about the new financial fix, here are six huge things Obama missed.
Even the Europeans have given up on Barack Obama.
Looking for the next sovereign debt blowup? Check out rich countries, not the poor ones.
The new regulatory regime should be called the "Hey Goldman! You're Not Going To Be So Profitable Anymore Act Of 2010."
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