A wave of populist outrage has put financial overhaul back onto the agenda in Washington, D.C. But what's being considered might not prevent another meltdown.
From the imposing brass doors of Goldman Sachs (GS, news, msgs) in New York to a bankers convention in Chicago to a Bank of America (BAC, news, msgs) lobby in Iowa, ticked-off Americans are gathering to let bankers feel their rage.
Their anger is as understandable as it is palpable. Americans rightly blamed the banks for the financial crisis. Now they're peeved that bankers rescued by massive taxpayer bailouts are rewarding themselves with huge bonuses as they skimp on the lending that would create jobs and help the economy.
This populist outrage has put financial reform back on Washington's agenda. But here's the hitch: For all the talk, the experts say, nothing proposed thus far would prevent the risky behavior that led to the meltdown.Msn.Video.createWidget('PlayerAd1Container', 'PlayerAd', 304, 314, {"configCsid": "MSNmoney", "configName": "player-money-4x3-articles-inline", "player.vcq": "videoByUuids.aspx?uuids= 1381c8e3-bffe-4569-bf0b-9ce7333df049,e48e83d2-8349-488e-b8e5-51b7fef04439,0559a10f-eb6f-4ebb-b63b-819f6b6a1cbe,a19a7988-b35b-42c7-9c59-cc584d319076,ec9f65fd-f033-4657-9ce6-403daf6dccbe", "player.fr": "iv2_en-us_money_article_Investing-CompanyFocus-inline"}, 'PlayerAd1');Msn.Video.createWidget('Gallery4Container', 'Gallery', 304, 150, {"configCsid": "MSNmoney", "configName": "gallery-money-articles", "gallery.linkbackLocation": "bottom_left", "gallery.numColsGrid": "3", "gallery.categoryRequests": "videoByUuids.aspx?uuids=1381c8e3-bffe-4569-bf0b-9ce7333df049,e48e83d2-8349-488e-b8e5-51b7fef04439,0559a10f-eb6f-4ebb-b63b-819f6b6a1cbe,a19a7988-b35b-42c7-9c59-cc584d319076,ec9f65fd-f033-4657-9ce6-403daf6dccbe;videoByTag.aspx%3Ftag%3Dmoney_dispatch%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1;videoByTag.aspx%3Ftag%3Dbest%2520of%2520money%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1"}, 'Gallery4');So while bankers and pundits warn against this popular uprising, I say: Bring it on. It might be our only hope.
Here's a look at what's been proposed and the changes we should really be demanding.Nothing trickled down You'll remember that the bailouts were supposed to save not just banks but the economy -- and be accompanied by reform to prevent future meltdowns.
"There was a theory that if you bailed out the banks, they would lend money to small businesses, and they are not," says Stephen Lerner of the Service Employees International Union. "Banks have unlimited money to reward themselves, but they have no interest in lifting up the country that helped them."
It's those rewards that have spurred a second round of outrage. The top six banks, which include Citigroup (C, news, msgs), Bank of America and Goldman Sachs, are on track to pay out $140.5 billion in bonuses for 2009, the SEIU calculates.
"People are angry about it, and they have a right to be angry," says Heather Booth, the executive director of Americans for Financial Reform. "Banks got funding, and we lost our jobs and homes, and our pensions and college savings have been jeopardized. At a time when everyone else is feeling the squeeze, you see the bank executives making off like bandits."
The bankers -- and some pundits -- have met the outrage with warnings about the proverbial pitchfork-wielding mobs. Citigroup's market strategist, Tobias Levkovich, recently warned that "objectionable" populism might "open up a treacherous path if mob mood swings essentially take precedence to reasoned deliberation."Reviving the issue Perhaps it could, and I, of course, support no violence. But no one has been tarred and feathered yet, while more than a year of reasoned deliberation has yielded nothing in the way of reform.
In fact, until recently, reform seemed to have dropped off the radar screen. Then bailouts and bonuses became issues in the huge upset victory by Republican Scott Brown in Massachusetts' special Senate election.
The populist push for banking reform
Suddenly, everyone in Washington wanted to be a populist. President Barack Obama unveiled a batch of reforms at a news conference that included macho posturing about wanting "to get into a big fight with the banks." Republicans talked just as tough, though nothing proposed has much GOP support.This uproar has made it more likely that something will come out of Washington before the November elections. But the experts see a huge gap between what's in the works and what's really needed.
