Wednesday, June 30, 2010

The Failure of Financial Reform, Itemized

It is really quite incredible that of all the things that went wrong to cause the latest economic crisis, the new financial reform bill does almost nothing with regards to the following key issues. Here are the original problems and the actions being taken.

1. Bank leverage:

2- Interest rates too low:

3- Lobbying and money in politics:

4- Too much debt everywhere:

5- Depositor insurance:

6- Bank consumer fees:

7- Predatory lending:

8- Global investor diversification:

9- Credit Default Swap (CDS) market:

10- Criminal behavior:

11- Board control:

12- Securitization:

13- Ratings agencies:

14- Fannie Mae and Freddie Mac:

15- Too many financial middlemen:

16- Who regulates?:

17- To big to fail (TBTF):

18- Bank market concentration and monopoly power:

19- Adjustable Rate Mortgages (ARM's):

20- Teaser rates:

22- Personal bankruptcy law:

23- Regulating long maturity asset industries:

24- Regulatory capture:

25- Managing risk:

26- Bankruptcy proceedings for banks and corporations:

27- Hedge funds:

28- Management incentives:

29- Complexity of mortgage and investment banking products:

30- Bad bank loans:

31- Government stimulus:

32- Severity of new bank regulations:

33- Bank executive compensation:

34- Undervalued Chinese currency:

35- Globalization:

36- Bank transparency:

37- Externality costs and collective action problems:
38- Federal Reserve independence:

39- Response times to crises:

40- Underwater mortgage holders:

41- Social Security (SS) and Medicare Impacts:

42- The media:

43- Insider trading and market manipulation:

44- Public reporting and transparency of publicly traded corporations:

45- Overnight repo market:

46- Corruption in government:

47- Global banking system:

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