LOL! I agree with that, with the current crisis, it has been empirical evidence how worthless a harvard MBA is – as icahn said. Now what are all those silly colleges and their professors gonna tell the public who turned out all these clowns?

In 2004 the SEC made an exemption for 5 banks to change capital ratios from 12 to 1 to 40 to 1 leverage to come in line with europe and that Basel stuff, can you guess the 5 banks?

securities.stanford.edu/news-archive/2004/20040428_Headline08_Drawbaugh.htm

April 28, 2004

EXCERPT: U.S. market regulators on Wednesday approved new rules that would let some major Wall Street brokerages reduce the amount of money they set aside as net capital, in some cases by as much as 30 percent. In a move in line with bank regulatory changes in Europe, the U.S. Securities and Exchange Commission voted unanimously in an open meeting to approve two optional sets of rules. Under one of them, five big U.S. brokerages are expected to apply soon to be designated as “consolidated supervised entities,” or CSEs. Each application for CSE status will have to be reviewed by the SEC, likely several months from now. Goldman Sachs , Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns have expressed keen interest in CSE status, SEC Market Regulation Director Annette Nazareth told reporters after the meeting. “They are all very well-capitalized firms,” Nazareth said. In line with new capital adequacy standards coming into force soon under Europe’s Basel accords, brokerages granted CSE status would be able to use in-house, risk-measuring computer models to figure how much net capital they need to set aside. Under Basel standards, some institutions could soon be cutting their net capital by as much as 50 percent. But the SEC’s new CSE rule added a $5-billion floor to the Basel model, reducing the likely level of reductions to 20 to 30 percent. The SEC approved a second set of net-capital rules, also voluntary, that would designate an institution as a “supervised investment bank holding company.” But Nazareth said there has been little industry interest expressed in it. SEC Commissioner Paul Atkins said monitoring the sophisticated models used by the brokerages under the CSE rules — and stepping in where net capital falls too low — “is going to present a real management challenge” for the SEC. Since the new CSE rules will apply to the largest brokerages without bank affiliates, SEC Commissioner Harvey Goldschmid said, “If anything goes wrong, it’s going to be an awfully big mess.”

LOL! I agree with that, with the current crisis, it has been empirical evidence how worthless a harvard MBA is – as icahn said. Now what are all those silly colleges and their professors gonna tell the public who turned out all these clowns?

In 2004 the SEC made an exemption for 5 banks to change capital ratios from 12 to 1 to 40 to 1 leverage to come in line with europe and that Basel stuff, can you guess the 5 banks?

http://securities.stanford.edu/news-archive/2004/20040428_Headline08_Drawbaugh.htm

April 28, 2004

EXCERPT: U.S. market regulators on Wednesday approved new rules that would let some major Wall Street brokerages reduce the amount of money they set aside as net capital, in some cases by as much as 30 percent. In a move in line with bank regulatory changes in Europe, the U.S. Securities and Exchange Commission voted unanimously in an open meeting to approve two optional sets of rules. Under one of them, five big U.S. brokerages are expected to apply soon to be designated as “consolidated supervised entities,” or CSEs. Each application for CSE status will have to be reviewed by the SEC, likely several months from now. Goldman Sachs , Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns have expressed keen interest in CSE status, SEC Market Regulation Director Annette Nazareth told reporters after the meeting. “They are all very well-capitalized firms,” Nazareth said. In line with new capital adequacy standards coming into force soon under Europe’s Basel accords, brokerages granted CSE status would be able to use in-house, risk-measuring computer models to figure how much net capital they need to set aside. Under Basel standards, some institutions could soon be cutting their net capital by as much as 50 percent. But the SEC’s new CSE rule added a $5-billion floor to the Basel model, reducing the likely level of reductions to 20 to 30 percent. The SEC approved a second set of net-capital rules, also voluntary, that would designate an institution as a “supervised investment bank holding company.” But Nazareth said there has been little industry interest expressed in it. SEC Commissioner Paul Atkins said monitoring the sophisticated models used by the brokerages under the CSE rules — and stepping in where net capital falls too low — “is going to present a real management challenge” for the SEC. Since the new CSE rules will apply to the largest brokerages without bank affiliates, SEC Commissioner Harvey Goldschmid said, “If anything goes wrong, it’s going to be an awfully big mess.”

he argued with my causation that ‘loans create deposits’

wouldn’t hire him to make coffee until he at least gets his monetary operations right

they don’t teach that at Harvard, apperently, as none of their grads and professors seems to have a clue.