"Beyond a doubt, the reforms on the table would do nothing to fix the problems," concludes Simon Johnson, a Massachusetts Institute of Technology professor and a former International Monetary Fund chief economist. "Their hearts are not really in substantial change."
I hear the same thing from just about every banking expert I talk with.
Let's look at the Obama proposals first.
Continued: The bank taxMore from MSN Money
Farewell to Wall St.'s decade of hubrisWhy bankers haven't earned bonusesObama proposes return to sanity in bankingIs your land line phone dead? Is lavish CEO pay on the way out?1 | 2 | 3 | next >
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ReplyReport AbusePoliticallyHomeless #2Tuesday, February 02, 2010 8:41:17 PMWhy is it "understandable" to blame the banks? Have you not seen the C-Span videos -- Congressional sessions, undeniable proof that Democrats fought an sabotaged all efforts to regulate the subprime mortgages -- in apparent payback for $200 million in campaign cash from Fannie Mae and Freddie Mac.See Congress verbally attacking the whistleblower who first exposed the fraud, Fannie Mae then headed by former Clinton Budget Director Frank Raines.Raines then paid $26 million in fines for fraud. One of the most corrupt events in American history. And predicted by the NY Times in 1999. When President Clinton began forcing banks to make more subprime loans then banks wanted to, the Times predicted that an economic downturn could cause massive bailouts equal to the S&Ls in the 1980s .. which is precisely what happened.Complete videos, timeline and NY Times link athttp://politicallyhomeless.net/?p=283"Know the truth and it shall set you free"ReplyReport AbuseHauptmann #3Tuesday, February 02, 2010 8:53:34 PMWhy all the one party blame? Both parties wanted and got lax regulations, etc. As for "forcing" banks to make sub-prime loans, the banks which got into trouble were dazzled by the idea that all they had to do was to charge very high interest rates to substandard borrowers. Of course, they forgot about defaults and loss of principal. The losses were concealed by manipulating delinquency reports to make loans appear to be of good quality and through the "miracle" of accruing interest---without correcting the accrual in succeeding periods. Ultimately, the interest was capitalized either by making refinancing loans and adding the interest or by making a separate loan, creating income that existed only on paper. There are any number of banks which stayed with what they knew and are still sound. If you doubt these facts, go to FDIC's web site and look at tithe Material Loss Reviews under the Inspector Genneral.section.ReplyReport AbusePoliticallyHomeless #4Tuesday, February 02, 2010 9:58:51 PM>>>Why all the one party blame? Both parties wanted and got lax regulations, etc. Can we say, "Blind-faith Gullible"?See the video. See the proof. The Bush Administration issued a warning, less than three months in office. This was followed by an alert ... see the Bush Administratyion testifying FOR regulation. C-Span. Official. Fact.See Greenspan testifying for regulation. Fact.You are in denial, like a GOP Birther. And you won't even look at the proof. FACT. You are a pawn. FACT.See the proof and get back to us. ReplyReport Abusenohlp4uorme #5Tuesday, February 02, 2010 10:35:58 PMYou know let them take, take ,take . The food bowl for them will run empty to . And when that happens God help us all. Even the dumbest man can see the banks own the gov't . So until that changes nothing will. Not talking just sum gov't. ALL right. left. middle. ALL!!ReplyReport Abusefiat register #6Tuesday, February 02, 2010 10:53:59 PMHow about a 30% reduction on principal owed on all mortgages, the rate set at 5% fixed with payments recalculated, and a three month extension period before the first payment is due in exchange for no punitive tax on the banks as long as they stop deflating.ReplyReport Abusenohlp4uorme #7Tuesday, February 02, 2010 10:59:18 PMthey can't do that . It would be helping people and take from there next golf outing.ReplyReport Abusenohlp4uorme #8Tuesday, February 02, 2010 11:03:27 PM they can't do that It would mean helping people And it would take from there next golf outing.ReplyReport Abusenovalifer #9Tuesday, February 02, 2010 11:15:57 PMOur current banking system is based on speculation rather than fact or truth and as a hard working American citizen I am tired. We need to re-establish the truth in our fundamental practices or I would estimate a true split in classes will appear.ReplyReport AbuseBenkl #10Wednesday, February 03, 2010 12:21:38 AMOne big difference the Politicians didnt allow free morgages to enrich themselves unlike most of the Banks and the first to fall which started the crises had nothing to do with the morgage securities Bear Stern , Lehman bro. , Wash Mutual etc. If these didnt fail it may be quite likely that Freddie M and co would have been ok.
