I just heard from a little bird...............

[jyl]

I can think of three general approaches.

First, we could prohibit certain types of companies from engaging in specific types of business, e.g. specific types of derivatives, loans, contracts, securities, etc. For example, the Depression-era Glass-Stegal Act kept commercial banks and investment banks separate, until it was repealed as part of the rush to deregulate everything in over the past couple decades. As another example, securities like CDS could be forced onto a public exchange, to make the scale of this business more visible and reduce counterparty risks.

Second, we could require accounting, capital, and other regulatory requirements that would force financial companies to more conservatively recognize the risks in their business. This would include closing regulatory loopholes - as an insurer, AIG managed to slip between some cracks and in other respects was regulated by state insurance departments who knew nothing about derivatives.

Third, we could require managers to be compensated over many years, based on how a particular piece of business ultimately pays off, rather than all upfront based simply on how the business looks when it is initially written.

I think all of this will be done. The last Administration didn't get to it in 2007/08, in fairness they were desperately plugging holes in the dike. The current Administration will have to do it.

Right now, re-regulation is moot - financial companies are desperately avoiding risk of all types, they are not about to take any chances. But we need these reforms in place before "next time". There will be a next time - humans naturally swing between greed and fear and economies naturally boom and bust, the point is to reduce the size of these booms and busts, not to prevent them altogether.

Originally Posted by Buckterrier

John L you certainly know more than I. Thank you for your replies. As I asked Red-Beard what fail safes can be but in place so it can't happen again? Or at the very least the bleeding stops quicker.
(and execution isn't a half bad idea). Ok... I'll settle for a public flogging.

[IDGAF27]

Originally Posted by jyl

I can think of three general approaches.

First, we could prohibit certain types of companies from engaging in specific types of business, e.g. specific types of derivatives, loans, contracts, securities, etc. For example, the Depression-era Glass-Stegal Act kept commercial banks and investment banks separate, until it was repealed as part of the rush to deregulate everything in over the past couple decades. As another example, securities like CDS could be forced onto a public exchange, to make the scale of this business more visible and reduce counterparty risks.

Second, we could require accounting, capital, and other regulatory requirements that would force financial companies to more conservatively recognize the risks in their business. This would include closing regulatory loopholes - as an insurer, AIG managed to slip between some cracks and in other respects was regulated by state insurance departments who knew nothing about derivatives.

Third, we could require managers to be compensated over many years, based on how a particular piece of business ultimately pays off, rather than all upfront based simply on how the business looks when it is initially written.

I think all of this will be done. The last Administration didn't get to it in 2007/08, in fairness they were desperately plugging holes in the dike. The current Administration will have to do it.

Right now, re-regulation is moot - financial companies are desperately avoiding risk of all types, they are not about to take any chances. But we need these reforms in place before "next time". There will be a next time - humans naturally swing between greed and fear and economies naturally boom and bust, the point is to reduce the size of these booms and busts, not to prevent them altogether.

OK , I am not a financial guru, but all that "we could........" it is just another smoke in an eye.......
n my opinion it is not " we could" , but we have to set rules if we are giving $$$$, or if damn goverment takes from us and gives them - THEY MUST PLAY BY OUR RULES.........

Previous AIG CEO took ~45mill severence pacage( insted of 50 mill) only because AIG lost 30bill that year !?:confused .......I'll take those punishements everyday.

According to you: I just go wild on my CC's and after I max 'em out, tell damn bank I need more to spend 'cause I am not loosing enough ?! and bank should go- "Yes, please...... How much you need?......when you'll be back for more?......"


......and I thought USSR was f@#!#up !

[jyl]

I thought we were having a rational and informed discussion about this. I'm not interested in participating in a know-nothing rant session. Goodbye.

[126coupe]

Originally Posted by milt

Not a problem. Inflation will push wages to 100/hr for burger flippers.

I have tons of experience flipping burgers, I'll do it for $800.00 a day!
but, Obama will take $799.99, to pay AIG, GM, Ford, ......................