Comments of the Week
April 27, 2012 11:29 AM
On reinstating Glass-Steagall:
"Having suffered through the worst economic disaster in the U.S. since the Great Depression, why is it so difficult for policy-makers to see that the first step in returning the nation's financial system to a sound footing is restoring the law enacted at the end the previous crisis?"
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On reinstating Glass-Steagall:
"Countrywide and Washington Mutual were old fashioned mortgage banks. Bear Stearns, Lehman Brothers and Merrill Lynch were old fashioned investment banks… Reinstating Glass-Steagall is not going to prevent a similar crisis."
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On Bernanke rejecting calls to break up big banks:
"The Chairman is very sage. Big banks are needed, and the Volcker Rule will remove risky products such as total return swaps from the prop desk."
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On Facebook's future in payments:
"Facebook has to get into payments. Right now there's a race between Google, Paypal, and (a very quiet) Facebook. The first one to be able to get all the data on each step of your purchasing decision wins."
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On executive pay:
"Eliminating incentive compensation in banking would also have a significant side benefit: It would attract conservative, risk-averse people to lead banks, while encouraging people who seek high risk-high reward environments to move to other businesses (such as hedge funds) where such an approach is more appropriate."
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On Wal-Mart efforts to acquire a bank charter over the past decade:
"This is a purely rhetorical question that reminds me of a friend who was a park ranger in Mesa Verde and was often asked how many undiscovered ruins there were in the park."
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On principal reductions:
"The ownership society was a laudable and doable goal then and now. The mistake was in not keeping the sharks out of the loan pool."
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On principal reductions:
"'Homeownership' is a myth and a pipe dream for many, which was oversold and became a sacred cow. It is not a government entitlement -- or if it is, we should all get free homes."
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On principal reductions:
"How about a monetized tax credit for everybody, underwater borrowers can use it to pay down their balance, people who did the right thing can use the money as they choose."
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On principal reductions:
"Here's another thought: forgive principal in those cases where borrowers can show that lenders chose to ignore income …In other words, make banks eat their 'liar's loans.'"
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On the Office of Financial Research:
"A thoughtful, incremental extension of the anti-trust/monopoly framework could have better addressed 'too-big-to-fail' issues."
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On the Office of Financial Research:
"OFR officials say that they will collect only what they say that they need, and I believe that they are sincere, but they are their own judges as to what they need, with no accountability and no limitation on that judgment … Mission creep is a fixed law of bureaucratic life."
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On keeping banks from becoming obsolete:
"The bank of the future will be a lot less about direct lending and more about technology, privacy/security management, wealth management, peer-to-peer enabling technology, and legal protection(s)."
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On the Fed taking up financial stability as part of its mission:
"This is not really a new phenomenon as a broadening of the mandate to cover financial stability really started with the market crash of 1987, was formalized with the creation of the Working Group on Financial Markets shortly thereafter with the Fed sitting on that group, it was expanded when the Fed stepped in to organize the rescue of Long-Term Capital Management in the late 1990s."
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On the Temporary Liquidity Guarantee Program:
"Another big difference between TARP and TLGP: TARP programs were designed in secret and announced in term sheets released by Treasury. TLGP was created using the processes set forth in the Administrative Procedure Act. The process is there for a reason. Without it, broad grants of power to administrative agencies would be untenable in our democratic system.
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