Federal Reserve Chairman Ben S. Bernanke said efforts by U.S. banks to raise capital are “encouraging” and called on firms to identify other risks through internal stress tests.Yeah Ben, I'm sure they'll get right on the self-testing. Just like they got on the self-regulation and self-correction during the Bush years. You know what's going to happen if you're relying on banks to self-test? Nothing. Nothing is going to happen. Why? Because financial institutions live to avoid regulation. The only financial innovation to happen in the last decade has been in discovering ways to circumvent rules, ignore rules, evade detection, and in new lobbying techniques to get current rules weakened.
The banks, especially those with “trading and investment banking businesses,” should keep monitoring “operational, liquidity and reputational risks,” which weren’t addressed by the exam concluded last week, Bernanke said in a speech yesterday at a Fed conference in Jekyll Island, Georgia.
You know we just handed out trillions of dollars. Maybe we should, I don't know, keep tabs on that ourselves? Just an idea I had. Maybe we should be the ones assessing the strength of banks and financial institutions so we can, I don't know, be ahead of the curve? Know what's going on? Find out whether or not this is going to happen again in 6 months? I know Benny, you just don't want to do your job. You thought reducing interest rates to zero would effectively give you nothing else to do. Now that black guy wants you to exercise a modicum of oversight on banks. You want them to do it themselves. It's summer. It's golf time. Does no one understand?
Maybe you should just pretend to do oversight. Pretend to stress test. Sure, failure of oversight and regulation helped grease the skids for one massive economic collapse, but it's never gone and caused two collapses back-to-back. History is on your side. Go get your clubs, the first tee awaits.
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