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Doesn't anyone else think this is a just a short-term measure to appease public opinion? It was obvious something like this had to happen, there is still a lot

Doesn't anyone else think this is a just a short-term measure to appease public opinion? It was obvious something like this had to happen, there is still a lot of blame to be attributed. Alas, it's the easy way out. Of course, some of the things that happened have to be brought to court, as there definitely was at least misrepresentation, if not fraud, involved. That doesn't change the fact that there are much larger things amiss. 1. Regulators who are ill-suited and ill-willing to enforce existing standards, not to mention any kind of additional authority that gets bestowed on them soon. There are numerous cases of whistles rightly being blown where regulators didn't do anything. Selective enforcement is worse than no enforcement at all. 2. Too much governmental interference in markets and backstopping of market actors to let markets function properly - but blame it all on the markets afterwards and cover up all kinds of fraud at Fannie/Freddie. This encourages fraud in markets which the government kindly looks down upon (it's housing, after all) 3. No consistent policy regarding bail-outs. If you bail-out market actors, you have to split up 'too big to fail'-institutions; otherwise it's just a game of waiting for the next tax-payer-sponsored bail-out.

cwp 17y ago
No, it doesn't solve all the deep-seated problems in our financial/political system. But it's still good news, because: - Court cases tend to make public previously secret information. Witness the recent publicity of banks under-reporting their debt levels. That pretty much came out of the Lehman bankruptcy proceedings. Lehman's accounting tricks came out in court, and people started wondering if other banks were still doing it. - It keeps the issue in the spotlight so that politicians feel pressure to do something about it. Perhaps this will help strengthen the Senate's reform bill. - The SEC is finally doing its job again! It's a small step, yes, but it's a start. Go Schapiro!
barmstrong 17y ago
Totally agree - this feel like "security theatre" at the airport - except it's SEC theatre. The SEC has largely failed in it's mission to prevent things like this happening in the first place - going back and arguing over whether it was technically fraud or not with the benefit of 20/20 hindsight isn't going to prevent stuff like this from happening again. People get sold bad investments all the time - the onus is on you as the buyer to make good decisions and do your research. If you feel it's fraud, the courts are available to you as a private party. The SEC doesn't add any benefit to this equation that I can see. It does perhaps add one negative to the equation by encouraging people to take these investments "on faith" because they believe (incorrectly) that the SEC is effective at watching out for them.

cwp 17y ago

No, it doesn't solve all the deep-seated problems in our financial/political system. But it's still good news, because: - Court cases tend to make public previously secret information. Witness the recent publicity of banks under-reporting their debt levels. That pretty much came out of the Lehman bankruptcy proceedings. Lehman's accounting tricks came out in court, and people started wondering if other banks were still doing it. - It keeps the issue in the spotlight so that politicians feel pressure to do something about it. Perhaps this will help strengthen the Senate's reform bill. - The SEC is finally doing its job again! It's a small step, yes, but it's a start. Go Schapiro!

barmstrong 17y ago

Totally agree - this feel like "security theatre" at the airport - except it's SEC theatre. The SEC has largely failed in it's mission to prevent things like this happening in the first place - going back and arguing over whether it was technically fraud or not with the benefit of 20/20 hindsight isn't going to prevent stuff like this from happening again. People get sold bad investments all the time - the onus is on you as the buyer to make good decisions and do your research. If you feel it's fraud, the courts are available to you as a private party. The SEC doesn't add any benefit to this equation that I can see. It does perhaps add one negative to the equation by encouraging people to take these investments "on faith" because they believe (incorrectly) that the SEC is effective at watching out for them.