Harold Meyerson: Who'll Rein in Wall Street?

[last_texas_dem]

>>>>The deliberations of the Senate Finance Committee on health-care reform -- which, understandably, have monopolized the public's attention to Capitol Hill -- have concluded not a moment too soon. On Wednesday the House Financial Services Committee begins the first congressional mark-up of legislation every bit as important: the bills that would rein in Wall Street.

But there's a problem. Looking at perhaps the single most important bill the committee will consider -- the one that will regulate derivatives, those opaque contracts that brought down Bear Stearns and Lehman Brothers and would have brought down AIG but for $180 billion in taxpayer money -- the banks have nothing to complain about. The regulations don't amount to much. The peril these derivatives pose to the economy will persist.

Under current practice, these deals, whereby banks and corporations hedge against many kinds of risk, are unregulated. There is no place where these deals are reported, no open exchange on which companies can shop for the best deal available and on which prices and risk become transparent. There is no way to know when major financial players are holding trillions of dollars of paper that cannot be redeemed -- until they are about to go under, dragging the rest of the economy down with them.

The Obama administration has been trying to change all that. Led by Gary Gensler, the chairman of the Commodity Futures Trading Commission, the administration proposed a bill that would have established an exchange on which derivatives, like stocks and bonds, could be traded. "It's very important to have transparency," Gensler said Tuesday. "Without it, there's a very significant information gap" between the sellers and buyers of derivatives, and for regulators trying to gauge the level of systemic risk.>>>>

http://www.washingtonpost.com/wp-dyn/content/article/2009/10/13/AR2009101302653.html?wpisrc=newsletter&wpisrc=newsletter

[Romulox]

1. This is ideological alphabet soup. Let the derivatives market be "free"

As in "free from a government backstop", then let the piranhas at each other. This idea of a "government nurtured free market" makes zero sense, ideologically or logically...

:wtf:

[Fumesucker]

2. Your title is unintentionally ironically hilarious..

"Reign in" and "Rein in" have almost diametrically opposed meanings.

"Reign" means to rule while "rein" means to curb or control.

At least I'm guessing your ironic title was unintentional.

[last_texas_dem]

4. Nah, just posting too early w/o a fully functioning brain

A little ashamed of myself as I'm generally pretty anal about spelling things correctly. I'll edit if I still have time, though it might actually be kinda funny to keep the original one...

[AllentownJake]

3. Nothing is going to happen

There will be no regulations of any substance. Too many democrats have deep ties into the banking industry.