DISHONOR ROLL
Alan Greenspan: The New York Times took a
>hard look at former Treasury Secretary's Alan Greenspan's legacy in Thursday's paper, leading with this rather statement of Greenspan's from 2004:
"Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient."
---Phil Gramm, the McCain adviser who helped craft the Gramm-Leach-Bliley act, "a bank deregulation bill that swept away a Depression-era law known as Glass-Steagall" as the Times writes. The Times also notes of Gramm:
"For more than two decades in Congress he argued that the forces of the market had to be freed from government interference. Just a year after the passage of Gramm- Leach-Bliley, he was largely responsible for another bill -- the Commodity Futures Modernization Act -- that clearly did contribute to the current crisis. That law unleashed the derivatives market and paved the way for banks to become more aggressive about investing in mortgages. As recently as this summer, he was still saying that the biggest problem facing the American economy was excessive regulation."
Chris Cox, the head of the Security and Exchange Commission helped put greater derugulation into effect, and as of last March, was
>saying the following:
"We have a good deal of comfort about the capital cushions at these firms at the moment."
Henry Paulson is leading the government's efforts to rescue the economy, but he himself was a major proponent of rolling back what he called "excessive regulation" and reducing the power of financial regulatory agencies.
Anderson Cooper's compiling a list of the top 10 people responsible for the collapse. At number 9 is Lehman Brothers' >Richard Fuld.
HONOR ROLL:
Paul Krugman of the New York Times has written about the need for greater regulation of banks and came out against the initial proposals for the bailout plan.
Nouriel Roubini, a professor of economics at NYU, has sounded the alarm about the possibility of a severe global depression. Here is an excerpt from a recent appearance on Charlie Rose:
"It was not just the Secretary it was the entire political system. It was Democrats and it was Republicans. We've essentially subsidized housing lots of different ways for the last twenty years. We've invested too much in homes that are not really increasing productivity, not enough in machines that increase productivity of labor, so there's been a distorted economy. Too much money's gone into housing, not enough in other stuff and now we're paying the consequences by having the biggest housing and mortgage crisis since the great depression. It's really severe and it's not being resolved."
http://www.youtube.com/watch?v=x_MowsF73x0
Read more of his thoughts on the economy
>here.
Former Governor Ann Richards >predicted much of the current situation when she was running against George Bush for governor of Texas in 1994.
--Joseph Stiglitz, the Nobel Prize winning economist, has long
>pointed out that the US economy was in serious trouble:
"To make matters worse, the U.S. economy is facing a recession. But our ability to implement a truly effective economic-stimulus package is crimped by expenditures of close to $200 billion on the two wars this year alone and by a skyrocketing national debt.
--Former Bear Stearns analyst Nomi Prins has written on why the bailout is unlikely to work:
"Here's the thing. Bear Stearns and Lehman Brothers didn't go bankrupt because of individual mortgage loans defaults and foreclosures. These were simply the catalysts at the bottom of a huge pyramid of leverage that ultimately uncovered the sheer lack of transparency in the financial markets. Without a clear understanding of the risks in our US financial system, including huge new conglomerate balance sheets like that of Bank of America-Merrill Lynch, this euphoria will soon give way to further disintegration. Using terms like 'adjustment' and 'correction' makes it seem like this episode of financial destruction can be cured by the equivalent of a chiropractor visit. What we really need is something more drastic: a Glass-Steagall style wall."
Byron Dorgan, a Democratic Senator from North Dakota, spoke out against Phil Gramm's deregulation efforts back in 1999, saying:
"I think we will look back in 10 years' time and say we should not have done this, but we did because we forgot the lessons of the past and that that which is true in the 1930s is true in 2010."