“Why did risk become so concentrated in some of the most regulated institutions in the world?”
By Daniel at 5 December, 2009, 5:03 pm
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The premise of this thesis is a logical fallacy called “begging the question”, most often used to defend a specious or circular argument.
Greenspan and Bernanke were lobbied to ignore MBS’s because banks “understood the risks” and were “capable of regulating themselves”. The garbage was rated AAA, and the Fed was asleep at the wheel, having been mollified by Greenspan, the SEC and the banksters into thinking that little to no regulation is the best regulation.
Where is the so-called proof that these institutions were so heavily regulated? Glass-Steagall had already been gutted, Brooksley Born was eviscerated by Phil Gramm and allies for wanting to (gasp) regulate the derivative market and the counterparties that wound up tanking AIG, and the rating agencies gave MBSs AAA ratings, making any attempt at regulation seem excessive, because after all…these were “safe” investments!
The problem was not the amount of regulation, the problem was the lack of enforcement of existing laws resulting in MISregulation based on letting the banking lobbyists, stupid and corrupt legislators and the executive branch turn a blind eye to the real problems that were developing under the ideology of letting the ‘free’ market take care of itself.
- NoSingleOne
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