said by FaxCap:Let's look at your Wild West style (read GREED) banking/financial
system. The unregulated greed of your banking/financial system has
damn near brought the world to it's knees. There are a few hundred
men in the USA who should be doing 50 year at hard labour.
As someone who works in/around the financial world for many years and has been involved in the regulation making process, the trading and risk management world, and in designing systems to take advantage of minute discrepancies in prices, the single worst feature of the last 25 years has been financial deregulation.
Human nature is what it is - filled with greed, avarice, and corner-cutting, and probably no more so than when it comes to money. Regulation is designed to temper those base instincts.
Most jurisdictions got it wrong in deregulating - none more than the USA. The repeal of Glass-Steagall and the changing of the rules of the CFTC in the late 90's was more Republican instigated than it was Democrat inspired - even though Clinton signed the damn bills.
Clinton was politically weak at the time, largely due to the incessant focus of US legislators and the press on 'Zippergate' rather than on what was truly important. Zippergate was really between Bill & Hilary - everything else surrounding it was a sideshow - except to Republican politicians. Clinton signed the legislation because he needed to get Congress off his back as much as possible.
So a decade goes by of deregulation, along with further evisceration of the bodies whose mandate it is to regulate, coupled with an unwillingness to enforce those laws which remain on the books, and cowboys take advantage of the system which remains - all the while those in charge believing that the laws of financial gravity don't apply because the Prophet of Chicago says they don't.
Even here in Canada we got the basic legislation wrong - removal of the separation of the so-called "four pillars" - banking, insurance, brokerage, trusts. But we did retain a relatively stronger regulator in OSFI. However, the various provincial securities legislators are jokes for resisting the call to merge into a national regulator - all because of turf wars.
People call some banks "too big to fail".
That's not what they are - they are too big to exist.
They should be broken up by the reinstatement of Glass-Steagall, and other forced divestitures.
I'd much rather work for a pure broker - taking my cut of the profits in a partnership with other like-minded individuals, whose own net worth is on the line every day, than to work for a bureaucrat banker whose worldview is tempered by the assinine questions an Aunt Mille will ask at the AGM and how his answer will apper on the evening news.
I'd much rather have many more smaller commercial banks competing for my business as a businessperson, than to be denied loans by the 5 big games in town (yes, I know that there are more than that - it's an allegory, ok?).
I'd rather know that my insurance company isn't investing my life insurance premiums in credit default swaps or CMO's that they don't know anything about (seen it), to be told what they're worth only by the dealer that packaged them in the first place (see that too), who didn't correctly model the package in the first place (seen that too many times), or who constructed it for their own benefit -- not that of their customers (oh yes, I've seen that too).
Anyway, I could go on for hours.
Suffice it to say that we're in a big mess globally and if we manage to stumble our way out it will be by sheer luck. Throw in a hot war with Iran (assign your own probability here x.xx) and the global economy will hit the shitter faster than a speeding bullet. Canada is not immue - we're better off than most, but we are unable to absorb much more stress.
