This is among the most sober and well-argued pieces we have seen on the flaws of the administration’s financial reform proposals. We thought we might end up disagreeing more strongly when Wallison pulled out the old chestnut of the “moral hazard” supposedly created by too-big-to-fail. We have always been skeptical of the moral hazard explanation [...]
Dumb squared
First he implies that traders caused the crisis, when the reverse is closer to the truth (the shorts were the only voice of sanity through the whole farce) then he says the tax would raise tons of money, which could be true only if it does not work, i.e., doesn’t discourage trading.
We think taxing [...]
Short selling is to financial markets what free speech is to political markets
Is it just us or are there a lot of unusually dumb pieces this morning? Somebody called Thomas Kostigen wants to flat out ban credit default swaps. We understand the impulse: When CDS first became common they struck as a particularly appalling example [...]
As usual when regulators try to block conflicts of interest they just create a crisis of competence.
Of course investment advisors sell products in which they have a proprietary interest. Mostly it does not matter because it’s all plain vanilla stuff and the advisors know about as much as you can pick up in less expensive [...]
The Volcker rule is merely pointless. The Senate preference for regulatory discretion is really dangerous
In Panic we spend more than 200 pages explaining what caused the crisis: but here it is two sentence: Over the past 20 years we have had the most politicized banking system in U.S. history, with bankers more slavishly responsive to [...]
One of the most-read pieces in the financial press this week is Joseph Stiglitz’s interview with Forbes. He starts off just right, making the point that no commentator other than the humble authors of Panic have made: the essence of the crisis was the attempt to have capitalism without ownership, or without strong ownership. That’s [...]
Progressives and the Growing Dependency Agenda
By George Will
WASHINGTON — Only two things are infinite — the expanding universe and Democrats’ hostility to the District of Columbia’s school choice program. Killing this small program, which currently benefits 1,300 mostly poor and minority children, is odious and indicative. It is a small piece of something large — [...]
If free market types are to grapple effectively with the late crisis, they need to get one thing clear in their heads: The mega banks are not free market institutions. They are agencies of the government.
Creating and maintaining the currency is a core function of government, laid out right in the Constitution (c.f. “and regulate [...]
Nobody gets Fannie and Freddie better than Peter Wallison. Here Peter explains why the twins should be privatized but won’t be: having their own mortgage bank is just too much fun for Congressmen
Everybody wants to talk about the Fed raising the discount rate. Bank profits may go down fractionally, otherwise, snore, snore. Point 75 like [...]
John Tammy, editor of Real Clear Markets is certainly right that it is absurd to expect the regulators to be smarter than the banks. But that’s only an argument against discretionary regulation, which is what got us in trouble. And banks like lawyers, perform a partly public function and for that reason will always be [...]