NY Times: Don’t Blame the New Deal

[marmar]

Don’t Blame the New Deal
Published: September 27, 2008


This year’s serial bailouts are proof of a colossal regulatory failure. But it is not “the system” that failed, as President Bush, Treasury Secretary Henry Paulson and others who are complicit in the calamity would like Americans to believe. People failed.

For decades now, antiregulation disciples of the Reagan Revolution have eliminated vital laws, blocked the enactment of much-needed new regulations, or simply refused to exercise their legal authority.

The regulatory system for banks, securities, commodities and insurance is unwieldy and in need of modernization. The system has gaps, like the absence of regulation for “innovations” such as credit default swaps, the insurance-like contracts now valued at $62 trillion whose destructive potential prompted the bailouts of Bear Stearns and the American International Group.

But the failures that have landed us in the mess we are in today are not mainly structural. To assert that they are masks deeper failings and sets false terms for the upcoming debate on regulatory reform.

Under a law passed in 1994, for example, the Federal Reserve was obligated to regulate banks and nonbank lenders to curb unfair, deceptive and predatory lending. Alan Greenspan, the former Federal Reserve chairman, ignored his responsibility, even as junk mortgage lending proliferated in plain sight. ......(more)

The complete piece is at: http://www.nytimes.com/2008/09/28/opinion/28sun1.html

[defendandprotect]

1. The FED is a private bank running the country -- !!!

[FreakinDJ]

2. Great article

[Vincardog]

3. We have been saying this for years, and been called "tin foil hat wearing conspiracy theorists".

[shraby]

4. It all leads back to deregulation and where

deregulation isn't in the picture, lack of enforcing what few regulations still exist takes over.

[Kolesar]

5. reform of Fannie Mae and Freddie Mac passed the House in 2005

*If the law had been enacted, the takeover of those companies may have been avoided. It failed in large part because President Bush wanted to fully privatize them and feared that if they were adequately reformed, privatization would lose steam.*

Wow, what a revelation. I had not been following this story.