September 17, 2008

THIS is good...

My wonderful friends, the adults are back in town...

House Speaker Nancy Pelosi has ordered a broad, swift investigation of Wall Street and will demand testimony from Bush administration officials and captains of finance, congressional officials said.

House Democrats plan to aggressively look at the administration’s role in the meltdown over the weekend and to explore further regulation and government structures that would be taken up under the new president.

Republican aides accused Democrats of trying to shift blame with a series of “show trials,” but acknowledged that key officials will wind up cooperating.

The hearings will take place over the next few weeks, the officials said. Treasury Secretary Henry Paulson, who regularly appears on Capitol Hill, will be called to testify as part of the investigation.

As the main event, Rep. Henry Waxman (D-Calif.), chairman of the House oversight committee, wrote to Richard Fuld, chief executive of the imploded Lehman Brothers, to ask him to appear on Capitol Hill on Sept. 25.

“The hearing will examine the regulatory mistakes and financial excesses that led to yesterday's bankruptcy filing by Lehman Brothers,” Waxman wrote. “The committee will also explore the impacts of the Lehman bankruptcy on financial markets and the United States economy.”

This, just so you know, is all about regulation or rather the lack thereof. For the last 28 years, Republicans have fought tooth and nail to deregulate everything in sight. Now, we're all living with the consequences. It's not that private enterprise is bad or inherently harmful... it's that humans make mistakes and let greed override good decision making. The result is that the Fed has to step in and lend private enterprise $80 billion... and shareholders take it on the chin. All because regulation was bad.

I wonder how many AIG shareholders would agree with that tonight? The money quote goes to Rep. Barney Frank"

Representative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee, said Mr. Paulson and Mr. Bernanke had not requested any new legislative authority for the bailout at Tuesday night’s meeting. “The secretary and the chairman of the Fed, two Bush appointees, came down here and said, ‘We’re from the government, we’re here to help them,’ ” Mr. Frank said. “I mean this is one more affirmation that the lack of regulation has caused serious problems. That the private market screwed itself up and they need the government to come help them unscrew it.”

Couldn't have said it better, Mr. Chairman.

Last thing... for those of you morons out there still fighting re-regulation and throwing around terms like moral hazard, there's this. The reality is that it was absolutely insane for a company like AIG or any market player to enhance credits with relatively small one time payments. At some point, the three sigma event you kept thinking would never happen, will happen. And then you're left staring into the abyss.

For some more, I'd like to point you here. What the Dem's in Congress are doing is absolutely perfect from a policy AND political standpoint. It's about time these folks went toe to toe with the Republicans and started hitting them in the face.

Posted by mcblogger at September 17, 2008 09:03 AM

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