Just saw another reference in today’s local paper as to how the catalyst for our continuing financial meltdown was due to “lack of financial regulation.”
Which is really the problem with just about everything in America, isn’t it? From swimming pools, to banks, to unregistered house cats, to insurance, to keeping wild animals, to school lunches, to where municipal employees live, to pig farms to — well, just about everything — we just need some more rules.
And — they don’t even have a rule about millionaire baseball players chewing tobacco. How’d that get by?
At least in the financial arena, we don’t have to worry about anything ever going wrong again as we now have the Mother of All Financial Regulatory Laws — the Dodd-Frank bill.
Cynics may point out that if people paid any attention, former Senator Dodd and Representative Frank would be known as “co-conspirators” instead of “cosponsors.”
Be that as it may, Dodd-Frank is a regulatory masterpiece with enough new rules, regulations, bureaucracies, czars, and apparatchiks to make “Compliance Specialist” the hottest new job in any industry that has anything to do with money. So we’re all safe.
Bank of America, with the blessing of the Federal Reserve, just shifted several trillions (yes, with a “t”) of dollars of derivative risk from its struggling Merrill Lynch operation to its struggling bank operation. Why bother?
Well, when those bets go bad, if they were still on the Merrill side, the stockholders and bondholders would take the hit. By moving them to the bank side, they’re now backed up by the FDIC and its completely inadequate $3.9 billion (yes, with a “b”) fund balance. So who’s backing up the FDIC? Do you really need to ask? Naturally, after the next bailout, people will demand even more government and regulations.
Remember, you heard it here first — the situation is hopeless, but not serious.