Financial Reform Farce

So the Volcker rule is officially dead as of today, what a surprise.  As for the rest of the financial reform package that is in its last hours of debate, it’s a complete farce.  I won’t go through every aspect here, but just understand this.  The reform does not in any way address the idea of too big to fail.  It almost certainly guarantees that if we are ever in the situation again where a financial firm is a risk to the entire system, that the American taxpayer will bail them out.  Was the idea of a bank tax which would contribute to a pool of money for this purpose any better an idea, no, it was moronic.  Instead though, our politicians have the idea that they will use taxpayer money to bail out the firm, and then retroactively tax the banks to get the money back.  That idea isn’t any better.

What should have been done in 08′ and what should be done in the future is very very very simple.  Take the fucking firm into receivership and sell off its assets.  Why are these firms allowed to stay around after they have failed?  Second, no investment bank should ever be allowed to go public, they should all be partnerships where the partners are liable for the losses, themselves.

Look, I’ve solved the whole problem right there, do not let them go public, partnerships don’t screw themselves because the partner’s private wealth is on the line.  Right now, an investment banker can make 10 million dollars one year in salary and bonus for making the firm 30 million, and then the next year lose the firm 5 million, but still make a salary, and probably a small bonus.  This is the most asinine thing on earth.

So there you have it, you want real financial reform, go do two things, don’t let an investment bank go public, and put the damn firms into receivership when they fail.  Short of those two things, any financial reform bill is, how should I say, putting lipstick on a pig.

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