Monday, February 7, 2011


I always tell my students "We don't regulate markets. We regulate people." Here's just one of the reasons why we regulate people ...

It appears that the Wall Street firms who sold mortgage-backed securities to investors violated federal securities laws by misleading their clients about the quality of the underlying mortgages. According to the Financial Crisis Inquiry Commission (FCIC) report, not only did "nearly every every cog in the financial system" break down over greed and myopic thinking, but the sellers of securities built on mortgage contracts failed to tell the buyers that the underlying contracts that they were peddling didn't meet their own standards.

The FCIC report - which every republican committee member effectively ran away from when they issued their own half-ass, Wall Street whitewash, report in December - found fault with every major player. Everyone, from Wall Street investment banks to government regulators, to the Federal Reserve, and the hedge funds and credit rating agencies, who kept pumping money into the system, played a role in wrecking our economy.

Ahh, the magic of the market ... brought to us by the nice people on Wall Street, who need to be regulated.

- Mark

No comments: