Forum Post: The #1 problem is there is no finance regulation.
Posted 13 years ago on Nov. 3, 2011, 1:58 a.m. EST by fixwallstreetnow
(42)
from San Francisco, CA
This content is user submitted and not an official statement
Many will view the demise of MF Capital as just another bit of the "creative destruction" of capitalism. The Republican candidates complain that Dodd-Frank, last year's financial reform bill passed in response to the credit crisis, is stifling healthy risk-taking. The reality is that Dodd-Frank does not do enough to prevent financial institutions from taking excessive risks with investors' money. While it imposes leverage requirements on banks, those requirements are still quite limited, and institutions not regulated by federal banking agencies are not restricted in their risk-taking in any meaningful way.
If their huge bets on European debts had paid off, Corzine and his colleagues would have added to their immense wealth. All of their incentives were to borrow as much money as possible so that small price movements in their direction would make them rich and large price movements in their direction would make them unimaginably rich.
Their debts did not pay off; they are still rich, but there are many others who will be much poorer. Leverage is the steroid of modern finance that creates the hazardous incentives to bet big, keep the winnings and dump the losses onto others.
What MF Global shows is that the problem is not too much regulation but too little. Without meaningful leverage restrictions on borrowers and meaningful lending restrictions on those who are willing to underwrite this steroidal debt expansion, MF Global is likely to be the tip of yet another iceberg. And we have yet to recover from the last financial Titanic.
http://www.cnn.com/2011/11/02/opinion/lewis-mf-global-demise/
Dodd/Frank empowered regulators. That are not smart enough or wise enough... The market is.. That is why they are BK....., You all should be in D.C. protesting in front of White House o r Congress. That is the root of the problem......
There were rules in place in 2006 and the Fed ignored doing anything. The "regulators " were insiders who will be re-hired in the private sector with nice salaries when they leave "public " service. We have government of ,by and for the corporations .
How it it biased to not mention what his politics are? Politicians are corrupt on both sides of the isle. As a self-described democrat Obama's failure to regulate and instead put in the likes of Geithner and Summers is the biggest failing of his presidency.
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That article was dripping with Democrat bias.
There was not one mention that Corzine was a Democrat. There was not one mention that Corzine is a HUGE fundraiser and cash bundler for Obama ... both in 2008 and 2012.
There was not one mention that Corzine ran the State of New Jersey into the ground. Not one mention that Corzine was being considered for the post of Treasury Secretary in Obama's administration.
Corzine and MF Global also broke the law and federal regulations by using money in client accounts to trade on behalf of the firm.