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With our current economic institutions failing, we can't afford to have innovative and successful financial institutions. That would just make everyone look ba
by drewcrawford 18y ago
With our current economic institutions failing, we can't afford to have innovative and successful financial institutions. That would just make everyone look bad.
- cabalamat 18y agoYeah, heaven forbid that the banks should actually have to face competition like, er, the rest of the economy. If the computer industry was regulated like this, the Internet would look like Compuserve circa 1990. And your PC would still only have 640K of RAM.
- patio11 18y agoI am as Republican as the day is long, I invested on Prosper and made a profit, I believed then and believe now that innovation in the financial markets would lower prices and raise returns, and I default to the assumption that government meddling in the free market is almost always to the detriment of the participants. That said? If you knew about the particulars of this situation, which I covered a wee bit about in a post above, you would say Prosper is about as close as you can get as a poster child for Why The Market Should Be Regulated without being founded by Ponzi himself.
- mattmaroon 18y agoPreventing innocent people from getting ripped off by scammers asking for investments is necessary for a healthy market.
- jhancock 18y agoit sure is...where was the SEC when every major bank in the world was doing it?
- mattmaroon 18y agoEh, banks weren't really ripping people off (I'm assuming you're talking about subprime mortgages) because the banks didn't stand to gain from it unless the people they lent to did as well. They weren't malicious, they were just stupid.
- jhancock 18y agoI'm wouldn't agree that they were "just stupid". I would choose the phrase "blinded by greed". Anyway, I was referring to the banks "investors/shareholders" that have been fleeced, not those the bank lent money to.
- mattmaroon 18y agoHow would you say they were fleeced? If you're talking about executive compensation, that runs through all industries, not just banking. I do believe that most of the people making the decisions that led to this crisis had the standard capitalistic intentions of making money for themselves and their shareholders. I wouldn't say they were "ripping off" their shareholders, though they certainly did let them down.
- jhancock 18y agoMost publicly traded financial entities were slow and limited in the amount of risk they reveled to their investors. Many of the really bad bets they made are still hidden from public view. These entities were not caught "by surprise". This was not an accident or a surprise. Executives of these companies have for years been talking behind closed doors about the risks of the bets they were placing but not disclosing this information to their investors (mostly public shareholders). On a smaller scale (relative to this crash), the dot com boom saw massive public market fraud as well. I was in the middle of it in NYC during this time and personally witnessed massive fraud and insider trading with NASDAQ entities. The direct result was that the outside public investors paid for this fraud. I have seen enough details of what bank and related financial entities have done over the last 10 years (and another cycle of bad behavior another 10 years prior and then another) to understand that they did not come close to disclosing the nature of the risks on and off their books. This is actually pretty scary to think that a public financial entity can even have such a thing as an "off the books" position.
- deleted 18y ago[deleted]