Needed.
1. Reserve stuffed up with too easy money from now on all bubbles will be pricked just like the fesering boils they are.
2. Companies too big to fall who wont go allong need the AT&T treatment. ANyone complain about the break up of AT&T ? Its a good thing. Let Voiker have his way (even the part the Dems and Reps are too gutless for).
ReplyReport Abuse1 - 10 of 16PreviousNext_ucf13('0'); _iuc2Om1('MSNPortalInlineComments','Initial_Load_Comment_View','http://articles.moneycentral.msn.com/Investing/CompanyFocus/6-banking-reforms-we-really-need.aspx?','en-us');Are you sure you want to delete this comment?Report AbusePlease help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease notify us using the Report abuse form below. We will investigate your report and take appropriate action against offenders. We report all illegal activity to authorities.CategoriesSpam or advertisingChild pornography or exploitationProfanity, vulgarity or obscenityCopyright infringementHarassment or threatOtherAdditional comments(optional)100 character limit To add a comment, pleasesign in/*MSN PrivacyLegalAdvertiseRSSHelpFeedbackSite mapAbout our ads© 2010 Microsoft/*
Here's a look at what's been proposed and the changes we should really be demanding.Nothing trickled down You'll remember that the bailouts were supposed to save not just banks but the economy -- and be accompanied by reform to prevent future meltdowns.
"There was a theory that if you bailed out the banks, they would lend money to small businesses, and they are not," says Stephen Lerner of the Service Employees International Union. "Banks have unlimited money to reward themselves, but they have no interest in lifting up the country that helped them."
It's those rewards that have spurred a second round of outrage. The top six banks, which include Citigroup (C, news, msgs), Bank of America and Goldman Sachs, are on track to pay out $140.5 billion in bonuses for 2009, the SEIU calculates.
"People are angry about it, and they have a right to be angry," says Heather Booth, the executive director of Americans for Financial Reform. "Banks got funding, and we lost our jobs and homes, and our pensions and college savings have been jeopardized. At a time when everyone else is feeling the squeeze, you see the bank executives making off like bandits."
The bankers -- and some pundits -- have met the outrage with warnings about the proverbial pitchfork-wielding mobs. Citigroup's market strategist, Tobias Levkovich, recently warned that "objectionable" populism might "open up a treacherous path if mob mood swings essentially take precedence to reasoned deliberation."Reviving the issue Perhaps it could, and I, of course, support no violence. But no one has been tarred and feathered yet, while more than a year of reasoned deliberation has yielded nothing in the way of reform.
In fact, until recently, reform seemed to have dropped off the radar screen. Then bailouts and bonuses became issues in the huge upset victory by Republican Scott Brown in Massachusetts' special Senate election.
The populist push for banking reform
This uproar has made it more likely that something will come out of Washington before the November elections. But the experts see a huge gap between what's in the works and what's really needed.
"Beyond a doubt, the reforms on the table would do nothing to fix the problems," concludes Simon Johnson, a Massachusetts Institute of Technology professor and a former International Monetary Fund chief economist. "Their hearts are not really in substantial change."
I hear the same thing from just about every banking expert I talk with.
Let's look at the Obama proposals first.
Continued: The bank taxMore from MSN Money
1 | 2 | 3 | next >
One big difference the Politicians didnt allow free morgages to enrich themselves unlike most of the Banks and the first to fall which started the crises had nothing to do with the morgage securities Bear Stern , Lehman bro. , Wash Mutual etc. If these didnt fail it may be quite likely that Freddie M and co would have been ok.
Needed.
1. Reserve stuffed up with too easy money from now on all bubbles will be pricked just like the fesering boils they are.
2. Companies too big to fall who wont go allong need the AT&T treatment. ANyone complain about the break up of AT&T ? Its a good thing. Let Voiker have his way (even the part the Dems and Reps are too gutless for).
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