Wednesday, April 28, 2010

Some Practical Financial Reform

Temple of Mut has an excellent piece on the "financial reform" proposed by Democrats and some practical proposals to actually implement some reform that is minimally intrusive. She also points to the best headline I have seen on the subject (from BizzyBlog):

‘Financial Reform’ Is a Massive Power Grab

Her practical reforms include limiting the oversight of financial derivatives to credit default swaps (not to instruments that have served markets well, such as cocoa futures) and limiting the amount of borrowing against the appraised value of a home, to limit the financial exposure. The money quote:

It matters much less to me who is responsible for the problems, because there is plenty of blame to go around. It matters to me that the problem be fixed on a permanent basis as best we can, in order to eliminate risk going forward for everyone involved. I think one thing we have learned from the financial crisis is that what happens on Wall Street impacts the average American much more than previously imagined. Financial liquidity freezes mean loans are not made and businesses fail. A credit crisis is not a good thing. Having unsold homes is not a good thing. Losing your job is not a good thing. Losing confidence that you are being told the total situation about a financial product is not a good thing. And especially ballooning our federal deficit to bail out selected companies at the expense of hard-working American taxpayers is not a good thing.

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