The next round of looting
What should worry you now -- if you can spare a neuron or two from worrying about the economy, your job, your retirement savings, your mortgage and the meltdown of the global financial system -- is that the looters aren't in retreat. If anything, they're getting more brazen.
For example, in the early days of the AIG crisis, Goldman Sachs Group (GS, news, msgs) denied it had any "material" exposure to AIG's troubles. It wasn't until months after then-Treasury Secretary Henry Paulson, a former CEO of Goldman Sachs, organized a bailout of AIG that taxpayers found out the biggest recipient of taxpayer money, pocketing $12.9 billion of the $170 billion bailout, was -- ta-da! -- Goldman Sachs.
The next round of looting is likely to come in the name of reform.
I'm just as skeptical about calls to give the Federal Reserve more power, turning it into a superregulator for the financial system. More power to the same Fed that could find only three examples of predatory lending, that fought against regulating derivatives and that did nothing as risk piled up at the nation's banks?
I think reform -- stem-to-stern reform -- is an absolute necessity. But I think almost all the existing regulatory bodies have been captured by the industries they are called upon to regulate. Tear them all down, I say, and begin from scratch.
Within 20 years, we'll be facing the same problem of regulators captured by their regulated industries, but, as Huey Long said about his plan to redistribute the country's wealth, what a time we'll have had.
In my next column, I'll take a look at why we can expect this same kind of crisis every 10 years or so unless we fix the system.
~ Jim Jubak, MSN Money
For example, in the early days of the AIG crisis, Goldman Sachs Group (GS, news, msgs) denied it had any "material" exposure to AIG's troubles. It wasn't until months after then-Treasury Secretary Henry Paulson, a former CEO of Goldman Sachs, organized a bailout of AIG that taxpayers found out the biggest recipient of taxpayer money, pocketing $12.9 billion of the $170 billion bailout, was -- ta-da! -- Goldman Sachs.
The next round of looting is likely to come in the name of reform.
I'm just as skeptical about calls to give the Federal Reserve more power, turning it into a superregulator for the financial system. More power to the same Fed that could find only three examples of predatory lending, that fought against regulating derivatives and that did nothing as risk piled up at the nation's banks?
I think reform -- stem-to-stern reform -- is an absolute necessity. But I think almost all the existing regulatory bodies have been captured by the industries they are called upon to regulate. Tear them all down, I say, and begin from scratch.
Within 20 years, we'll be facing the same problem of regulators captured by their regulated industries, but, as Huey Long said about his plan to redistribute the country's wealth, what a time we'll have had.
In my next column, I'll take a look at why we can expect this same kind of crisis every 10 years or so unless we fix the system.
~ Jim Jubak, MSN Money
