Anyone who bashes Finreg (aka Financial Regulation) after the financial meltdown, the near nightly tightening of the credit market, and after two rounds of quantitative easing obviously knows little to nothing about what went on to cause the real estate bubble, much less, what is still occurring within the legal system from ticked off mortgage backed securities investors (e.g. state pension funds,some of the largest bond mutual funds in the world, etc.) trying to get their money back after being sold fraudulent investments.
Sadly, Alan Greenspan, one of the key architects of loosening financial requirements allowing the formation of the mega (too big to fail) banks, as well as deregulating the commodities and futures markets, has had his “Come to Jesus” moment after the bulk of the (fraud) damage has been done.
There are two fundamental reforms we need: adequate capital and to get far higher enforcement of fraud statutes – existing ones – I’m not even talking about new ones.
Things were being done which were certainly illegal and clearly criminal in certain cases. If you cannot trust your counterparties, it [capital markets] won’t work. And indeed we saw that it didn’t.
– Alan Greenspan
Perhaps I’m too cynical or misanthropic for my own good, but when you strip away basic financial regulations — like excess bank leverage at 40 to 1, destroying underwriting standards, or allowing the complete destruction of personal property rights by foreclosing on a homeowner without a mortgage — you’re practically chopping wood for your own stake burning.
Oops… too late.