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InvisibleBlack -> RE: Banks Bundled Bad Debt, Bet Against It and Won (12/24/2009 11:07:36 AM)
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quote:
ORIGINAL: Musicmystery
But I'm sorry--designing a toxic asset to ditch to your customers while selling it short yourself to rape the same customers for the profits cannot be permitted. This isn't market loss or caveat emptor--it's not being able to trust financial institutions to sell investments in good faith, which can only ultimately result in reluctance to invest--and that's going to hurt everyone.
Investors should be at risk. That's what justifies the reward for those who do their homework (and perhaps a few who get lucky). They should also, however, be able to accurately ascertain the nature of those investments.
Clearly, that will take regulation. NOT to regulate in such an environment will itself restrict growth.
Agreed. My issue is ... I think the last thing we need is another regulatory agency. Had the Glass-Steagall Act been left intact, well, none of these companies could have ever created these securitized investments nor could commercial banks have sold their mortgages to be turned into CDOs.
I think that trying to create regulatory agencies who will be constantly trying to keep up with investment bankers, who will be constantly creating new investment vehicles which will be, at best, poorly understood, is a recipe for an ongoing series of disasters - and this assumes that the regulatory agencies will not end up staffed by former industry insiders or vice versa.
Don't try to fix this system. Put the old system back.
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