Regulation...Who Needs It?

All I hear is whining about big government this and big government that. See what happens when we don't regulate.

Jay Bookman's op-ed, writing on the $2 billion lost by a trader at JP Morgan Chase, is a good starting point to begin to understand just how the heck a bank can lose $2 billion dollars in trading credit default swaps. A bank trading? I put my money in a bank and somehow the bank is losing money. Do they put my savings at risk? For our country's financial stability wouldn't we want to have some institutions that form a financial bedrock of stability?

There should be a law. A law that does not allow banks to invest hard-earned savings in risky financial instruments. On the news, I heard the nature of the trade was a credit default swap. Seems like we have had trouble with those silly things in the past. Seems like there was a bill passed to re-regulate the banks and stop them from putting our money at risk?

There was a law. It was passed in 1933, and it was called Glass-Steagall Act, and this law prohibited banks and investment firms from putting our money at a level of risk like investors face. This law was repealed in 1999. I think we would have been better off, as a country, if the Glass-Steagall had never been.

Every time there is a bill put forth to cut down on the risk we all face the bankers' lobby fights and fights to stop the regulations. They call the president crazy names, they wine and dine the Congress, and they form super PACs to attack the regulations. Banks spend millions to stop government regulations. We as taxpayers are still in line to bail out JP Morgan Chase again should they fail.

Let's understand: They take risks and make more money the more risk they take. And, if the risk fails, we will still bail them out. But don't regulate, oh no don't regulate. You see, when you regulate then the government is too big. Now I never hear that the government is too big when the Pentagon wants to buy more hardware.

One of the aspects about the regulation/deregulation argument that has always confused me is the fighters. When the EPA wants to cut mercury emissions that comes out of power plants and subsequently into our lungs it does not surprise me that a lobby group funded by all the power companies fights the regulation. I would think they would care as people, but there are dollars involved so I sort of get it.

No, the real surprise comes from local people who whine and whine about such regulations. They may see an increase of $25 a year and get better air, but they fight hard for the big business. For me, I trust government regulation more than the collective consciousness of big business. Big business really doesn't care.

Jay Bookman's blog can be read here

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David Bruce May 18, 2012 at 10:10 PM
Great article, Mr. Allen, and I couldn't agree more.
Robert Thomas. Sr. May 19, 2012 at 02:55 AM
I agree that reasonable regulation is needed, but there seems to be a thread in your comments about Wall Street that it is a Republican bastion - anything but - Wall Street financiers are 80% Democratic and the they and Hollywood - another bastion of Democrats - are the chief sources of large money contributions for President Obama's re-election campaign. The problem is not regulation, but over-regulation. Look at any Congressional Hearing at the cadre of people accompanying the witness to protect him or her from your representatives. You and I are paying for them to sit on their duffs and worse than that to go back to their offices and without much practical experience write regulations which strangle the economy. Or, put more succinctly - do you think Henry Ford could have begun in this over-regulated economy the car company which gave so many Americans mobility at an affordable price? That is the problem, not reasonable rules for clean water, safe medicines, etc. There is also the problem of the over-production of mostly left-indoctrinated college graduates, especially from elite colleges, who think they're entitled to the middle class life and really haven't learned to do anything useful. These people and the refuse from the 60's make it impossible for this country to do the things we need to do to give the non-privileged, non-government employee a chance at a decent life.
Ted Asher July 03, 2012 at 05:12 PM
This is largely derives from a truthout.org article listing ways banks create money for themselves. Full article is here: http://truth-out.org/news/item/10086-six-ways-the-big-banks-are-getting-back-door-bailouts 1. Profiting from the administration of Food Stamp vouchers (EBT cards). 2. Profiting from administering debit cards for unemployment benefits. 3. Profiting from college student's financial aid related debit cards. 4. Tax return debit cards (I see a pattern developing here). There's more, but I find the whole "convenience fee" concept in these cases so predatory I feel nauseous.
Ted Asher July 03, 2012 at 05:21 PM
Mr. Thomas, are you from THIS planet? Wall Street financiers are 80% Democratic? When I look at any Congressional hearing with bankers I become sick to my stomach. I see pigs rolling in the slop and I see pig farmers feeding them. The pig farmers are not the congresspeople. Please post one example of "leftist indoctrination" occuring at college. Why do you criticize the very people you profess to defend? Yes, Mr Ford would have been able to start his company. He was a Keynesian, he believed in making his products by keeping his material costs low and paying good wages to him employees. He was also a pioneer in the recycling of metal.


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