Warren further on public discourse, Brad Delong points out how little the “public” or their gubbment representatives have in deciding stuff – just a few hank paulsons at the top are doing all the heavy work (unsupervised) and then reporting their actions in a couple briefs to a few people whose eyes probably glaze over. Didn’t the founding fathers say something about absolute power and corruption?

http://delong.typepad.com/sdj/2008/09/this-is-how-thi.html

(snip)

one of the odd facts about this crisis is that the elected branches of government have been completely cut out of the response. George W. Bush and Dick Cheney have not, as far as anyone can tell, been steering the ship. According to The Wall Street Journal, Bush was briefed on the rescue after it was in play. And even then, he was only “briefed.” There’s been no effort on the part of the White House to even advance the idea that Bush is an engaged participant who’s actively signing off on these actions, possibly because suggesting his involvement in a crisis of this complexity would cause the stock market to run and hide in a corner.

Congress, too, has been cut totally out of the loop. The AIG bailout — in fact, all of the bailouts — have been conceived entirely without their involvement. Indeed, the Federal Reserve and the Treasury Department have been acting, over the course of this crisis, as if they are the sum total of the government. And that may be the correct approach: Neither the president nor the legislative branch possess the expertise or speed to be involved in the real-time crisis management that Bernanke and Paulson are trying to manage. They could, presumably, reverse decisions after the fact or change the contours of the law, but for now, the ship is being steered by the Chairman of the Federal Reserve, the Treasury Secretary, and an informal working group of Wall Street CEOs and banking powerhouses. And the government, as we normally think of it, has basically accepted their temporary authority. You’ve heard of martial law? We’re currently in a state of market law.

(snip)

“the fewer the people tied up in financial sector, the more who can get the ‘real’ things done.”

My trader friends are really mad about this stoppage of short selling, saying that it will foster illiquidity, but I know many monetarists – especially keynes said liquidity was the biggest devil to slay – so now that all these traders won’t be in markets making them liquid and trading what will they do? They are too lazy or stoopid to help build houses or find cancer cures. I think now is a good time for you Warren to start doing a jerry maguire and with your own actions back your words – never trade EVER again. What is good for you is good for me and every other human being. Lead by example, not by words.

“ramifications to see if it infact meets public purpose.”

See that is why I always have problems, like that guy socrates I guess, I usually don’t like what the big ole “public” wants to do. You want to legalize drugs, I don’t. I want to legalize hookers, but I don’t see anyone else jumping on the bandwagon – one happy unified world is just never gonna be, too many people with different backgrounds, customes, beliefs and wants and it seems to be getting more fractured.

lots of ways to skin the cat

success is measured by the useful output of the community.

the fewer the people tied up in financial sector, the more who can get the ‘real’ things done.

changing the loan terms changes the distribution of output between houses and other things. so, not to duck your question, before incentives are put in place i’d suggest discussion them and their ramifications to see if it infact meets public purpose.

I remember reading about japan offerin 100 year multi generational loans – the grandfather, father, son and grandson all had to sign the note – long term planning. In my granpappys day (1930s) he said most loans were only 5 to 7 years to buy a house, thank goodness for 100 year loans, how did people in the early days manage with just 5 or 7 year loans? I can’t wait for 1000 year loans or longer – how long do you think is the ideal loan term Warren?

not running with Ron Paul- his economics are totally confused- he’s part of the problem, not part of the answer.

yes, an rtc type plan only works when govt already owns all the institutions of consequence.

they are probably going to come up with a proposal for the govt to somehow add capital, maybe something like Japan did where the gov bought preferred stock of its member banks.

Anywayz Senator Schumer today saying this hank paulson proposed RTC like plan is filled with so many holes that it won’t really help the situation – I guess blowing up indymac wasn’t enough for him *snicker* – ex-fed guy that ran the RTC (siedman i think) has said several times on CNBS and doomblerg that the S&L RTC trick won’t work today either – totally different problems – inelastic owners who don’t want to dump at any price – but boy are markets dumb to rally on rumors – why do we let dummies have access to capital where they can make really big problems with their ignorance? Keynes said the fetish of liquidity was the most evil of them all!

These inelastic sellers reminds me of a book I read in the 5th grade called THE PEARL –

http://www.google.com/search?hl=en&q=the+pearl+john+steinbeck&aq=1&oq=the+pearl+-

it was about these island people on the virgin islands who found this massive pearl in the ocean – they were poor living in a stick hut with their son and eating fish – but they were happy – well the bankers came to these guys and they were inelastic sellers so the CIA jackal hit man come in and killed the children and then mom and pop villager threw the pearl back into the sea – nobody won and there was much gnashing of teeth.

Kinda like my miami condo friends who say if they don’t get the price they want – they will take a match to that sucker and get their AIG insurance payout!! BWAHAHA LOL!!